Brookfield Renewable Partners L.P.

BEP Details

Brookfield Renewable Partners L.P. (NYSE: BEP) has a portfolio of assets comprising ~21,000 MW of capacity and annualized LTA generation of ~61,300 GWh and a ~62,000 MW development pipeline of the largest pure-play public renewable companies in the world.

Results Performance for the Year Ended 31 December 2021 – (FY21)

• The company reported an FFO of $934 million or $1.45 per Unit of FFO, up 10% YoY or 17% on a normalized basis, primarily driven by contracted cash flows, organic growth and acquisitions.
• It commissioned ~1,000 megawatts of new capacity and progressed over 15,000 MW through construction and advanced-stage development.
• The wind and solar segments generated a combined $581 million of FFO, indicating a rise of 55% YoY, primarily driven by contributions from acquisitions and ~770 MW of solar and wind projects commissioned in FY21.

Source: Company Reports, Analysis by Kalkine Group

Key Update:

• On 1 March 2022, the company and Brookfield Renewable Corporation announced the filing of their respective 2021 annual reports.
• On 20 February 2022, the company, together with its institutional partners and GROK Ventures announced participation in a privatization proposal regarding AGL Energy Limited. The Consortium’s proposal is at A$7.50/share, which values AGL at an equity value of A$5 billion.

Outlook

The company agreed to invest ~$2 billion of capital across various transactions at 12-15% target returns. It continues to seek opportunities for growth in hydroelectric generation, particularly for large and experienced operators. Meanwhile, it raised an additional ~$1.0 billion of 40-year investment-grade debt for growth and target returns, which is projected to generate over $100 million of annual net FFO for the business. With over 5,500 gigawatt-hours of generation available for contracting over the next five years, the company has significant capacity across the fleet to execute on contracts that would contribute additional FFO and generate a highly accretive funding source for growth.

Key Risks

The group’s businesses are exposed to movements in the market price of electricity, foreign currency risk for operations, anticipated transactions, and particular foreign currency debt. In addition, changes to hydrology at hydroelectric facilities, wind conditions at wind energy facilities, the irradiance at solar facilities or weather conditions generally, due to climate change or otherwise, at any of the facilities could adversely affect the volume of electricity generated.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

The company has delivered a 6-month and 1-year return of ~+2.32% and ~-0.39%, respectively. In addition, the stock is trading higher than the average of the 52-week high price of $44.30 and the 52-week low price of $30.93.

The stock has been valued using EV/Sales multiple based relative valuation (on an illustrative basis). The target price so arrived reflects the potential fall of low double-digit (in % terms). In addition, a slight discount has been applied to EV/Sales Multiple (NTM) (Peer Average), considering continued losses reported in FY21 and the higher debt burden of the company versus the industry median.

Considering the aforementioned factors, the current trading levels, and the associated business risks, we advise the investors to book profits. We give a “Sell” rating on the stock at the closing market price of $41.01 per share, up 0.2% as of 11^th March 2022.

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Brookfield Renewable Partners L.P. (BEP) is a part of Kalkine’s Global Green Energy Product

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.