Keyera Corp T.KEY

Scotiabank

[retiredcf]

Scotiabank analyst Robert Hope previewed earnings reports for the dividend-heavy energy infrastructure sector and provided top picks,

“Thoughts for Q3. Overall, our estimates for Q3 are slightly below consensus, and in general, we see modest commodity pricing and softer renewable generation impacting results. Broadly speaking, we are ahead of consensus for the utility group and below for the power group. We are particularly above consensus for (1) TRP (+7%) due to a strong Bruce Power contribution, and (2) CU / ACO (+12% / 7%) due to utility growth and a strong Structures contribution. We are below consensus for (1) ENB due to lower volumes across its Liquids assets, (2) KEY as a result of a softer Marketing contribution, and (3) the renewable group (BEP, BLX, INE, NPI) given weaker renewable generation. We have made some minor tweaks to our models heading into the quarter with a bias downwards. Investor sentiment for pipelines / midstream continues to shift positive. Investor sentiment for the pipeline and midstream group is as positive as it has been in many years, especially for gas-levered names. The group should benefit from the continued ramp up of LNG exports and incremental natural gas demand to serve increasing power demand as well as coal-to-gas conversions. We expect the outlook for data centers to again be a key focus for the conference calls and do believe this will add to demand in the medium-term. Valuations have expanded and are slightly above 10-year average levels, which we view as fair. Our top picks in the group are TC Energy (TRP-T) and Keyera (KEY-T)”