Professional Documents
Culture Documents
[TSX:BEP.UN]
Mitchell Li
Company Overview
Business Overview
Business Strategy
Recent News
Management
Richard Legault
Harry Goldgut
Sachin Shah
President &
CEO
Chairman
CFO
Company Overview
Industry Outlook
Investment Thesis
Risk Identification
Company Overview
Map of Operations
North America
~15 billion AUM
> 5700 MW
900 employees
Europe
~1 billion AUM
330 MW
75 employees
Brazil
~3 billion AUM
670 MW
340 employees
40
5%
14%
15%
220
35
180
30
Source
55%
Region
25%
85%
Other
Wind
Company Overview
Hydro
Europe
Canada
Industry Outlook
140
25
20
18/11/2010
Brazil
U.S.
01/04/2012
BEP
Investment Thesis
100
27/12/2014
14/08/2013
S&P 500 Utilities
Risk Identification
Industry Outlook
Hydroelectric Power
5,000
Revenue ($MM)
Key Players
4,500
4,000
3,500
3,000
2003
2006
2009
2012
2015
Wind Power
Wind Power Industry Revenue
Revenue ($MM)
10000
6000
4000
2000
2004
2007
Company Overview
2010
Over the past five years, wind power's share of the total
electricity generated in the U.S. from increased from 1.9-4.3%
Key Players
8000
0
2001
2013
Industry Outlook
Investment Thesis
Risk Identification
Investment Thesis
Argument I: Strong Macroeconomic Demand
Renewable power is a compelling asset class due to three reasons:
1. Demand for electricity is closely linked to economic growth
2. Renewables are becoming increasingly important to diversify the supply mix of U.S. power generation
3. Environmental regulations are increasing in many countries
BEPs diversified portfolios output is sold predominantly under long-term contracts and generates enough
electricity from renewable resources to power more than 3.5 million homes on average each year
Company Overview
Industry Outlook
Investment Thesis
Risk Identification
Investment Thesis
Argument I: Strong Macroeconomic Demand
Improving Economic Conditions
Increasing
Generation
Capacity
Revenue
Growth
Environmental Regulations
Company Overview
Industry Outlook
Investment Thesis
Risk Identification
Investment Thesis
Argument II: Positioned to generate stable, long-term cash flows
High Quality Assets
Safe Harbour
Second largest privately held
hydro in U.S.
Targeted Return: 16%
Long-term Contracts
Positioned
assets for
long-term
contracts
when pricing
is inline with
long-term
view of value
Company Overview
Industry Outlook
Investment Thesis
Risk Identification
Risk Identification
Dependence on BAM & Partners
3
2
5%
0
2009
2010
USD/EUR
2011
2012
USD/CAD
2013
2014
USD/BRL
Contracted
3
1
-12
-6
-1 0
-3
12
y = 0.127x + 0.277
R = 0.0296
-5
Company Overview
Industry Outlook
Investment Thesis
Risk Identification
Source: Bloomberg
Nov 18, 2014
EV/Revenue
2014E
2015E
Net
P/CF Debt/EBITDA
14.33 x
7.48 x
7.75 x
6.98 x
14.85 x
12.52 x
4.42 x
4.01 x
17.56 x
16.51 x
14.81 x
12.34 x
2035.14
nmf
11.79 x
11.58 x
1884.62
3581.29
nmf
16.50 x
Average 2352.50
6219.03
15.93 x
Brookfield 5122.62
19282.80
14.61 x
Mkt Cap
(MM)
Enterprise
Value (B)
Northland
2528.48
5522.10
14.27 x
15.29 x
Algonquin
2124.68
4039.61
17.29 x
Innergex
1106.11
2853.24
TransAlta
1348.48
Pattern
Company
P/B
FCF
Yield
Dividend
Yield
6.28 x
3.94 x
-42.40%
6.30%
15.30 x
5.94 x
1.98 x
-11.43%
3.74%
11.36 x
11.56 x
9.60 x
2.65 x
-11.13%
5.35%
8.88 x
8.61 x
nmf
nmf
1.34 x
nmf
nmf
10.58 x
11.93 x
8.61 x
nmf
8.93 x
nmf
nmf
nmf
14.77 x
12.71 x
9.14 x
8.22 x
9.86 x
7.36 x
2.31 x
-11.77%
4.95%
13.69 x
12.45 x
9.81 x
9.01 x
5.59 x
6.07 x
1.64 x
17.88%
4.42%
Profitability
Operating
Margin (%)
Company
Northland
Algonquin
Innergex
TransAlta
Pattern
Average
Brookfield
Company Overview
31.50%
4.67%
52.24%
22.23%
14.55%
24.03%
19.01%
Return on
Assets (%)
-1.20%
1.65%
-1.19%
nmf
-1.07%
-0.29%
0.35%
Recommendation: Buy
Return on
Equity (%)
-9.24%
5.28%
-8.44%
nmf
-4.09%
-2.93%
1.86%
Industry Outlook
Return on
Capital (%)
nmf
3.07%
nmf
nmf
nmf
3.07%
4.36%
$35.74
Market Price
9.46%
4.42%
13.88%
Target Price:
$39.12
Stop-Loss:
$28.50
Investment Thesis
Risk Identification
Conclusion
Investment Thesis
Argument I: Strong Macroeconomic
Demand
Argument II: Positioned to generate
stable, long-term cash flows
Recommendation: Buy
$35.74
Market Price
4.42%
$39.12
Undervalued
Brookfields strong liquidity (almost $1.2 billion available) position the L.P. to take a long-term view in making highquality acquisitions and accretive development investments (17-20% post-tax IRR) that can support a consistent
annual dividend of >5% over the long term
Conclusion
10
Company Overview
Industry Outlook
Investment Thesis
Risk Identification
11
6%
1% 1%
7%
Coal
39%
19%
Natural Gas
Nuclear
Hydropower
19%
Other Renewables
Petroleum
Other renewables
Biomass 1.48%
Geothermal 0.41%
Solar 0.23%
Wind 4.13%
Company Overview
81%
Other Gases
27%
Industry Outlook
Total Exports
Exports: $2.35 B
Investment Thesis
Risk Identification
Total Imports
Imports: $519 M
12
Appendix 3: Valuation
Comparables Company Analysis
Multiple
EV/EBITDA
2014E
Implied EV ($MM)
Low
Mean
High
Metric
11.79 x
14.77 x
16.51 x
$ 1,319.49
$15,560.77 $19,491.91
$21,782.93
12.71 x
14.81 x
$ 1,319.49
$13,966.13 $16,774.56
$19,540.50
9.14 x
12.34 x
$ 1,965.24
$ 8,677.66 $17,968.53
$24,256.52
$ 7,875.81 $16,160.07
$22,325.02
EV/EBITDA
2015E
10.58 x
EV/Revenue
2014E
4.42 x
EV/Revenue
2015E
4.01 x
8.22 x
11.36 x
$ 1,965.24
P/B
10.58 x
2.31 x
11.79 x
Low
Mean
Low
Mean
High
21.60
Average
$11,520.09 $17,598.77
$21,976.24
$(2,019.91)
$4,058.77
Implied Price
Low
Mean
High
$ 29.04
$ 49.93 $ 85.18
$8,436.24
$ (14.09)
$ 28.32 $ 58.86
Average
$ 7.47
$ 39.12 $ 72.02
Company Overview
756.00
Minority
Interest
$ 2,499.00
Industry Outlook
Debt
Cash
$10,285.00
Investment Thesis
Shares
0
143,330,025
Risk Identification
13
Appendix 4: Valuation
Balance Sheet
($ Millions)
17,364
15,741
Equity-accounted investments
Total assets
232
18,555
290
16,979
7,322
6,623
2,332
10,285
756
2,265
9,443
796
2,202
1,303
51
54
2,499
2,762
18,555
2,657
2,726
16,979
With its flexible but strong balance sheet, Brookfield has demonstrated a willingness to take on a higher degree
of near-term contracting risk at the margin in anticipation of rising power prices in its key geographies over time
Company Overview
Industry Outlook
Investment Thesis
Risk Identification
14
Bibliography
Analytic Databases
Bloomberg
Capital IQ
Thomson One
IBIS World
Other Sources
U.S. Energy Information Administration for Industry Segmentation
Oanda for Exchange Rates
Bibliography
15