Author Topic: KMI - Kinder Morgan  (Read 137127 times)

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: KMI - Kinder Morgan
« Reply #300 on: January 21, 2016, 01:28:34 PM »
Yeah, I think post distribution cut, looking at EV/EBITDA, this is probably fairly valued right now.
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT


Picasso

  • Hero Member
  • *****
  • Posts: 2015
Re: KMI - Kinder Morgan
« Reply #301 on: January 21, 2016, 02:04:27 PM »
What's the right EV/EBITDA multiple for this business?  I've asked this a couple times on this thread and no one's given me a good answer.  Also when do you as a shareholder get to see some of that free cash flow?  This is an equity stub that is somehow still worth $30 billion.

I can easily make the case that it should trade at half the current price or even less.  Just as easy to make it look inexpensive if you want to give it an old 12x multiple.  Plus there are only going to be constant downward revisions to EBITDA in the future.  Rich Kinder should issue some stock here while he still has the chance.  He has way too much leverage in this environment to just hope things start to get better.


Spekulatius

  • Hero Member
  • *****
  • Posts: 1764
Re: KMI - Kinder Morgan
« Reply #302 on: January 26, 2016, 12:09:14 PM »
The pipeline business, as far as the larger backbone and especially FERC regulated pipelines are concerned are similar to real estate assets. They throw of predictable amounts of cash (that are indexed to inflation with a little bonus on top if FERC regulated) for a long period of time, measured in decades.
Now other assets like processing plants and interconnects are less predictable and also require more Capex to keep them current. Overall, since the business is somewhat similar, I think the leverage should be a bit less than what a real estate asset should be valued at. I think you get a very good deal, if you can buy it for 10x EBITDA. In fact, for  FERC regulated pipeline, I think it would be a fantastic deal in the current low interest environment.
« Last Edit: January 27, 2016, 04:11:30 AM by Spekulatius »
To be a realist, one has to believe in miracles.

roark33

  • Hero Member
  • *****
  • Posts: 540
Re: KMI - Kinder Morgan
« Reply #303 on: January 26, 2016, 01:43:50 PM »
We are going to lower our debt levels, they said....Sure....

http://www.sec.gov/Archives/edgar/data/1506307/000110465916091457/a16-2881_1ex99d1.htm

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: KMI - Kinder Morgan
« Reply #304 on: January 26, 2016, 04:15:38 PM »
We are going to lower our debt levels, they said....Sure....

http://www.sec.gov/Archives/edgar/data/1506307/000110465916091457/a16-2881_1ex99d1.htm

Completely tone deaf management.
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT

jay21

  • Hero Member
  • *****
  • Posts: 1217
Re: KMI - Kinder Morgan
« Reply #305 on: January 26, 2016, 04:28:24 PM »
We are going to lower our debt levels, they said....Sure....

http://www.sec.gov/Archives/edgar/data/1506307/000110465916091457/a16-2881_1ex99d1.htm

Completely tone deaf management.

How much are they refi'ing? And upsizing at 150bps is good, no?

Sorry, dont follow this one close.
@jay_21_

roark33

  • Hero Member
  • *****
  • Posts: 540
Re: KMI - Kinder Morgan
« Reply #306 on: January 27, 2016, 12:26:09 AM »
This is from the conference call last week, Jan. 20

"So I think the real message here guys is we are self funding now. Okay. And I got to tell you that to me that's a big relief, nobody is affected any more than I was by the division cut. Okay. But the point is we are building a very solid, stable, balance sheet with the ability to return an awful lot of cash to our shareholders over the next few years."
 
Self-funding must mean something different at KMI.  If I claim to not increase my debt, i.e. self-funding my personal expenditures, and then go add $2B onto my credit card a week later, something isn't right.

Another gem from just a week ago:

I believe that long term, the fact that we have no need access equity markets not just for ‘16, but for the foreseeable future and that we will self-fund our capital expenditures our growth capital should in the long run I think be a very solid underpinning to this company and we’re going to be able to return a lot more money to our shareholders in the long term as well as de-lever the balance sheet.

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: KMI - Kinder Morgan
« Reply #307 on: January 27, 2016, 03:46:05 AM »
There's three things KMI needs to do: 1) Build stuff 2) Grow dividends 3) Maintain leverage. If they do 2, they can't do 1 & 3. If they do 1 & 2, they can't do 3.

To model this out, keep one line item for DCF (Source of cash), one line item for Total Dividends (use of cash), and one for Growth Capex (use of cash). The balance is funded by debt (source of cash).
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT

frommi

  • Hero Member
  • *****
  • Posts: 1114
Re: KMI - Kinder Morgan
« Reply #308 on: January 27, 2016, 05:09:11 AM »
There's three things KMI needs to do: 1) Build stuff 2) Grow dividends 3) Maintain leverage. If they do 2, they can't do 1 & 3. If they do 1 & 2, they can't do 3.

To model this out, keep one line item for DCF (Source of cash), one line item for Total Dividends (use of cash), and one for Growth Capex (use of cash). The balance is funded by debt (source of cash).

Of course they can grow the dividend with the higher DCF of one year later, otherwise growth capex is maintenance capex.

<quote> Proceeds from the term loan will be used for general corporate purposes, including the repayment of existing borrowings. </quote>

Wheres the problem with that statement? They refinance some debt that is due in 2016.
They lowballed the guidance for 2016, but is that really surprising?

Palantir

  • Hero Member
  • *****
  • Posts: 2620
Re: KMI - Kinder Morgan
« Reply #309 on: January 27, 2016, 05:49:09 AM »
There's three things KMI needs to do: 1) Build stuff 2) Grow dividends 3) Maintain leverage. If they do 2, they can't do 1 & 3. If they do 1 & 2, they can't do 3.

To model this out, keep one line item for DCF (Source of cash), one line item for Total Dividends (use of cash), and one for Growth Capex (use of cash). The balance is funded by debt (source of cash).

Of course they can grow the dividend with the higher DCF of one year later, otherwise growth capex is maintenance capex.

Not if they have an increased capex program, if they do manage to grow, div growth will be weak.
My Portfolio: AMZN, PAGP, FSLR, OKE, PYPL, RHT, MSFT