Pembina Earnings: Good Quarter; Waiting for New Opportunities With Alliance/Aux Sable Deal

Pembina’s fourth-quarter and full-year 2023 results met our expectations, as 2023 EBITDA of CAD 3.8 billion matched our forecast. 2024 guidance of a midpoint of CAD 3.875 billion, excluding the pending Alliance/Aux Sable deal that has yet to close, looks realistic. The forecast is consistent with ours, after excluding Alliance/Aux Sable, which we assume will close in 2024. We continue to think the transaction is one of the better ones Pembina has made on the M&A front in several years. It should acquire high-quality assets for a reasonable price with likely attractive expansion opportunities, which we expect to start to be spelled out by management once the deal closes. Initially, we expect to maintain our CAD 41 fair value estimate and no-moat rating.