Brookfield Infrastructure Partners LP BIP

Alternate Symbol(s): T.BIP.UN | BIP.PR.B | BRIPF | T.BIP.PR.F | T.BIP.PR.A | T.BIP.PR.B | T.BIP.PR.E

Brookfield Infrastructure Partners L.P. is a global infrastructure company. The Company owns and operates in the utilities, transport, midstream and data sectors across the Americas, Asia Pacific and Europe. The Company’s segments include Utilities, Transport, Midstream, Data and Corporate. The Utilities segment consists of regulated transmission (natural gas and electricity) and commercial and residential distribution (electricity, natural gas, and water connections) operations. The Transport segment comprises infrastructure assets that provide transportation, storage and handling services for merchandise goods, commodities, and passengers. The Midstream segment comprises systems that provide natural gas transmission, gathering and processing, and storage services. The Data segment comprises critical infrastructure servicing customers in the telecommunications, fiber, and data storage sectors. It is also a data center provider.

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Brookfield Infrastructure Partners LP

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Post by retiredcfon Jul 20, 2024 10:20am

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Post# 36141106

TD

Have a $49.00 target. GLTA

LOOKING FOR SOLID Q2/24 RESULTS; EARNINGS GROWTH SHOULD INFLECT HIGHER IN H2/24

THE TD COWEN INSIGHT

BIP has enjoyed a recent bounce on lower interest rate expectations, but still yields ~5% and trades at only 12.4x EV/EBITDA, based on an average of 2024E/2025E EBITDA (consensus), which we see as a very modest multiple to pay to access a high-quality infrastructure portfolio that is well-diversified by sector/geography and has meaningful and increasing exposure to decarbonization/digitalization.

Event

BIP will report its Q2/24 results on Thursday, August 1 (pre-market).

Impact: NEUTRAL

Q2/24 Results: We/the Street are forecasting FFO/unit of $0.77, a healthy ~7% y/y increase. We expect y/y earnings growth to inflect to ~10%-11% in H2/24, with particularly strong growth in Q3/24, which has the easiest prior-year comparable (2023 divestitures were heavily weighted to H1/23, and new acquisitions were heavily weighted to H2/23).
Capital Deployment/Recycling: BIP has deployed $500mm+ to new investments YTD, and has a robust M&A funnel. Tuck-in deals, which tend to offer the highest returns, are BIP's primary current focus, but it is also pursuing an early-stage pipeline of larger opportunities, such as asset carve-outs/strategic partnerships in OECD countries, which could exceed its 12%-15% return targets. BIP is confident in hitting its $2bln capital recycling target, regardless of sector transaction velocity, having already secured $1.2bln. Admittedly, ~$1bln has come from opportunistic asset-level refinancings vs. asset sales, but these financings relate to assets that BIP intends to sell within 2 years, where the debt is fully portable to the buyer, and arguably just represent a pull-forward of future sale proceeds.
Leveraged to Decarbonization/Digitalization: We see BIP as an unmatched opportunity for public market investors to access a high-quality infrastructure portfolio that is well- diversified by sector/geography. In effect, investing in BIP provides exposure to each active vintage of Brookfield's private infrastructure funds, with the benefit of daily liquidity. Furthermore, BIP was early in anticipating the trends towards decarbonization/ digitalization: ~30% of BIP's 2023 FFO was leveraged to those trends, an exposure that we see rising to ~50%+ over time, with ~70% of BIP's backlog and ~75%-80% of its M&A pipeline linked to those themes.
Valuation Still Very Compelling: Despite a recent bounce, driven by lower interest rate expectations, we believe BIP's valuation remains very compelling. The units trade at 12.4x EV/EBITDA based on an average of 2024E/2025E EBITDA (consensus), which is at the low-end of the 10-year trading range of 12.5x-16.7x.