REPEAT - Credit Suisse Previews Results at Capital Power, TransAlta, TransCanada, Enbridge, Fortis, Emera, Pacific Northern Gas
Quarterly earnings preview: "Most of the sector is experiencing very robust and, at times, peak valuations, therefore, we believe greater stock selectivity should exist at this time. In general, 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 very well positioned for meaningful asset, 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 Corp (CPX.TO), TransAlta Corp (TA.TO) and TransCanada Corp (TRP.TO)]; (b) restructuring and M&A opportunities [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; (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:
Tuesday, October 25th CPX.
Friday, October 28th TA.
Tuesday, November 1st TRP.
Thursday, November 3rd FTS.
Friday, November 4th BIP, Emera (EMA.TO) and Pacific Northern Gas (PNG.TO).
Wednesday, November 9th BRC and ENB.
Friday, November 11th BAM.