Brookfield Renewable Partners L.P.

BEP Details

Brookfield Renewable Partners L.P. (NYSE: BEP) has a portfolio of assets comprising ~19,000 MW of capacity and annualized LTA generation of ~56,300 GWh and a ~23,000 MW development pipeline making it one of the largest pure-play public renewable companies in the world.

Results Performance for the Third Quarter Ended 30 September 2021 (Q3FY21)

• Funds from operations (FFO) stood at $210 million in Q3FY21, up 32% YoY, primarily due to solid performance of assets, high levels of asset availability and recent acquisitions.
• The company signed 19 power purchase agreements to supply ~1,300 gigawatt-hours (GWh) renewable generation across major industries.
• Progressed ~8,000 megawatts of projects through construction and advanced stage permitting. Also, it added ~5,000 megawatts to the global development pipeline, totalling ~36,000 megawatts.

Source: Company Reports, Analysis by Kalkine Group

Outlook

The company continues to increase its distributed generation business around the globe, positioning itself as a partner with companies and other institutions by offering a ‘one-stop solution for onsite and offsite energy generation, storage, and efficiency services. The company agreed to acquire three late-stage solar development projects in the U.S., having an installed capacity of 475 megawatts. In addition, the company is expanding PPA discussions with big corporate buyers for renewable power generation. The projects are anticipated to be commissioned by 2024. The company will invest $135 million (~$35 million net to Brookfield Renewable).

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)

Technical Overview:

Daily Price Chart

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

Stock Recommendation

The company has delivered a 6-month and 1-year return of ~+4.71% and ~+0.70%, respectively. In addition, the stock is trading lower than the average of the 52-week high price of $49.87 and the 52-week low price of $34.55.

The stock has been valued using EV/Sales multiple based relative valuation (on an illustrative basis). The target price so arrived reflects the potential rise of low double-digit (in % terms). In addition, a slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average), considering improved gross profit margin and EBITDA margin in Q3FY21 versus Q3FY20 and FFO at $210 million in Q3FY21, up 32% YoY.

Considering the factors above and the current trading levels we give a “Buy” rating on the stock at the current market price of $38.44 per share as of 12^th November 2021 (Time: 9:59 AM, NY, USA).

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.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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