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Enbridge Inc. (ENB $67.11)
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TC Energy Corporation (TRP $76.61)
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Pembina Pipeline Corporation (PPL $54.03)
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Brookfield Infrastructure Partners L.P. (BIP.UN $49.58)
Q: Questions on PPL:
- Can you please provide a bear and bull case for PPL?
- How is its balance sheet compared to TRP and ENB?
- Is PPL different enough from TRP and ENB that one could own all three?
- If one were to own all three (and if BIP.UN is also owned - which has pipelines too) what overall total percentage range of Pipelines would 5i be comfortable with?
- Can you please provide a bear and bull case for PPL?
- How is its balance sheet compared to TRP and ENB?
- Is PPL different enough from TRP and ENB that one could own all three?
- If one were to own all three (and if BIP.UN is also owned - which has pipelines too) what overall total percentage range of Pipelines would 5i be comfortable with?
5i Research Answer:
The three noted have some differences but the correlation of stocks is fairly high and we do not think all three need to be owned. PPL bull case is growing dividends, decent valuaton, stability, cash flow and benefits from tuck in acquisitions. Bear case is sentiment towards energy, pipeline restrictions, high debt and high capital expenditures. Debt to cash flow is 4X; ENB is 6X; TRP is 8X
We would see 12% as the max comfort weighting, though we could push this a bit with the expected fall in interest rates over the next year.