BLX: Increasing PT to $37.25 to reflect proposed acquisition by Brookfield and La Caisse

Research evidence excerpt

BLX: Increasing PT to $37.25 to reflect proposed acquisition by Brookfield and La Caisse

Boralex Inc.

Target/Upside/Downside Scenarios Investment summary

We expect Boralex to perform in line with other companies inBoralex Inc.

our coverage universe for the following reasons:

45 125 Weeks 20DEC23 - 11MAY26

40 TARGETTARGET 37.2537.25 • Back-end loaded growth profile. Management plans to

CURRENTCURRENT 36.8136.81 more than double its generation capacity to 7 GW in 2030 35

30 (from 3.2 GW in 2024). We believe it is an ambitious plan

25 that is back-end loaded, with ~80% of the capacity additions

20 planned for the 2028-30 period.

15 • Strong development track record. Management has been

10 successful to date in developing wind and solar projects in

40m key geographies including France, Eastern Canada, and New

30m

20m 10m York State.

2024 2025 2026

D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M • Attractive contracted cash flows. A majority of Boralex’s

BLX CN Rel. S&P/TSX COMP IDX MA 40 weeks generation capacity has medium- to long-term PPAs. In

Source: Bloomberg and RBC Capital Markets estimates for Target addition, we expect the relatively low-risk wind and hydro

Valuation facilities to contribute a majority of cash flows.

Our price target of $37.25 reflects the offer price under • Conservative payout ratio allows for some growth to

the arrangement agreement with Brookfield Renewable (and be internally funded. Management targets a payout ratio

institutional partners) and La Caisse. The transaction values range of 20–40% of discretionary cash flows (before

Boralex at approximately 12x our 2027E EBITDA estimate. Our development costs), which we view as conservative and

price target supports our Sector Perform rating. internally funding growth.