Brookfield Ord Shs Class A T.BN

TD

[retiredcf]

Currently have a US$74.00 target. GLTA

Q3/24 DE BEAT BY 2%-3%; FAVOURABLE TAILWINDS THROUGH Q4/24 AND INTO 2025

THE TD COWEN INSIGHT

Q3/24 DE of $0.84/share was a 2%-3% beat vs. consensus of $0.82. FRE increased 14% y/ y, and BN expects strong fundraising in Q4/24 and into 2025. Wealth solutions earnings doubled y/y, as BN integrates AEL and starts to reposition the float. BN's franchise has been resilient despite macro headwinds over the past 2 years and now those headwinds are becoming tailwinds.

Event

BN reported Q3/24. The conference call is at 10:00 a.m. ET (registration link). Impact: SLIGHTLY POSITIVE

• Q3/24 DE of $0.84/share was a 2%-3% beat vs. the Street at $0.82, although somewhat shy of our $0.88 forecast. The variance vs. our forecast primarily relates to realizations of $66mm vs. our estimate of $100mm, which we knew might prove optimistic. DE excluding realizations was a record $0.80, which is essentially in line with our forecast of $0.81 and represents 19% y/y growth.

• Fee-related earnings increased 14% y/y, and with anticipated closes on several flagship funds, BN expects strong fundraising in Q4/24 and into 2025, which should result in further earnings growth, including operating leverage/margin expansion. Importantly, the asset management franchise is a leader in the fastest growing sectors of the alternatives market: transition/renewables/infrastructure and credit.

• Wealth solutions earnings doubled y/y to $364mm, reflecting the acquisition of AEL, increased annuity sales and strong investment performance. The average spread on BN's insurance portfolio was 180bps, as the company makes progress on repositioning the AEL float and returning to its target of ~200bps. The business is earning ~$1.5bln today and BN expects that to grow to ~$2bln in the near-term. Including annuities and retail products targeting the private wealth market, BN is raising ~$2bln of retail inflows per month, and it has just started to access this new layer of scale capital. Today, the business announced a deal to reinsure $1.4bln of U.K. pension liabilities, marking its first transaction outside North America.

• BN's franchise has been very resilient, and now the headwinds of the past 2 years are becoming tailwinds. Interest rates are declining, liquidity is returning to the capital markets, and transaction velocity has meaningfully re-accelerated. BN closed/advanced over $17bln of monetizations across the business at very attractive returns during Q3/24. The accumulated but unrealized carried interest balance increased to ~$4.50/ share in Q3/24, up 17% y/y and 6% q/q.

• BN has repurchased $1bln of shares YTD and intends to continue to allocate capital to share buybacks.