Relaunching Coverage of Pembina; Raising Fair Value Estimate Slightly
We are relaunching coverage of Pembina Pipeline Corp., and raising our fair value estimate slightly from CAD 34 to CAD 35. The stock currently yields over 5%, and we expect Pembina to increase its annual dividend over the long term while maintaining a comfortable distributable cash coverage ratio.ÂTrading at CAD 39, which represents a 12% premium to our fair value estimate, the stock continues to look overvalued. While our near-term EBITDA forecasts are in line with consensus’ estimate, we beli...
Pembina Pipeline has four operating segments: conventional pipelines business, which is a tariff-based operation consisting of pipelines and related facilities that deliver crude oil and natural gas liquids; oil sands and heavy oil business, which consists of the Syncrude Pipeline, the Cheecham Lateral and the Horizon Pipeline; midstream and marketing business, which consists of Co.'s direct and indirect interest in a storage operation, its direct interest in terminals, storage and hub services under a mixture of short, medium and long-term contractual arrangements; and gas services business which consists of natural gas gathering and processing facilities.
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