Currently have a US$39.00 target. GLTA
PARTNERS L.P. Q4/23 First Look: Results And Distribution Increase In Line With
Our Expectations; Investment Landscape Improving
Financial Results In Line: BIP reported an in-line quarter, including
FFO/unit of $0.79, in line with our $0.79 estimate but just below consensus of
$0.80, an increase of ~10% Y/Y, reflecting strong base business
performance and contributions from investments, including capital projects.
Momentum should remain strong as a number of investments closed in late
2023 and into 2024 and will contribute during 2024. Despite the recent
performance in the unit price, we maintain a positive view given the
improvement in the investment landscape and the implications for capital
recycling and investment, with a more stable rate environment potentially
also benefitting yield-oriented securities.
The management outlook statement is also optimistic, and capital recycling
initiatives have also been advancing well, recently completing several
transactions for $550MM of proceeds, demonstrating progress against the
$2B capital recycling objective for the year.
Distribution Increased: BIP increased the quarterly distribution 6% to
$0.405/unit ($1.62/unit annualized) in line with our estimate but slightly below
consensus of a 6.5% increase to $0.4075/unit ($1.63/unit annualized).
Recent Acquisitions: BIP closed on the acquisition of Cyxtera’s North
American retail colocation data center business in mid-January, and secured
a new acquisition for a portfolio of 78,000 telecom towers from American
Tower’s operations in India that will generate synergies when combined with
existing operations. BIP’s contribution is $150MM acquired for below a 6x
2024E EBITDA and is expected to close in 2024.
Operating Results: The Utilities segment underperformed, reporting FFO of
$218MM compared to our estimate of $268MM (-18.6%), but was up 16%
Y/Y on benefits from inflation indexation. The Transport segment posted a
big beat, with reported FFO of $292MM vs. our estimate of $195MM (+50%),
benefiting from much stronger organic growth of 7% and 7% higher tariffs.
The Midstream segment was mostly in line, with reported FFO of $162MM
vs. our estimate of $169MM (--4%) due to the partial sale of a U.S. gas
pipeline and the normalization of market-sensitive revenues. The Corporate
segment missed, with FFO of ($117MM) vs. our estimate of ($69MM). The
Data Infrastructure segment was in line, with reported FFO of $67MM vs. our
$68MM estimate.
The company will host a conference call today at 9:00 a.m. ET. The dial-in
number is 1-855-513-1368.