MPLX

MPLX LP

Energy


Presented:11/15/2017
Price:$34.41
Cap:$13.59B
Current Price:$44.09
Cap:$45.00B

Presented

Date11/15/2017
Price$34.41
Market Cap$13.59B
Ent Value$22.02B
P/E Ratio37.56x
Book Value$23.94
Div Yield6.83%
Shares O/S395.00M
Ave Daily Vol1,436,966
Short Int5.04%

Current

Price$44.09
Market Cap$45.00B
MPLX LP is a fee-based, growth-oriented master limited partnership. It is engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of natural gas liquids; and the gathering, transportation and storage of crude oil and refined petroleum products. The company operates through two segments: Logistics and Storage & Gathering and Processing. The Logistics and Storage segment includes transportation and storage of crude oil, refined products and other hydrocarbon-based products. The Gathering and Processing segment engages in gathering and processing of natural gas. MPLX was founded in March 27, 2012 and is headquartered in Findlay, OH.

Publicly traded companies mentioned herein: Energy Transfer Partners LP (ETP), Enterprise Products Partners LP (EPD), Kinder Morgan Inc (KMI), Magellan Midstream Partners LP (MMP), Marathon Petroleum Corp (MPC), MPLX LP (MPLX), Williams Companies Inc (WMB), Williams Partners LP (WPZ)

Highlights

Marathon Petroleum (MPC) and MPLX recently announced a transformational, two-part deal that will drop the refining logistics assets and fuels distribution services down to MPLX for ~$8.1bn, and MPC is going to exchange its GP interests in MPLX [including incentive distribution rights (IDRs)] for MPLX common units. In the presenter’s opinion, this structure is very attractive. He is long MPLX at $34, and is also long/ constructive on some of the other US MLPs that have recently seen substantial, seemingly unwarranted declines. He stated, “With valuations back to 1Q 2016 levels, and back to 2009 levels on a relative basis, [MPLX’s] FCF yield is 10%, the dividend yield is 7.5%, and there is a visible path to 10% [annual] growth for the next four years”. This sort of “deep value” is unique in the market today. MPLX is trading at 10x his forward FCF estimate, which is a discount to peers of 2-4 turns; he expects the multiple to expand following the transaction’s completion, driving 20%+ upside over the next 12 months.

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