BMO energy infrastructure Ben Pham summarized interest in the income-heavy energy infrastructure sector after a marketing tour in Europe and the U.S.,
“Stock interest: (1) In the pipes, TRP (Mkt) with the upcoming liquids spin dominating conversations. Conversely, GEI (Mkt) inquiries were limited despite a potential positive near-term catalyst on recontracting its U.S. oil export terminal and discounted valuation (~9.5x EV/EBITDA vs. peers ~10.5x). (2) In utilities, focus was on asset sales/balance sheet improvement stories, particularly EMA (OP) following its LIL sale and AQN (OP) with its pending renewable carve-out. Consistent feedback we received is the Cdn utility names screen expensive relative to U.S. and European names; and (3) In renewables, interest levels were highest in BLX (OP) with its growth pipeline singled out as being relatively attractive, followed by our Top Pick NPI (OP) where we received mixed investor feedback. Notably, power company TA (OP) saw an uptick in inquiries, particularly from U.S. fast money investors. Most discussed themes: (1) coverage exposure to datacenter growth and related energy needs, particularly in power; (2) recent acceleration of Western Cdn. production on the back of improving egress (i.e., inaugural West Coast LNG, TMX); and (3) thoughts on the Cdn. bond yield outlook following the BoC rate cut”
Mr. Pham has outperform ratings on Pembina Pipeline Corp., Emera Inc., Canadian Utilities Ltd., Hydro One Ltd., Altagas Ltd., Brookfield Renewable Partners, Algonquin Power and Utilities, Northland Power Inc., Boralex Inc. and Atco Ltd.