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Keyera Earnings: KAPS Is Finally in Service, and Strong Marketing Performance Is Good Start to 2023

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Securities In This Article
Keyera Corp
(KEY)

Keyera’s KEY first quarter was strong with the KAPS pipeline finally entering service in April (with a new 50% owner in Stonepeak) and its marketing business outperforming during the quarter. The firm’s marketing margin is now expected to be a midpoint of CAD 350 million compared with earlier guidance of CAD 265 million and our CAD 297 million forecast. The primary drivers of the outperformance are lower butane feedstock costs and high iso-butane premiums. The recently acquired capacity at the Fort Saskatchewan complex contributed to a record margin of CAD 119 million in the liquids infrastructure segment. After updating our model to boost our marketing forecast modestly, our fair value estimate of CAD 30 and our no-moat rating are unchanged.

Keyera has temporarily shut down six gas plants on May 4 and 5 in response to the recent Alberta wildfires. One plant has already obtained regulatory approval to restart, and the firm does not expect a material financial impact at this time.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Stephen Ellis

Strategist
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Stephen Ellis is a strategist, AM Resources, for Morningstar*. He covers US and Canadian midstream companies.

Before joining Morningstar in 2007, Ellis worked as a freelance analyst for The Motley Fool and worked in project and financial analysis for Environmental Systems Research Institute (ESRI), a supplier of geographic information system software and geodatabase management applications. Before assuming his current role in 2017, he was director of equity research for financial services and a senior equity analyst. He is also a former editor of the Morningstar Opportunistic Investor newsletter, and a former member of the Economic Moat Committee, a group of senior members of the equity research team responsible for reviewing all Economic MoatTM ratings issued by Morningstar. Ellis is a former member of Morningstar’s China Economic Committee, which provided research on the long-term outlook for the Chinese economy.

Ellis holds a bachelor’s degree in business administration from the University of Redlands. He also holds a master’s degree in business administration from the University of Redlands.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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