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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (60738)	3/7/2005 10:44:23 AM
From: Taikun	Respond to of 74559

Jay, On AY.UN, very prescient! -D RJ upgrades to Outperform APF Exceeds our 4Q04 Expectations, Raising Rating and Target Price Unit Rating 6-12 Month Target Target Total Return Market Capitalization (mln) $694 2004E 2005E 2006E CFPU $2.12 $2.60 $2.62 = DPU $2.00 $1.92 $1.92 Yield 16.9% 16.3% 16.3% Payout Ratio 88% 73% 73% = Pre-Tax NAV $13.38 $13.20 $12.22 P/NAV 88% 89% 97% All figures in C$ unless otherwise noted. APF ENERGY TRUST (AY.UN-T, $11.80) 20.1% $11.80 OUTPERFORM 2 $12.25 APF reported 4Q operational results on Friday that were in line with our estimates while cash flow exceeded our expectations. Production for the quarter of 18,450 boe/d beat our forecast of 18,163 boe/d by 2%, although the trust spent $14 million more than the $25 million we were modeling. Cash flow for the quarter was $31.1 million ($0.53/unit) compared to our estimate of $27.6 million ($0.47/unit). We are increasing our estimates for 2005, forecasting production of 18,245 boe/d and CFPU of $2.60 for the year, up from 17,500 boe/d and $2.44/unit. With our increased production and cash flow estimates, APF’s payout ratio for this year and next is now expected to be 73%, down from the 78%-80% we had previously forecast. Using our commodity price forecasts, APF now trades at an 11% discount to our 2005E net asset value compared to the group average of a 2% discount. While debt levels and payout rates are still above average, APF’s current yield of 16.3% is also above average, and at a level that we believe will provide momentum for the trust’s unit price in the near future. We are increasing our target price on APF Energy from $11.50 to $12.25 and raising our rating from MARKET PERFORM to OUTPERFORM. Our target is based a 5.5 times 2006E EV/EBITDA multiple and combined with the 16.4% yield, represents a potential 6-12 month return to investors of 20.1%.