Q: Can you enlighten me on BEP.UN.
I see a staggering amount of debt, net debt roughly 32.4 billion. Cash from OP around 2.8 billion, which is only around 8.6%. Negative free cash flow. Total Debt/EBITDA around 8x. Interest coverage around 1x.
Thanks Gord
I see a staggering amount of debt, net debt roughly 32.4 billion. Cash from OP around 2.8 billion, which is only around 8.6%. Negative free cash flow. Total Debt/EBITDA around 8x. Interest coverage around 1x.
Thanks Gord
5i Research Answer:
The industry and BEP are currently in the building-out asset portfolio phase wherein investments are made for long-term projects. Cash flow from operations is expected to improve over the next five years significantly and free cash flow is expected to turn positive as soon as next year. The numbers may seem outrageous here, however, the size of the company, history, assets, and management team continues to drive sentiment. For long-dated assets such as for BEP, the profile will look much stronger later on.
The high debt is why (with the rising interest rates) the industry and BEP valuations have slipped the way they have. Debt is high, but total assets have increased 4-fold ($16B to $64B) in the past decade.