CIBC EQUITY RESEARCH
January 22, 2024 Industry Update
Energy Infrastructure Takeaways – 27th
Annual CIBC Western Investor Conference
Our Conclusion
We had eight companies participate in fireside chats with Q&A at our 27th
Annual Western Institutional Investor Conference. Presenting companies
were ALA, BIP, ENB, GEI, KEY, PPL, TRP, and SPB. Notwithstanding the
recent commodity price volatility, management teams are pleased with 2023
achievements and are optimistic for the industry outlook in light of the
improving egress, consistent with our view.
Overall, the rooms were quite full and we had considerably more questions
than usual, which we take as a sign of increasing investor interest. Investors
mentioned some macro risks, including the pace of central bank rate cuts
and commodity price volatility, although management teams have taken a
number of steps to mitigate these risks. Capex inflation was less of a talking
point this year. Company Highlights
Below we outline notable comments, updates, and key takeaways from the fireside chats and
conversations with presenting companies at the conference.
Brookfield Infrastructure Partners (BIP):
• Management sees 2024 as a promising year for deal activity as rate volatility has
slowed. Despite lower inflation, the company expects to be well within 6%-9%
organic growth, and there is no change to the 5%-9% distribution growth target. It
also spoke favourably of the Blackrock acquisition of GIP. We concur that the deal
supports a positive view of infrastructure as an asset class.
• The organic growth outlook has never been stronger with a $6B backlog (net to BIP).
The “Three Ds” – digitalization, deglobalization, and decarbonization – continue to be
the prominent themes driving outsized deployment opportunities. Digital infrastructure
including towers, data centres, and fiber (building out capabilities in order to scale up
in the future) continue to be a focus.
• Management views Triton as a great example, with the business a top-five cash flow
generating asset. The business has strong contracted cash flows, 30% market share
(the number-one industry participant), and a high free cash flow conversion ratio with
40 years of operating history. BIP also underwrote the deal at a high-teens return and
the Red Sea disruption is a positive tailwind for the business.