Brookfield Ord Shs Class A T.BN

Alternate Symbol(s): BN | T.BN.PR.C

Financial Services Asset Management

Brookfield Corporation is a Canada-based global investment firm focused on building long-term wealth for institutions and individuals around the world. The Company has three core businesses: alternative asset management, wealth solutions, and its operating businesses which are in renewable power, infrastructure, business and industrial services, and real estate. Its asset management business includes managing long-term private funds, perpetual strategies and liquid strategies on behalf of its investors and itself. Its wealth solutions business includes its equity accounted interest in Brookfield Reinsurance Ltd. Its renewable power and transition business includes the ownership, operation and development of hydroelectric, wind and others. Its infrastructure business includes the ownership, operation and development of utilities, transport, midstream, and data assets. Its private equity business is focused on ownership and operations in the business and industrial services sector.

TSX:BN - Post by User

Brookfield Ord Shs Class A

<< Previous

Bullboard Posts

Next >>

Post by retiredcfon Aug 06, 2024 8:56am

176 Views

Post# 36165622

TD Raise Target

Obviously these are USD targets and numbers. GLTA

Q2/24 PREVIEW; SUBSTANTIAL UPSIDE POTENTIAL REMAINING

THE TD COWEN INSIGHT

We have revised our Q2/24 DE/share estimate to $0.78 vs. $0.86, to reflect a somewhat slower-than-expected start to the year, which has limited impact on our long-term forecasts/investment thesis. We still see substantial share-price upside to any reasonable view of intrinsic value. Our $62.00 target offers an implied return of >40%, and we see room to increase our target by ~$10.00-$14.00+.

Event

BN will report its Q2/24 results on Thursday, August 8 (pre-market).

Impact: NEUTRAL

Q2/24 Results: We have revised our forecasts to reflect: 1) lower market caps for BEP/BIP/BBU and subdued transaction/advisory fees at BAM (link); 2) corporate debt issuance at BN in mid-June; 3) a true-up of certain lumpier forecast items, e.g., residential development/energy marketing, etc.; and 4) lower realized carried interest, which we now expect will be more back-end-loaded. Our new DE estimate of $0.78/share is in line with consensus.

Considerable Remaining Upside Potential: Despite YTD share-price performance, we still see substantial upside to any reasonable estimate of intrinsic value. Our $62.00 target price offers an implied return of >40%, and we believe that our target NAV has ~$10.00- $14.00+ of upside, based on: 1) the FRE multiple used to value BAM; 2) the use of a PE multiple to value insurance; 3) the inclusion of some value for carried interest; and 4) the discount applied to the IFRS value of the real estate business. We value BAM based on a 22.5x multiple of FRE for the 12 months ending June 30, 2026, whereas BAM and BX are currently trading at 23.0x and 28.5x 2024E/2025E consensus FRE, respectively, and every 1x multiple-point increases our BAM target by ~$2.25/share (~$1.75/BN share). We currently value insurance based on book value of ~$4.50/share (including AEL), but the use of an 8x-10x multiple to value spread-related earnings would translate into ~ $7.00-$9.00/share based on the prospective run-rate of ~$1.4bln, pro forma AEL. Our target price does not embed any value for carried interest, whereas the accumulated but unrealized carried interest balance is ~$4.00/share. And finally, we value the real estate business by applying a 30% discount to the IFRS value of ~$31bln (including the real estate LP stakes), which is the equivalent of giving 100% value to the LP interests and the residential land operations (land is generally held at cost), zero value to the T&D portfolio, and ~$7.50/share of value to the core real estate portfolio (~82% of IFRS value). Just including the core real estate portfolio at 100% of IFRS value would add ~$1.75/share.