Post by
Dibah420 on Aug 09, 2024 9:34am
BMO
Pembina Pipeline PPL-TSX Rating Outperform Price: Aug-8 $52.99 Target ↑ $56.00 Total Rtn 11% Q2 - Record Results and 2024 Guidance Boosted; Target to $56 from $54 Bottom Line: Similar to peers, PPL delivered second-quarter results that exceeded expectations (+7%). The new high watermark drove PPL to boost its 2024 EBITDA guidance +2%. In the mean-time, ~$3.5B of organic growth projects are advancing, WCSB volume throughput remains robust, and PPL can still self-fund growth with its positive FCF generation and debt/EBITDA of 3.6x (at low end of target). Combined with undemanding valuation (~10.5x 2026E vs. ~11-11.5x TRP/ENB), we maintain our Outperform rating and target to $56 (vs. $54). Conf. call Aug. 9 at 10 a.m. ET; 1-289-819-1520 or 1-800-549-8228. Key Points Strong Q2/24 results. Q2/24 adj. EBITDA came in at $1,091M (Q2/23 of $823M), ~7% above consensus $1,016M (BMOe $1,030M). The positive variance to us was due to Marketing ($143M vs. our $109M), but the more visible fee-based segments also saw momentum with Pipelines at $655M vs. our $646M and Facilities at $340M vs. our $330M. Prop. debt/EBITDA was 3.6x (low end of 3.50-4.25x target), Peace VIII was commissioned during the quarter achieving its goal of segregated product service on Peace (total capacity of Peace/Northern is 1.1M bbls/d), and on August 1, PPL acquired the remaining 14.6% of Aux Sable U.S. for US$160M. Thoughts on the outlook. PPL boosted 2024E adj. EBITDA guidance ~2% to $4.2-4.35B vs. $4.05-4.30B, driven by higher contribution from NGL marketing, PGI and Nipisi and factoring in the Aux Sable tuck-in deal. PPL expects 6% growth in conventional volumes and 4% in gas processing. Also, 2024 capex increased to $1.3B vs. $1.16B. Lastly, on organic growth, all projects tracking: NEBC MPS Expansion ($90M capex; Q4/24 commissioning), Wapiti expansion ($140M net capex; 1H/