NYSE:BIP - Post Discussion
Post by
retiredcf on Sep 18, 2023 8:45am
TD
Have a US$50.00 target. GLTA
Brookfield Infrastructure Partners L.P.
(BIP-N, BIP.UN-T) US$32.72
Investor Day Preview; Valuation Offers Attractive Entry Point
Event
BIP will host an Investor Day in Toronto on Thursday, September 21.
Impact: NEUTRAL
Visible Organic Growth: BIP's FFO/unit is up ~10% y/y to-date in 2023, demonstrating the benefit of ~70% FFO inflation indexation. BIP has secured mid- single-digit inflationary tariff increases YTD, which creates the prospect of another year of organic growth towards the high end of the 6-9% target range in 2024.
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Active Capital Recycling: BIP has already secured/closed on ~$2bln of asset sales YTD, demonstrating its ability to execute its asset rotation strategy throughout market cycles. BIP has also exceeded its $1.5bln capital deployment target, closing/committing to three investments totalling ~$2bln: 1) ~$500mm to acquire Data4, a premier European hyperscale data center platform; 2) ~ $1bln to privatize Triton, the world's largest owner/lessor of intermodal shipping containers, funded largely with BIPC shares (~$900mm); and 3) ~$400mm for Compass Datacenters, a North America-centric data center platform, purchased in partnership with Ontario Teachers' Pension Fund. BIP normally provides an outlook on its expected Q4 FFO/unit exit run-rate and/or its expected year-ahead FFO/unit growth rate at its Investor Day. The Street/TDSI are looking for Q4/23 FFO/unit of $0.82/$0.84, and the 2024E FFO/unit (consensus) of $3.39 implies ~12-13% y/y growth. The timing of the Triton deal closing is a source of potential upside/downside vs. consensus, which is not fully in BIP's control.
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Spotlight on Data: We anticipate that BIP's presentation will highlight that it is now one of the largest hyperscale data-center developers globally, a platform that was completed with the 2023 acquisitions of Data4/Compass Datacenters, both deals made at going-in multiples that were several turns lower vs. the peak in mid- to-late 2021 (25x-30x), rewarding BIP's capital discipline/patience.
TD Investment Conclusion
BIP yields ~5% and is trading at ~12x EV/2024E EBITDA (consensus), which is below the low end of the 10-year range of 12.5x-16.7x, and a valuation that we consider very attractive for a high-quality and well-diversified portfolio of long- life infrastructure assets, which has delivered a 10-year FFO/unit growth CAGR of 11% (2012-2022). By owning BIP, investors effectively gain exposure to each active vintage of Brookfield's private infrastructure funds, with the benefit of daily liquidity.
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