NATIONAL BANK STOCK PITCH COMPETITION

Stocksrock Capital
BROOKFIELD Rotman FT MBA Class of 2022

RENEWABLE PARTNERS September 2020

L.P. (TSX:BEP.UN)
INVESTMENT THESIS- STOCKSROCK CAPITAL PITCH
Stocksrock Capital Pitch Stock price performance (52 weeks)
 Current Price: C$ 58.94
 Target Price: C$ 64.32
 Dividend: C$ 0.63 / quarter
 High quality cash flows: long-term locked-in rates
 Highest rating of investment grade balance sheet in the sector
 FFO per Unit Growth Potential is 6% to 11% annually

Value Drivers Additional Considerations

 Strategic M&A of decarbonizing businesses and assets that are

 Value investing focused on long-term organic growth in
below intrinsic value; $4 billion in M&A and Development in the next
line with industry evolution
five years
 Strong Operations adapted to regional markets
 Diversification of technology and geographic coverage with the aim of
 Disciplined M&A, Development and Financing
achieving scale in Asia and maintaining 5% - 9% annual organic
growth
 Investment grade financing with diversified capital pools, including
opportunistic recycling of capital from mature assets

Source: Capital IQ, Brookfield Corporate Profile, Brookfield Investor Day 2019
COMPANY OVERVIEW
Pure Play Global Decarbonization Leader Diversified Assets (MW)
• Renewable Electricity company founded in 1999 2,700; 14%
• Ticker- TSE: BEP.UN; NYSE: BEP
• Generates electricity through hydroelectric, wind, solar, • Significant investment Hydro 800; 4%
cogeneration, and biomass in solar and wind Wind
• Portfolio in North America, Colombia, Brazil, Europe, India, and Solar 7,900; 42%
2,600; 14%
China Distributed
• In line with the growth Generation (DG)
• Market cap $18,589.2 MM, total EV $44,848 MM
• trend in the industry Storage
CEO: Sachin G. Shah, CPA
4,700; 25%

Financial Metrics 2016 – 2019 (MM CAD)

Year 2016
2019 2018 2017

Total Revenue 3898.4 3901.1 3434 3207.7

Gross Profit
2,600.7 2,577.2 2,172.9 1,879.9
EBITDA
2451.6 2441.1 2034.3 1768.7
EBITDA Margin
62.90% 62.60% 59.20% 55.10%
EBITDA Growth Over Prior Year %
0.43% 20.00% 15.02% 31.52%

Source: Capital IQ, Brookfield Corporate Profile, Brookfield Investor Day 2019
INDUSTRY OVERVIEW
Global Renewable Energy Market in Expansion Wind and Solar the Strongest Growth Sectors: Falling Costs
• Expanding global renewable energy consumption Distribution of renewable energy consumption worldwide in 2017 and 2023 by
technology
• Growing electricity price: government setting higher rates
60%
• Government programs for renewable energy: from 26% of all 50%
50% 46%
energy sectors in 2017 to 41% in 2030 40%
31%
• Lower operating costs and higher profit margin compared to 30% 27%

20%
thermal power: 19.4% vs. 15.5% in 2019 (EBIT) 12%
9% 8%
10% 4% 4% 4%
• Higher barrier of entry + highly regional operations + phasing out 2% 3%
0%
of coal-fired power generation = low competition Bioenergy Hydropower Wind Solar PV Solar thermal Geothermal

2017 2023
Renewable energy consumption worldwide
(in million metric tons of oil equivalent) Global Renewable Energy Space (Total EV)
3000
2748.09

2500
2188.95

2000
1674.05

1500
1231.06

1000 801.89
570.96
448.7
500
234.39
35.02 44.82 59.35 103.45 Notable Players
0
1990 1995 2000 2005 2010 2015 2017 2020 2025 2030 2035 2040 Source: IBIS World, Statista, Capital IQ, IRENA
 VALUATION: PRICE TARGET & JUSTIFICATION
Stock trading below consensus value Base Case Valuation (1 year horizon)
NTM EBITDA (U$ mm) 2,097.7

• Base case implies 13% total return over one (1) year time EV/EBITDA (x) NTM 17.06
Enterprise Value (U$ mm) 35,777.5
horizon Debt (C$ mm) 10,947.0
• Stock trades above average of peer group’s multiples Cash & Cash Equivalents (U$ mm) 115
Minority Interest (U$ mm) 9,339
• BEP.UN is led by a proven management team Preferred Shares (U$ mm) -
• Conservative philosophy of amassing a well-diversified global Equity Value (U$ mm) 15,606.54

portfolio of predominantly contracted, carbon-free generation Shares Outstanding (mm) 315.4

Price (U$) 49.48
assets Price (C$) 64.32
• Upside EBITDA growth scenario can yield total return up to Dividend/Share (C$) 0.63
33% Current Market Price (C$) 58.94
Total Return (C$) 7.895
Total Return (%) 13.39%

Relative Valuation and relation to price target  1 Year Price Target (C$) EBITDA Growth Rate

EV/EBITDA 1.82% 5.8% 9.78%

15.40x 40.19 50.02 60.22
TBD:
17.06x 53.45 64.32 75.62
Insert Football field which will include the following bars 18.71x 66.70 78.63 91.02
1. 52 week trading price (Please keep in mind the tickr is BEP.UN 
1 Year Total Return (%) EBITDA Growth Rate
2. Range of price based on EV/EBITDA range(where EBITDA growth is
EV/EBITDA 1.82% 5.8% 9.78%
fixed) (50.02-78.63) 15.40x (29.15%) (11.83%) 6.15%
3. Range of Price based on EBITDA range ( 53.45-75.62) 17.06x (5.78%) 13.39% 33.31%
4. Transaction blended ($40.19-$91.02) 18.71x 17.58% 38.62% 60.47%

5. Wells Fargo report ( august 4’20) Initiating coverage report target issue
Source: Capital IQ, Brookfield Corporate Profile, Yahoo Finance
48 (ours is $U 49.48 ) the bar for this can extend from $U45.04 to $U 48
(Please convert this to Canadian dollars for plotting. Exch rate of 1.3 (Call
KEY RISKS AND MITIGATION MEASURES
Key Industry Risks Key Company Risks
• Hydrology • Dependence on BAM and potential conflicts of interest
• Fluctuating commodity prices • Taxation
• Sudden interest rate movements • Increasing competition
• Complexity of energy market dynamics • Foreign exchange exposure
• Complex environmental rules across markets

Risk Mitigation measures by Brookfield Renewable

• Long term, fixed rate PPA’s (average is 15 years) with end users insulate company’s long cash flow from electricity rates
• Strong focus on ESG practices (e.g. Dedicated task force on Climate related Financial Disclosures (TCFD) framework to analyse long term climate change
risks)
• Diverse customer base: over 600 high quality counterparties insulate the business from single counterparty risk, with most of them being public power
authorities and utilities
• A ~20% below LTA-hydrology year in any single market would have less than a 2% impact on its FFO
• Diversified Foreign Current Exposure: In the event of a 10% depreciation in any single currency, it has only 1% FFO exposure
• Low to no reliance on M&A to achieve M&A distribution growth target

Source: Capital IQ, Brookfield Corporate Profile

PEER COMPARABLE ANALYSIS AND VALUATION
With strong historical EBITDA growth and margins and an above average EV/EBITDA multiple, BEP.UN is likely to witness a strong upside to its
current market price over the medium term
Company Name Exchange/ Day Dividend Market Total Enterprise Total Net EBITDA EBITDA EBITDA EBITDA, 2
Symbol Close Yield Capitalizati Value (2019) Revenue Debt/EBITDA Margin % Margin Margin (NTM) Yr CAGR
Price Latest on Latest (2019) (2019) 2018 2019 (2017-2019)
Latest
Brookfield Renewable TSX:BEP.UN 44.92 3.90% 11,477.60 31,311.90 2,980.00 6.2x 62.60% 62.90% 59.70% 9.78%
Verbund AG WBAG:VER 52.54 1.5% 18,375.0 21,211.2 4,617.2 1.4x 32.2% 32.0% 30.5% 13.45%

Northland Power Inc. TSX:NPI 27.41 3.3% 3,751.7 9,995.9 1,268.1 4.2x 73.2% 74.5% 73.5% 12.10%

Algonquin Power & Utilities TSX:AQN 13.63 4.6% 7,360.9 12,761.9 1,624.9 5.8x 38.5% 38.5% 39.4% 0.81%
Corp.
Avangrid, Inc. NYSE:AGR 48.67 3.6% 15,808.7 23,782.7 6,338.0 6.0x 29.1% 29.0% 29.6% (0.16%)

   
Forward Multiples Trailing Multiples
   
EV/EBITDA (x) NTM EV/Sales (x) P/E (x) NTM EV/EBITDA (x) 2019 EV/Sales (x) P/E (x) 2019
NTM 2019
Brookfield Renewables 18.71x  9.87x  48.02x  15.4x   10.2x  81.0x
Avangrid 10.33x 3.63x 20.29x 12.8x 3.7x 26.6x
Verbund AG 14.21x 4.55x 27.39x 15.2 5.2x 25.8x
Northland Power 12.87x 7.28x 19.09x 11.0x 8.2x 16.3x
Algonquin Power & Utilities 12.15x 6.48x  18.45x    19.9x 7.8x 19.2x
Average 12.39x 5.49x 21.31x 14.73x 6.23x 21.98x
Lower Quartile 11.70x 4.32x 18.93x 12.35x 4.83x 18.48x
Upper Quartile 14.21x 7.28x 27.39x 19.9x 8.2x 26.6x

*P/E= Price/Diluted EPS before EXTRA Source: Capital IQ, Brookfield Corporate Profile