Have a US$39.00 target. GLTA
PARTNERS L.P. Q2/24 First Look: Results In Line With Consensus; H2/24 M&A
Expected To Increase
Financial Results In Line: BIP reported an in-line quarter vs. consensus,
including FFO/unit of $0.77, but ahead of our $0.75 estimate, This represents
an increase of 7.6% Y/Y (+10% in reported FFO), including 7% organic
growth. The strong growth rate was driven by inflation indexation and higher
Midstream revenues, in addition to $1B of capital commissioned from the
backlog over the last 12 months. Residential infrastructure was weaker, while
growth accelerated in the Data Infrastructure segment and Triton’s
intermodal containers business remains strong. Momentum is also noted in
the new data center platforms in North America and Europe.
We maintain a positive view given the improvement in the M&A landscape
and the implications for capital recycling and investment, with a more stable
rate environment potentially also benefitting yield-oriented securities. Besides
the recent hybrids issuance, the company could continue to take advantage
of historically low credit spreads with asset sales, as buyers should have
solid access to funding. $210MM of capital recycling was reported in the
quarter, bringing the total to $1.4B YTD. Six further sales are progressing
that are expected to generate $2.5B (net to BIP) over the coming quarters.
Operating Results In Line: The Utilities segment underperformed due to
residential infrastructure, reporting FFO of $180MM compared to our
estimate of $227MM (-20.6%), down 19.6% Y/Y. The Transport segment
posted a big beat, with reported FFO of $319MM vs. our estimate of $260MM
(+22.7%), benefiting from strong results at Triton, an incremental 10% stake
in the Brazilian rail operations with the remaining businesses generating 9%
organic growth. The Midstream segment missed, with reported FFO of
$143MM vs. our estimate of $166MM (-13.8%) due to turnaround activity and
financing activity. Storage contract duration was extended at much higher
rates, consistent with industry activity. The Corporate segment posted a
modest beat, with FFO of ($112MM) vs. our estimate of ($123MM). The Data
Infrastructure segment beat, with reported FFO of $78MM vs. our $67MM
estimate, an 8.3% Y/Y increase.
The company will host a conference call today at 9:00 a.m. ET. The dial-in
number is 1-855-513-1368. Interested parties must register to join. There will
also be an Investor Day on September 24 in Toronto