Pembina Pipeline Corp PMMBF

From Today's Globe and Mail

[hawk35]

CIBC’s Robert Catellier raised his Pembina Pipeline Corp. (PPL-T +2.10%increase) target to $54 from $53, maintaining an “outperformer” rating. Others making changes include: Raymond James’ Michael Shaw to $50 from $49.50 with a “market perform” rating, BMO’s Ben Pham to $55 from $54 with an “outperform” rating and Scotia’s Robert Hope to $55 from $54 with a “sector outperform” rating. The average is $50.70.

“Q1/22 results underscore the upside leverage from the favorable commodity price environment, namely the step-change in Marketing ($268-million vs. $90-million last year) and physical volumes on conventional pipe (reached a high in April). At the same time, tight capacity and PPL’s well positioned “Store” is driving new organic growth (Peace VIII reactivated), supporting further capital return ($41-million shares repurchased year-to-date and 3.6-per-cent dividend increase expected in Q3 post KKR JV close). What’s not to like? Maintain Outperform rating, Top 3 Best Idea designation,” said Mr. Pham.

[autofocus111]

What’s not to like? Overall the results are good, but I don't like that the PR LPG terminal expansion is nixxed. Clearly the propane market dynamic has shifted and exports are no longer as lucrative as they were. Sure, PPL will still profit from diverting product to other regions, but what is the impact to the existing operation? I hope it's not going to turn into a stranded asset like

[mrbb]

am still wished ppl had bot ipl.  That will take care of the propane  

[bttmfischer]

In my humble opinion there is money in propane, especially in those areas in Asia without pipelines. The question is, how good is the maritime transport network, but  quite likely PPL's  experts looked into that aspect, before making their decisions.

[autofocus111]

bttm I did not think about transport costs. Maybe high shipping fess combined with the high NA propane prices has made exporting it overseas a less profitable venture. I'd think this was all transitory, but maybe not the case. Not sure if PPL breaks out export volume figures in their reports.

[Albatross]

It made sense to ship propane to Asia when it was priced so low in North America. Now that its price has increased in North America perhaps that spread in price differential that Pembina would be capitalizing on is lowered to the point that spending money on more export capacity is not prudent at this time. I for one and glad they can make those tough calls to hold off on projects before they get

[autofocus111]

mrbb PPL will do okay fractionating and marketing the propane. But not so sure about the IPL (now BIP) plastics plant. Propane is the key input, and the price has been trending up strongly. That could squeeze margins for the Heartland plant if it continues. Still, strange to see such high propane prices. A few years ago, low cost and abundant source of propane was the driving force for building

[Albatross]

Perhaps the much reduced USA shale production has had an effect on propane supply.

[mrbb]

the main reason why BIP went after and bought IPL was IPL had secured long propane contract at depressed propane prices. IPL also had secured ~ 70% of its polyproylene production as well. BIP knows a bargain when they see one.