Event
Gibson Energy Inc. (GEI) reported Q1/22 combined AFFO/share of $0.54, largely
in-line with our estimate of $0.55, above the recent consensus of $0.52, and above
the Q1/21 AFFO/share of $0.44.
 
Impact: SLIGHTLY POSITIVE
 
Q1/22 Results: GEI's Q1/22 AFFO/share of $0.54 was largely in-line with our
estimate, driven by a stronger-than-modelled improvement in the Marketing
business and a lighter capital spend that we had forecasted, offset by higherthan-forecasted cash taxes and other expenses. We note that the Infrastructure
business continues to benefit from additional tankage at Hardisty and the yearover-year performance was impacted by a $7mm reversal of an accrual in the
prior comparable quarter relating to a regulatory matter.
 
Upward Bias to Financial Forecasts: While the marketing business is benefiting
from stronger industry fundamentals and volatility, at this point we are maintaining
our financial forecasts, although our expectation is that any revisions as the
year progresses will have an upward bias. Note that we are adjusting our target
valuation methodology to proportionately incorporate price-to-earnings, which
we believe energy infrastructure investors reference, together with EV/EBITDA,
dividend yield, and free-cash-flow yield. As a result, our target price increases a
dollar to $26.00.
 
TD Investment Conclusion
 
GEI's capital growth opportunities include a mix of tanks, DRU expansion, and
energy transition initiatives. This should support continued dividend growth in the
medium term, in our view, and potential share buybacks could augment returns of
capital to shareholders.