Analysts Actions: Credit Suisse Previews Canadian Infrastructure Cos Quarterly Results
Quarterly earnings preview: "Going into this round of quarterly results, we continue to prefer companies generating relatively strong cash flows in most economic scenarios, long-term underlying asset value, reasonable relative and absolute valuations and manageable external capital market needs (for both equity and fixed income). Aside from a chase for dividends and income oriented product, we do not believe the sector will face a significant multiple expansion or notable near-term upward momentum. Over the next few years, we believe many companies within the sector are extremely well positioned for meaningful cash flow, dividend and earnings growth."
Selected specifics: "We continue to believe quarterly results are not a major driving force for a considerable portion of our infrastructure universe. Yet, in our view, this earnings season may provide more insight on a selection of issues for several companies within our coverage universe, including: (a) an interesting Alberta power market given the Sundance 1 and 2 outage (Capital Power (CPX.TO), TransAlat Corp (TA.TO) and TransCanada (TRP.TO); (b) restructuring and M&A opportunities (Bioxel Phmara Inc. Brookfield Infrastructure Partners L.P ( BIP ), Enbridge (ENB.TO) and Fortis (FTS.TO)); (c) the ongoing development of North America's crude oil pipeline system (ENB and TRP); (d) new infrastructure build supporting some large commodity projects ( BIP ); (e) dividend appeal with potential for an adoption of cash flow payout targets ( ENB ); (f) direct pension fund investment longer-dated assets; and, (g) positive credit market conditions for long-dated assets."
Corporate strategy and development a focus: "For most of our universe, we continue to place little emphasis on the quarterly results and focus our efforts on incremental information that either supports or detracts from each investment thesis in this long cycle infrastructure focused sector."
Potential results release dates include:
Wednesday, July 27th, CPX.
Thursday, July 28th TA and TRP.
Friday, July 29th, Pacific Northern Gas Ltd (PNG-A.TO).
Wednesday, August 3rd BIP and FTS.
Thursday, August 4th BRC.
Friday, August 5th, Emera Inc. (EMA.TO) and Enbridge (ENB.TO).
Wednesday, August 10th, Brookfield Asset Management (BAM.TO).