Barlow’s Research Roundup: Biggest tax break winners in the yield-heavy energy infrastructure sector

TOP LINKS Barlow’s Research Roundup: Biggest tax break winners in the yield-heavy energy infrastructure sector SCOTT BARLOW MARKET STRATEGIST PUBLISHED 50 MINUTES AGO COMMENTS SHARE SAVE FOR LATER Listen to this article Learn more about audio Log in or create a free account to listen to this article. Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow MORE SUMMIT WINNERS Scotiabank analysts Kevin Fisk, Chris MacCulloch and Robert Hope provided individual company winners in the energy space from the Canada Investment Summit’s big tax break announcement, “The draft Productivity Mega Deduction is a notable improvement relative to the framework proposed in the Spring Economic Statement and a meaningful positive development for the Canadian energy sector. The immediate expensing of qualifying capital investments should improve project returns, enhance near-term free cash flow, and lower the after-tax cost of growth capital. More broadly, we view the legislation as another tangible step toward improving Canada’s investment competitiveness and supporting long-term economic growth. We see Canadian oil & gas producers as significant beneficiaries of the proposed legislation, while the impact to the infrastructure companies is limited as many operators already generate substantial tax shields and may not be positioned to fully utilize the enhanced deductions. Producers that are taxable, or will be taxable soon, and are spending on production growth are likely to see the most significant cash flow improvement; we highlight KEL, BTE, SCR, PEY, WCP, TOU, and CVE as the largest beneficiaries. Among the infrastructure companies, we see the greatest benefits accruing to PPL and TA given their sizable capital programs and meaningful cash tax exposure” FED WILL BE DONE QUICKLY BMO chief economist Doug Porter compares the rates and equity markets to the year 2000 and also summarizes the important developments from the Canada Investment Summit, “Even with the sustained upward pressure on oil and bond yields, the ultimate degree of rate hikes is likely to be relatively mild, with inflation still holding close to 3 per cent. Some of the hawkish persuasion were quick to point out that not only does the Fed almost never move just once, rate hiking cycles often entail at least six steps and hundreds of basis points of hikes. But this is no typical cycle … One could point to the cycle before that as a rough guide, when the Fed…