TSX:PPL - Post Discussion
Post by
Ariahp on Nov 05, 2021 4:18pm
Pembina Pipeline Reiterated at Buy at TPH
11:34 AM EDT, 11/05/2021 (MT Newswires) -- Tudor, Pickering and Holt on Friday reiterated its buy rating on the shares of Pembina Pipeline (PPL.TO) with a C$45.00 target price after the energy-infrastructure company reported its third-quarter results than mostly met expectations.
"Neutral. Pembina printed in-line Q3 Adj. EBITDA of C$850mm driven by lower Pipelines contributions offset by higher Marketing margins," analyst Matt Taylor noted. "Pipelines was C$30mm weaker than expected due to lower Alliance earnings despite the AECO-Chicago spread averaging $1.28/mmbtu and several unusual items relating to Cochin, AEGS, and Vantage. Facilities trended in-line, while Marketing beat by ~C$40mm based on very strong margins despite a realized hedging loss of C$45mm. 2021 EBITDA guidance should be well in hand with Q4 implied at C$887mm to reach the mid-point of the range which is only 2% higher than Q4'20.
New projects in service and Marketing significantly stronger y/y should be enough to offset weaker Ruby contributions and a lower FEX rate. We expect the 2022 guidance update in early December to be positive (TPH +3% vs Street) based on favorable Marketing strength comments, matching TPHe at +40% y/y, the recent 3x oversubscribed Alliance open season, and deferred contracted projects awaiting FID.
Notably absent was commentary on capital allocation plans. This remains a sticking point with investors given producer discipline and the ongoing energy transition. With C$350mm in hand from IPL CN and a superior 2022+ free cash flow profile compared to CAD peers, we suspect an "all of the above" capital allocation plan with clear leverage and shareholder return targets would be well received to balance the commentary on large, long-term capital-intensive projects that carry significant risks. Maintain Buy."
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