Reinstatement of coverage: "Following a research restriction, we
reinstate Brookfield Infrastructure Partners (
) coverage with an Outperform rating and a US$32.00 target. Given
BIP is scheduled to report Q3 2011 results on Friday, November 4th,
our financial estimates remain unchanged at this time. We are
forecasting earnings per unit of US$0.30, however, for a few
reasons, we do not believe a reliable consensus number exists at
this time. From our perspective, the Funds from Operations (FFO) is
a more useful metric for BIP and we forecast US$0.61 per unit at
the Brookfield Infrastructure L.P. level which may relate to the
Street's lone cash flow estimate of US$0.56 per unit. In light of
the long-cycle nature of most of our coverage universe, we do not
place undue emphasis on quarterly results.
Selected highlights: "Some areas to watch include: (a) BIP's
capital plans; (b) outlook for further toll road acquisitions and
developments; and, (c) log price realizations, harvest rates and
the extent of exported timber.
Ongoing organic growth: "We continue to believe a considerable
amount of organic growth exists within BIP's existing asset base.
Additionally, from our perspective, the Brookfield Group (broadly)
is very well positioned to acquire selected infrastructure assets
in need of de-levering over the coming years.
Valuation: We reinstate our Outperform rating and US$32.00
target price. The target price is obtained from multiple valuation
methods including: a NAV of US$32.44, a targeted 4.4% distribution
yield; and, an 11.9x multiple on our 2012e FFO. We reinstate our
Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.