Wednesday, March 24, 2010 *Click on title to view Comments **Click here to view Calendar of Events Initiating Coverage Computer Modelling Group Initiating Coverage at Outperform M. Mazar Pason Systems Initiating Coverage at Market Perform M. Mazar Rating Changes Golden Star Resources Upgrading to Outperform and Raising Target Price; Mines Delivering With Potential Catalysts Ahead A. Breichmanas SouthGobi Energy Resources Upgrading to Outperform (Speculative) M. Bandy Large Cap Stocks J.B. Hunt Transport Services Increasing Target Price to $38 on Tightening Industry Conditions J. Granger Peyto Energy Trust Going Horizontal G. Tait Small Cap Stocks Genivar Income Fund Target Increased to $31; Management Continues to Execute; Outperform Rating Maintained B. Powell Legacy Oil + Gas Q4/09 Results M. Leggett Theratechnologies Not Much New In 1Q10; Waiting for Tesamorelin FDA Advisory Meeting J. Zhang Coast Wholesale Appliances Income Fund Increasing Target to $5.50 on Long-Term Outlook; Q4/09 Results in Line S. MacLeod Descartes Systems Group Target Price Raised to $7.00; Porthus Acquired T. Moschopoulos Glacier Media Trends Improving T. Casey SEMAFO The New Premium-Rated West African Producer as Mana Exploration Potential Continues to Impress A. Breichmanas Industry/Macro Comments Apparel Retail MALL TALK: March Field Team Finds J. Morris Energy - Royalty Trusts Weekly Royalty Trust Report – Week Ending March 19, 2010 G. Tait Quantitative Analysis Relative Strength Filter — Euro Breakdown M. Steele Quantitative Analysis Market Elements M. Steele Economic Research A.M. Notes Economics Disclosure Statements To view important Disclosure Statements go to http://research-ca.bmocapitalmarkets.com/Company_Disclosure_Public.asp
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Wednesday, March 24, 2010
*Click on title to view Comments **Click here to view Calendar of Events
Initiating Coverage
Computer Modelling Group Initiating Coverage at Outperform M. Mazar
Pason Systems Initiating Coverage at Market Perform M. Mazar
Rating Changes
Golden Star Resources Upgrading to Outperform and Raising Target Price; Mines Delivering With Potential Catalysts Ahead
A. Breichmanas
SouthGobi Energy Resources
Upgrading to Outperform (Speculative) M. Bandy
Large Cap Stocks
J.B. Hunt Transport Services Increasing Target Price to $38 on Tightening Industry Conditions J. Granger
Peyto Energy Trust Going Horizontal G. Tait
Small Cap Stocks
Genivar Income Fund Target Increased to $31; Management Continues to Execute; Outperform Rating Maintained
B. Powell
Legacy Oil + Gas Q4/09 Results M. Leggett
Theratechnologies Not Much New In 1Q10; Waiting for Tesamorelin FDA Advisory Meeting J. Zhang
Coast Wholesale Appliances Income Fund
Increasing Target to $5.50 on Long-Term Outlook; Q4/09 Results in Line S. MacLeod
Descartes Systems Group Target Price Raised to $7.00; Porthus Acquired T. Moschopoulos
Glacier Media Trends Improving T. Casey
SEMAFO The New Premium-Rated West African Producer as Mana Exploration Potential Continues to Impress
A. Breichmanas
Industry/Macro Comments
Apparel Retail MALL TALK: March Field Team Finds J. Morris
Energy - Royalty Trusts Weekly Royalty Trust Report – Week Ending March 19, 2010 G. Tait
Quantitative Analysis Relative Strength Filter — Euro Breakdown M. Steele
Quantitative Analysis Market Elements M. Steele
Economic Research A.M. Notes Economics
Disclosure Statements To view important Disclosure Statements go to http://research-ca.bmocapitalmarkets.com/Company_Disclosure_Public.asp
Earnings & Conference Calls AGF Management Ltd. (AGF.B) EPS Q1/10 BMO EPS $0.32 vs. $0.14 last year; First Call Mean $0.35
866-300-4047; Webcast: www.agf.com 11:00 am
Hochschild Mining (HOC) EPS FY09 BMO EPS $0.12 vs. $0.08 last year; First Call Mean $0.20
44-203-003-2666; Replay: 44-208-198-1996 (Passcode: 7993057#) 5:30 am
Endeavour Silver (EDR) EPS FY09 BMO EPS ($0.06) vs. ($0.37) last year; First Call Mean ($0.02)
877-240-9772 or 416-340-8530 Mar. 252:00 pm
ICL (ICL) EPS Q4/09 BMO EPS US$0.15 vs. US$0.12 last year; First Call Mean US$0.18
877-407-0784, 201-689-8560 or 800-224-6266 10:30 am
Eurasian Natural Resources (ENRC) EPS FY09 BMO EPS US$0.85 vs. US$2.05 last year; First Call Mean US$0.87
Today's Events & Marketing
Redback Mining (RBI) Company presentation in Europe. Rick Clark (CEO) and Simon Jackson (VP, Corporate Development).
Atul Shah (Diversified Financials Analyst) Marketing in Vancouver & Alberta
Eastern Platinum (ELR) Company presentation in Europe. Ian Rozier (CEO).
TimberWest Forest (TWF.UN) Company presentation in Montreal. Paul McElligott (President & CEO) and Bev Park (Executive VP & CFO; President & COO – Couverdon Real Estate).
John Morris (Apparel Retail Analyst) Marketing in San Francisco
Ambrish Srivastava (Semiconductor Analyst) Marketing in New York
Dave Shove (Managed Care and Pharmacy Benefit Managers Analyst)
Marketing in Kansas City, Dallas & Austin
Edwin Chee (Chemicals & Fertilizers Analyst) Marketing on the West Coast
Cedar Shopping Centers (CDR) Company presentation in New York. Leo Ullman (CEO & President) and Larry Kreider (CFO).
Bert Hazlett (Pharmaceuticals Analyst) Marketing in Boston
Ken Zaslow (Food & Agribusiness Analyst) Marketing San Francisco & Los Angeles
Mike Mazar (Oil & Gas Services Analyst) Marketing in Kansas City
BMO Capital Markets Calendar of Events
Page 2 March 24, 2010 (Back to Index)
Economics/Industry Data
Time Data Period BMO Capital Markets Estimate
Previous Period
Consensus
10:00 am U.S. New Home Sales Feb. (e) 309,000 a.r. (unch) 309,000 a.r. (-11.2%) 315,000 a.r. (+1.9%)
Upcoming Events & Marketing
Redback Mining (RBI) Company presentation in Europe. Rick Clark (CEO) and Simon Jackson (VP, Corporate Development).
Mar. 22-25
Dave Shove (Managed Care and Pharmacy Benefit Managers Analyst)
Marketing in Kansas City, Dallas & Austin Mar. 23-25
Edwin Chee (Chemicals & Fertilizers Analyst) Marketing on the West Coast Mar. 23-25
Ken Zaslow (Food & Agribusiness Analyst) Marketing San Francisco & Los Angeles Mar. 24-25
Mike Mazar (Oil & Gas Services Analyst) Marketing in Kansas City Mar. 24-25
John Reucassel (Financials Analyst) Marketing in New York Mar. 25
MOSAID Technologies (MSD) Company presentation in Toronto. Michael Salter (Director, Investor Relations & Corporate Communications).
Mar. 25
Flowserve (FLS) Company presentation in New York. Dean Freeman (Sr. VP Finance & Treasurer), Kyle Ahlfinger (VP, Chief Marketing Officer) and Paul Fehlman (VP, Financial Planning & Analysis and IR).
Mar. 25
Marvell Technology (MRVL) Company presentation in Toronto & Montreal. Jeff Palmer (VP of Investor Relations). Mar. 25-26
Peyto Energy Trust (PEY.UN) Company presentation in Toronto. Darren Gee (President & CEO). Mar. 25-26
Dan Salmon (Marketing Services & Advertising Agencies Analyst)
Marketing in Kansas City & Dallas Mar. 25-26
Bert Powell (Special Situations Analyst) Marketing in Vancouver & Alberta Mar. 25-26
Christopher Brown (Oil & Gas International Producers Analyst)
Marketing in Europe Mar. 25-26
Winn-Dixie Stores (WINN) Company presentation in New York Mar. 25-26
Peter Sklar (Auto Parts/Food & Drug Retailing Analyst)
Marketing in Vancouver Mar. 26
Joanne Wuensch (Medical Technology & Devices Research Analyst)
Marketing Florida Mar. 26
BMO Capital Markets Calendar of Events
Page 3 March 24, 2010 (Back to Index)
Linamar (LNR) Company presentation in Montreal. Linda Hasenfratz (CEO) and Mark Stoddart (Chief Technology Officer & Executive VP, Marketing).
Mar. 26
Carl Kirst (North American Pipeline Analyst) Marketing in Montreal Mar. 29
Bunge (BG) Company presentation in Boston. Jackie Fouse (CFO) and Mark Haden (Director of Investor Relations).
Mar. 29
Alan Laws (Oil Services Analyst) Marketing in Atlanta Mar. 29
Tim Long (Communications Equipment Analyst) Marketing in the Mid-Atlantic Mar. 29
TELUS (T) Company presentation in New York & Boston. Bob McFarlane (EVP & CFO) and Robert Mitchell (Investor Relations).
Mar. 29
EnCana (ECA) Company presentation in Los Angeles & San Francisco. Mike McAllister (VP, Canadian Deep Basin (Montney & Bighorn)), Todd Brown (Team Lead, Texana (Haynesville)) and Ryder McRitchie (VP, Investor Relations).
Mar. 29-31
TELUS (T) Company presentation in Montreal. Bob McFarlane (EVP & CFO) and Robert Mitchell (Investor Relations).
Mar. 30
Bert Hazlett (Pharmaceuticals Analyst) Marketing in Boston Mar. 30
Karen Short (Food Retailing Analyst) Marketing in Chicago Mar. 30
Artis REIT (AX.UN) Company presentation in Chicago. Armin Martens (President & CEO) and Jim Green (CFO).
Mar. 31
Ballard Power Systems (BLD) Company presentation in Toronto Mar. 31
Mike Vinciquerra (Exchanges & Discount Brokers Analyst)
Marketing in Boston Mar. 31
Dan Salmon (Marketing Services & Advertising Agencies Analyst)
Marketing in Chicago Mar. 31-Apr. 1
Karine MacIndoe (Real Estate & REITs Analyst) Marketing in the Mid-Atlantic region Apr. 1
Dan Salmon (Marketing Services & Advertising Agencies Analyst)
Marketing in the Pacific Northwest Apr. 5
Wayne Hood (Broadline Retailing Analyst) Marketing in New York Apr. 5-6
Andrew Kaip (Precious Metals & Mining Analyst) Marketing in Boston & New York Apr. 5-7
INV Metals (INV) Company presentation in Toronto. Bob Bell (President & CEO) and Candace MacGibbon (CFO).
Apr. 6
BMO Capital Markets Calendar of Events
Page 4 March 24, 2010 (Back to Index)
Gordon Tait (Royalty & Income Trusts Analyst) Marketing in Vancouver Apr. 6
Meredith Bandy (Coal Analyst) Marketing in Boston Apr. 6
Connie Maneaty (Personal Care & Household Products Analyst)
Marketing in Richmond & Atlanta Apr. 6
Lana Chan & Peter Winter (Financial Institutions Analysts) Marketing in Texas Apr. 6-8
Gammon Gold (GAM) Company presentation in Boston & New York. Scott Perry (CFO) and Anne Day (Director, IR).
Apr. 6-9
Joanne Wuensch (Medical Technology & Devices Research Analyst)
Marketing in the Mid-West Apr. 7
Karine MacIndoe (Real Estate & REITs Analyst) Marketing in Vancouver Apr. 7
Claude Proulx (Airlines & Special Situations Analyst) Marketing in Toronto Apr. 7-8
Cap REIT (CAR.UN) Company presentation in Winnipeg & Vancouver. Tom Schwartz (President & CEO) and Richard Smith (CFO).
Apr. 7-8
Christopher Brown (Oil & Gas International Producers Analyst)
Marketing in Winnipeg Apr. 8
Alan Laws (Oil Services Analyst) Marketing in New York & Connecticut Apr. 8-9
Christopher Brown (Oil & Gas International Producers Analyst)
Marketing in Toronto Apr. 9
Carl Kirst (North American Pipeline Analyst) Marketing in Boston Apr. 12
Wayne Hood (Broadline Retailing Analyst) Marketing in Europe Apr. 12-14
Gammon Gold (GAM) Company presentation in Texas, L.A. & San Francisco. Scott Perry (CFO) and Anne Day (Director, IR).
Apr. 12-14
Alpha Natural Resources (ANR) Company presentation in Europe. Kevin Crutchfield (CEO), Frank Wood (CFO) and Allen Todd (VP, IR).
Apr. 12-15
Alpha Natural Resources (ANR) Company presentation in Europe. Kevin Crutchfield (CEO), Frank Wood (CFO) and Allen Todd (VP, Investor Relations).
Apr. 12-16
Detour Gold Corp. (DGC) Company presentation in Europe Apr. 12-16
New Gold (NGD) Company presentation in Europe Apr. 12-16
BMO Capital Markets Calendar of Events
Page 5 March 24, 2010 (Back to Index)
Randy Ollenberger (Oil & Gas Producers & Integrated Oils Analyst)
Marketing in Toronto Apr. 13-15
Gordon Tait (Royalty & Income Trusts Analyst) Marketing in Montreal Apr. 14
General Mills (GIS) Company presentation in the Mid-Atlantic. Don Mulligan (CFO) and Kristen S. Wenker (VP, Investor Relations).
Apr. 14
Carl Kirst (North American Pipeline Analyst) Marketing in the Mid-West Apr. 14-15
Jim Byrne (Integrated Oils & Refiners Analyst) Marketing in Vancouver Apr. 15
Paul Adornato & Richard Anderson (U.S. REITs Analysts) Marketing in Boston Apr. 15
Jeffrey Logsdon (Entertainment & Gaming Analyst) Marketing in Boston Apr. 15-16
Gammon Gold (GAM) Company presentation in Toronto. Scott Perry (CFO) and Anne Day (Director, IR). Apr. 16
Randy Ollenberger (Oil & Gas Producers & Integrated Oils Analyst)
Marketing in Montreal Apr. 16
Osisko Mining (OSK) Company presentation in Europe Apr. 19-23
Gordon Tait (Royalty & Income Trusts Analyst) Marketing in Toronto Apr. 20-21
Alamos Gold (AGI) Company presentation in Europe. John A. McCluskey (President and CEO) and Jeremy Link (Investor Relations Manager).
Apr. 21
John Morris (Apparel Retail Analyst) Marketing in the Pacific Northwest Apr. 21
Pacific Rubiales (PRE) Company presentation in Europe Apr. 22-23
If you are interested in any of the above events, please contact your BMO Capital Markets Institutional Equity/Fixed Income salesperson, or the following: Toronto Events: Laura Heuff 416-359-5816 Montreal Events: Marjorie Heppell at 514-286-7231 Western Canada Events: Jennifer Crombie 604-443-1452 U.S. Events: Angela Dong 212-702-1969 Europe Events: Hannah Pead 44-207-246- 5418 Sources: BMO Capital Markets; Thomson StreetEvents (www.streetevents.com)
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 13 to 15.
Back to Index
Computer Modelling Group (CMG-TSX) Stock Rating: Outperform Industry Rating: Market Perform
Notes: All values in C$ Major Shareholders: Foundation CMG (12.8% Non Voting), Directors and Officers (12.6%) First Call Mean Estimates: COMPUTER MODELLING GROUP LTD (C$) 2010E: $0.76; 2011E: $0.95
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 10 to 12.
Back to Index
Pason Systems (PSI-TSX) Stock Rating: Market Perform Industry Rating: Market Perform
Notes: All values in C$ Major Shareholders: James Hill (President and CEO) (20.0%), Royce & Associates (12.9%), Caisse De Depot (10.3%) First Call Mean Estimates: PASON SYSTEMS INC (C$) 2010E: $0.34; 2011E: $0.70
This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including
Back to Index
Golden Star Resources (GSS-AMEX; GSC-TSX) Stock Rating: OutperformIndustry Rating: Outperform
Quarterly EPS Q1 Q2 Q3 Q4 2008A -$0.02 -$0.03 -$0.10 -$0.03 2009A -$0.01 $0.00 $0.00 $0.03 2010E $0.05 $0.04 $0.04 $0.03 Dividend $0.00 Yield 0.0% Book Value $2.02 Price/Book 1.9x Shares O/S (mm) 257.4 Mkt. Cap (US$mm) $976 Float O/S (mm) 256.2 Float Cap (US$mm) $971 Wkly Vol (000s) 21,572 Wkly $ Vol (USmm) $63.5 Net Debt ($mm) -$29.5 Next Rep. Date May (E)
Notes: All values in US$ Major Shareholders: Sentry Select Capital (16.5%), Van Eck Associates (5.30%) First Call Mean Estimates: GOLDEN STAR RESOURCES LTD. (US$) 2010E: $0.23; 2011E: $0.35
Changes Target $4.00 to $5.00 Rating Mkt to OP
This report was prepared in part by an analyst(s) em nd who is (are) not registered as a research analyst(s) under FINRA rules. For disc e refer to pages 5 to 7.
Back to Index
SouthGobi Energy Resources (SGQ-TSX) Stock Rating: Outperform(S)Industry Rating: Market Perform
ployed by a Canadian affiliate, BMO Nesbitt Burns Inc., alosure statements, including the Analyst's Certification, pleas
-0.50
-0.45
-0.40
-0.35
-0.30
South Gobi Energy Resources (SGQ)Price: High,Low,Close Earnings/Share(US$)
Event BMO Research is upgrading SouthGobi to Outperform (Speculative) from
Market Perform (Speculative) and maintaining the price target of C$21. Prior to
the Hong Kong listing (priced January 22); SouthGobi shares ran up to over
C$20, but have since been range-bound around C$16–17/share. BMO is also
adjusting estimates for Q4/09 results (reported March 22, 2010). 0
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Impact
Positive.
Forecasts BMO forecasts that SouthGobi’s Ovoot Tolgoi and Soumber mines reach full
production of 10.5Mt saleable coal production by YE2013, up from 1.3Mt of
sales in 2009. The revised model assumes a slightly slower production ramp,
but also incorporates the company’s guidance on higher realized coal pricing.
The net effect is a decrease in 2010–12 earnings, but a slightly higher NPV.
Valuation BMO’s 10% NPV per share increased 2% from US$22.56 (C$23.01) to
US$22.93 (C$23.39).
Recommendation BMO Research is upgrading SouthGobi to Outperform (Speculative) from
Market Perform (Speculative) and maintaining the price target of C$21.
SouthGobi currently trades at about 70% of NPV whereas the rest of the coals
trade at over 90% NPV. On BMO’s estimates, the weakness in the shares
following the Hong Kong listing represents a good entry point for long-term
investors. SouthGobi has an excellent growth profile with accesses to growing
regional Chinese coal demand.
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(FY-Dec.) 2008A 2009A 2010E 2011E EPS -$0.48 -$0.37 $0.00 $0.31P/E na 50.6x CFPS -$0.01 -$0.10 $0.17 $0.56P/CFPS 92.2x 28.0x Rev. ($mm) $3 $36 $111 $252 EV ($mm) $1,938 $2,344 $2,691 $2,934 EBITDA ($mm) -$60 -$28 $27 $114 EV/EBITDA na na 99.7x 25.7x Quarterly EPS Q1 Q2 Q3 Q4 2008A -$0.10 -$0.10 -$0.17 -$0.10 2009A -$0.07 -$0.06 -$0.11 -$0.12 2010E -$0.02 -$0.03 $0.01 $0.05 Dividend $0.00 Yield 0.0% Book Value $14.69 Price/Book 1.1x Shares O/S (mm) 183.4 Mkt. Cap ($mm) $2,964 Float O/S (mm) 49.6 Float Cap ($mm) $802 Wkly Vol (000s) 231 Wkly $ Vol (mm) $3.5 Net Debt ($mm) -$516.3 Next Rep. Date 15-Jun (E)
Notes: Share price and market capitalization in C$, all other values in US$ Major Shareholders: Ivanhoe Mines Ltd (57.7%), CIC (13.6%) First Call Mean Estimates: SOUTHGOBI ENERGY RESOURCES LTD (US$) 2009E: -$0.35; 2010E: $0.01; 2011E: $0.38
Changes Annual EPS Annual CFPS Quarterly EPS Rating 2010E $0.11 to $0.00 2010E $0.33 to $0.17 Q1/10E -$0.02 to -$0.02 Mkt(S) to OP(S) 2011E $0.41 to $0.31 2011E $0.74 to $0.56 Q2/10E $0.03 to -$0.03 Q3/10E $0.05 to $0.01 Q4/10E $0.05 to $0.05
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 3 to 5.
Changes Annual EPS Annual CFPS Target 2011E $1.72 to $1.89 2011E $3.24 to $3.41 $32.00 to $38.00
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 9 to 12.
Notes: All values in C$; Net debt and Units O/S at Q4/09 Major Unitholders: 9% held by management and directors First Call Mean Estimates: Not Available
Changes Annual CDPU Annual CFPU Quarterly CDPU 2010E $1.08 to $1.44 2010E $1.60 to $1.90 Q1/10E $0.27 to $0.36 2011E $1.92 to $2.12 Q2/10E $0.27 to $0.36 Q3/10E $0.27 to $0.36 Q4/10E $0.27 to $0.36
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 7 to 9.
Back to Index
Genivar Income Fund (GNV.UN-TSX) Stock Rating: OutperformIndustry Rating: Outperform
Member of: Top 15 Small Cap Stock Selections Top 15 Growth Stock Selections
March 23, 2010 Research Comment Toronto, Ontario
Bert Powell, CFA (416) 359-5301 [email protected] Assoc: Luigi Di Pede, CFA
Target Increased to $31; Management Continues to Execute; Outperform Rating Maintained
Event Genivar reported Q4/09 net revenues of $108.7 million, up 16.6% year over
year, versus our expectation of $108.2 million. Reported EBITDA was $21.0
million versus our expectation of $21.6 million, and was negatively affected by
a $1.4 million non-cash F/X loss. EPU were $0.48 versus our expectation of
$0.53. Excluding the F/X loss, earnings were in line with expectations.
Impact Neutral.
Forecasts For 2010, we forecast net revenue of $471.8 million and EPU of $2.57. For
2011, we forecast net revenues of $561.3 million and EPU of $2.36.
Valuation Our $31 target is based on 8.0x 2011E EV/EBITDA discounted back one year at
15.0%.
Recommendation Genivar delivered an in-line quarter with better-than-expected organic growth
despite a challenging economic environment. Operating margins continued to
remain fairly stable and backlog improved y/y. We remain confident
management will continue to execute on the M&A front and the strong balance
sheet provides the flexibility to pursue additional acquisition opportunities. We
continue to rate Genivar Outperform and have increased our target price to $31
Genivar Income Fund (GNV.UN)Price: High,Low,Close Earnings/Share
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Last Data Point: March 22, 2010
(FY-Dec.) 2008 A 2009A 2010E 2011E CDPU $1.70 $1.95 $1.50 $1.50 P/CDPU 18.4x 18.4x DCPU $2.42 $2.56 $2.93 $2.93P/DCPU 9.4x 9.4x Payout % 72% 79% 51% 51% EV ($mm) $529 $621 $698 $723 EBITDA ($mm) $69 $79 $99 $117 EV/EBITDA 7.7x 7.9x 7.1x 6.2x Quarterly CDPU Q1 Q2 Q3 Q4 2008A $0.25 $0.25 $0.38 $0.83 2009A $0.38 $0.38 $0.38 $0.83 2010E $0.38 $0.38 $0.38 $0.38 Distribution $1.50 Yield 5.4% Book Value $10.52 Price/Book 2.6x Units O/S (mm) 27.2 Mkt . Cap ($mm) $751 Float O/S (mm) 27.2 Float Cap ($mm) $751 Wkly Vol (000s) 206 Wkly $ Vol (mm) $5.3 Net Debt ($mm) -$45.9 Next Rep. Date 20-May (E)
Notes: All values in C$ Major Unitholders: Goodman & Company (4.1%); British Columbia Investment Management (3.0%); Montrusco Bolton (2.86%) First Call Mean Estimates: GENIVAR INCOME FUND (C$) 2009E: $2.13; 2010E: $2.30; 2011E: $2.05
Changes Annual DCPU Target 2010E $3.15 to $2.93 $30.00 to $31.00 2011E $2.92 to $2.93
This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including
Notes: All values in C$; EPS (diluted), CFPS (diluted) Major Shareholders: Insiders (17%) First Call Mean Estimates: LEGACY OIL + GAS INC (C$) 2010E: $1.40; 2011E: $2.04
Changes Annual CFPS Quarterly CFPS 2010E $1.29 to $1.31 Q1/10E $0.30 to $0.31 2011E $1.74 to $1.77 Q3/10E $0.33 to $0.34
Event Theratechnologies (aka Thera) reported 1Q10 net loss of $0.07 per share, in
line with Street expectations. The loss per share was $0.02 narrower than our
estimate owing to lower R&D and market development costs.
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THERATECHNOLOGIES INC (TH)Price: High,Low,Close(US$) Relative to S&P 500
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Impact Investors are primarily focused on two upcoming events for TH shares: the FDA advisory panel meeting on 5/27/10 followed by the PDUFA date of7/27/10 for tesamorelin. We continue to believe that tesamorelin has a compelling clinical profile and expect a positive outcome for both events(please see our prior notes for our in-depth analysis of tesamorelin). However, we pushed back our expected launch date for tesamorelin to 3Q10from 2Q10. Moreover, we updated our portfolio valuation model, which isbased on a modified discounted cash flow method.
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efer to pages 6 to 8 for Important Disclosures, in
Forecasts We estimate tesamorelin can capture ~50% and ~40% of the severe lipohypertrophy patients in the US (22K) and ex-US (10K), respectively. With a slightly higher price than previous assumed, our tesamorelin peaksales estimate is $275 million in the US and $100 million in ex-US markets.
Valuation We estimate the present value of tesamorelin’s profits to be ~$317 million, present value (risk adjusted) of the US milestones (higher probability thanprevious assumption), cash position to be $160 million, and total firm value of $487 million or $8 per share.
Recommendation We maintain our OUTPERFORM(S) rating on TH shares.
2010E $0.23 to $0.21 2010E $0.05 to $0.03 Q2/10E $0.35 to -$0.07 $6.00 to $8.00 2011E $0.12 to $0.11 2011E -$0.04 to -$0.05 Q3/10E -$0.03 to $0.37 Q4/10E $0.00 to -$0.02
Balance Sheet Data (08/31/09) Net Debt ($mm) -$70 TotalDebt/EBITDA nm Total Debt ($mm) $0 EBITDA/IntExp na Net Debt/Cap. nm Price/Book 6.5x Notes: All values in US$.
Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global Insight, Reuters, and Thomson Financial.
This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including
Back to Index
Coast Wholesale Appliances Income Fund (CWA.UN-TSX)
Notes: All values in C$ Major Unitholders: CWAL Investments (35% of total units); The Jerry Zucker revocable Trust (16.1% of Class A units); The Futura Corporation (15.4% of Class A units) First Call Mean Estimates: COAST WHOLESALE APPLIANCES INC F (C$) 2009E: $0.70; 2010E: $0.89; 2011E: $0.97
Changes Annual CFPS Quarterly EPS Target 2010E $1.30 to $1.04 Q1/10E $0.13 to $0.12 $4.25 to $5.50 2011E $1.16 to $1.17 Q4/10E $0.22 to $0.21
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 4 to 6.
Notes: All values in US$ Major Shareholders: Mawer (11%); Acuity (10%); Jarislowsky (10%); Directors & Executives (3%); remainder widely held First Call Mean Estimates: Not Available
Changes Annual EPS Annual CFPS Quarterly EPS Target 2011E $0.11 to $0.10 2012E $0.40 to $0.49 Q1/11E $0.01 to $0.00 $6.50 to $7.00 2012E $0.16 to $0.21 Q2/11E $0.03 to $0.02 Q4/11E $0.03 to $0.05
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 7 to 9.
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Glacier Media (GVC-TSX) Stock Rating: Market PerformIndustry Rating: Market Perform
Notes: All values in C$ Major Shareholders: Madison Venture Corp. (33%) First Call Mean Estimates: GLACIER MEDIA INC (C$) 2009E: $0.22; 2010E: $0.27; 2011E: $0.29
Changes Annual EPS Annual FCFPS Quarterly EPS Target 2010E $0.27 to $0.26 2011E $0.21 to $0.22 Q2/10E $0.15 to $0.14 $2.00 to $2.35
This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including
Notes: Share price, target price and capitalization in C$, all other values in US$ Major Shareholders: Sentry Select Capital (16.5%) First Call Mean Estimates: SEMAFO INC (US$) 2009E: $0.20; 2010E: $0.33; 2011E: $0.39
Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E $0.34 to $0.29 2010E $0.49 to $0.47 Q1/10E $0.07 to $0.08 $4.50 to $5.50 2011E $0.41 to $0.33 2011E $0.57 to $0.53 Q3/10E $0.09 to $0.06 Q4/10E $0.09 to $0.07
MALL TALK: March Field Team Finds Summary Month to date business in March has been strong,
based on our field research. Weather has been
favorable for early spring shopping, with mall traffic up
3% through the week ended 3/20. We expect the
release of Apple’s iPad to boost mall traffic in April
and shopping spillover to specialty apparel.
AEO – OP: We believe AEO is having a strong
month, driven by a spring floor set that is better
represented in wovens relative to its peers. We
expect to see improvements in AUR, given much less
clearance. We remain comfortable with our 1Q EPS
estimate of $0.16.
LULU – MP: We expect 4Q EPS of $0.30, slightly
ahead of guidance for $0.26-$0.28. We expect
management to stress the continued need for
incremental SG&A spend in FY2010 on store labor to
build back service levels, which may limit SG&A
leverage.
The Sale Rack Index continues to run roughly 5%
lower than last year.
Month to date, business in March has been strong, according to our field research. Weather has been favorable for early spring shopping, evidenced by a 3% uptick in mall traffic through the week ended March 20. Our store checks indicate that conversions are improving, given pent-up demand and the infusion of better fashion items into many assortments. We also expect the release of Apple’s iPad on April 3 to boost mall traffic in April and create shopping spillover to our specialty apparel stores.
American Eagle (AEO – OP): We believe AEO is having a strong month, driven by a spring floor set that is better represented in wovens (a key trend of the season) relative to its peers. We expect to see improvements in AUR, given much less clearance, coupled with a stronger position in denim and knits. We remain comfortable with our 1Q EPS estimate of $0.16.
lululemon athletica (LULU – MP): We expect LULU to report 4Q EPS of $0.30, slightly ahead of guidance for $0.26-$0.28. We expect management to stress the continued need for incremental SG&A spend in FY2010 on store labor to build back service levels, which may limit SG&A leverage.
Reitmans (RET.A – OP): We expect RET to report 4Q EPS of $0.21, in line with consensus. We believe strength in December carried through the remainder of the quarter and into 1Q10. Based on our channel checks, we believe business in early spring has been solid thus far, as well.
The Sale Rack Index continues to run roughly 5% lower than last year.
S&P/TSX Energy Trust Index vs. S&P/TSX E&P Index vs. S&P/TSX Composite Index
50
60
70
80
90
100
110
120
130
140
150
Jan-07 M ay-07 Oct-07 Feb-08 Jul-08 Nov-08 Apr-09 Aug-09 Jan-10
ET IndexTSX Comp.E&P Index
N o te: last data po int M arch 19, 2010
ET Index
TSX Comp.
E&P Index
Source: BM O Capital M arkets, B loomberg
WTI Oil (US$/bbl) and AECO Gas (C$/Mcf)
$15
$30
$45
$60
$75
$90
$105
$120
$135
$150
Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 M ar-09 Aug-09 Jan-10
WTI
Oil
(US$
/bbl
)
$1.50
$3.00
$4.50
$6.00
$7.50
$9.00
$10.50
$12.00
$13.50
$15.00
AEC
O Gas (C
$/Mcf)
AECO
WTI
N o te: last data po int M arch 19, 2010 Source: BM O Capital M arkets, B loomberg
Weekly Highlights For the week, the S&P/TSX Canadian Energy Trust Index decreased
0.4%, while the S&P/TSX E&P Index declined by 2.2%. Year to date, the Energy Trust Index is up 6.4%, compared to a 0.8% decrease for the E&P Index and a 2.2% increase for the S&P/TSX Composite.
WTI crude oil ended the week at US$80.68/bbl (C$81.94), a decrease of 0.7% over last week’s close. WTI crude oil has averaged US$69.64/bbl over the past 12 months and US$78.38/bbl year to date. AECO natural gas closed the week at C$3.80/Mcf, a decline of 8.9% from last week. AECO has averaged C$4.00/Mcf over the past 12 months and $5.10/Mcf year to date.
The top three performing royalty trusts last week were COS (4.6%), FRU (3.6%), DAY (3.3%), while the weakest performance came from PVE (-8.9%), AAV (-7.1%), PEY (-4.5%).
We have Outperform ratings on AET, BNP, BTE, COS, CPG, NAE, PGF and VET. We are restricted on PMT.
This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 13 to 14.
This report was prepared in part by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 8 to 9.
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Market Elements March 23, 2010 Research Comment Quantitative/Technical Research Mark Steele (416) 359-4641 [email protected] Assoc: Tiberiu Stoichita
Equity markets gained; with the S&P 500 and FTSE 100 advancing to new highs; the VIX fell to a new closing low.
Most global government bond markets rallied (North American market was the exception); Greek bonds staged a rebound; the corporate CDS market rebounded after a 2-day sell off.
Major currency crosses were little changed; Swiss Franc rose to a record high vs. Euro, Brazilian real rebounded off of its 200d MA the Euro closed on the 1.35 mark, the lowest close since last May.
Commodities generally rallied; albeit with little gusto.
Levels* Currencies (USD per) Commodities Government 10- Yr Benchmark Equity Indices & Sentiment
Symbol H/L Level %Chg Symbol H/L Level %Chg Symbol H/L Level Chg Symbol H/L Level %ChgDXY 80.82 0.2% DJ UBS 131.79 -0.2% U.S. 3.69 0.03 S&P 1200 1,345 0.5%EUR 1.3498 -0.4% WTI Oil 81.89 0.8% Canada 3.47 0.01 S&P 500 H 1,174 0.7%CHF 0.9456 0.1% NMX Gas 4.14 1.5% Germany 3.06 -0.01 S&P/TSX 12,045 0.6%GBP 1.5039 -0.4% AECO Gas 3.60 0.0% France L 3.37 -0.02 Euro STOXX 2,911 0.7%JPYx10 0.1106 -0.3% Gold 1,104.7 0.2% Switzerland 1.90 0.01 FTSE 100 H 5,674 0.5%CAD 0.9844 0.3% Silver 17.03 0.3% Italy L 3.91 -0.02 Hang Seng 20,988 0.3%AUD 0.9191 0.1% Platinum 1,610.5 0.7% Spain 3.82 -0.03 Topix 947 -0.2%NZD 0.7076 0.2% Palladium 463.50 1.0% Greece 6.31 -0.14 S&P/ASX 4,875 0.9%BRL 0.5630 0.8% CMX Cu 336.95 -0.1% U.K. 3.92 -0.01 Shang/Shen 3,276 -0.8%MXNx10 0.8007 0.4% LME Al 3m 1.02 0.1% Australia 5.66 -0.02 Sensex30 17,451 0.2%ZAR 0.1365 -0.1% LME Ni 3m 10.20 1.0% Hong Kong 2.66 -0.02 CDX IG 5Yr 87.35 -2.5%KRWx10 0.8816 0.0% LME Zn 3m 1.02 -1.6% India 7.87 -0.01 TRIN 0.77 7%SGD 0.7140 0.1% Lumber 278.40 -0.1% Japan 1.36 -0.02 VIX L 16.34 -3.1%
Moves Currencies (spot) Commodities Government 10- Yr Benchmarks Equity Indices
1.0% 0.5% 0.0% 0.5% 1.0%
EUR
GBP
JPY
ZAR
KRW
CHF
SGD
AUD
NZD
CAD
MXN
BRL
2.0% 1.0% 0.0% 1.0% 2.0%
LME Zn 3m
DJ UBS
Lumber
CMX Cu
AECO Gas
LME Al 3m
Gold
Silver
Platinum
WTI Oil
Palladium
LME Ni 3m
NMX Gas
-0.15-0.10-0.050.000.05
Greece
Spain
Italy
Hong Kong
Australia
France
Japan
Germany
India
U.K.
Sw itzerland
Canada
U.S.
1.0% 0.5% 0.0% 0.5% 1.0% 1.5%
Shang/Shen
Topix
Sensex30
Hang Seng
S&P 1200
FTSE 100
S&P/TSX
Euro STOXX
S&P 500
S&P/ASX
Sectors S&P Global 1200 S&P Europe 350 S&P 500 S&P/TSX Composite
0.0% 0.2% 0.4% 0.6% 0.8% 1.0%
Hlth Care
Utilities
Telecom
Cons Stap
Energy
Cons Disc
Financials
Industrials
Info Tech
Materials
0.0% 0.5% 1.0% 1.5%
Utilities
Energy
Hlth Care
Cons Disc
Financials
Cons Stap
Telecom
Info Tech
Industrials
Materials
0.5% 0.0% 0.5% 1.0% 1.5%
Hlth Care
Cons Stap
Telecom
Utilities
Cons Disc
Energy
Info Tech
Financials
Materials
Industrials
0.5% 0.0% 0.5% 1.0% 1.5% 2.0%
Industrials
Cons Stap
Materials
Telecom
Energy
Utilities
Financials
Cons Disc
Hlth Care
Info Tech
Source for all data and graphics in this publication: BMO Capital Markets, Bloomberg, Thomson * H/L = at a new closing 52- wk High/Low; / = within 10% of the 52- week High/Low; Colour codes are inverted for bond and sentiment indications
Daily Charts 3- Month View with 50- and 26- Day Moving Averages
Greek to Me (Greek 10-year bond yields fell 14bps and are 34bps off of Monday’s high): Germany, France Back IMF Role – Bloomberg; Greece, the IMF and the euro - LEX; Greek Crisis Risks Boiling Over - WSJ; Germany sets conditions for Greek rescue - FT.
Daily Sector Charts 3- Month View with 50- and 26- Day Moving Averages
New Highs: U.S. - Industrials, Discretionary, Staples, Technology; Canada – Discretionary, Health Care, Financials; Europe – Materials, Industrials, Discretionary, Technology.
S&P 500
S&P/TSX Composite
S&P Europe 350
Market Elements
Page 5 March 23, 2010 (Back to Index)
Market Movers – Largest Daily Percentage Moves Global - Cairn Energy (CNE LN) shares surge on improved India outlook - AFP.
U.S. - Titanium Metals (TIE), RTI International Metals (RTI) surge in wake of Boeing production boost - MW.
Canada – Bankers Petroleum (BNK) volumes have grown on this breakout.
S&P Global 1200 ex U.S. & Canada S&P 500 S&P/TSX CompositeName Symbol % Chg Name Symbol % Chg Name Symbol % ChgSECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg
Energy Cairn Energy PLC CNE LN 7.9% EOG Resources Inc EOG 2.9% Bankers Petroleum Ltd BNK 7.5%Technip SA TEC FP 5.3% Peabody Energy Corp BTU 2.5% Crew Energy Inc CR 3.9%
Saipem SpA SPM IM 4.0% Pioneer Natural Resources Co PXD 2.3% Mullen Group Ltd MTL 3.1%Nippon Oil Corp 5001 JP -0.6% Baker Hughes Inc BHI -0.8% AltaGas Income Trust ALA-U -1.0%
TonenGeneral Sekiyu KK 5012 JP -0.7% BJ Services Co BJS -0.8% Pacific Rubiales Energy Corp PRE -1.6%
SK Energy Co Ltd 096770 KS -0.8% Nabors Industries Ltd NBR -4.3% Progress Energy Resources Corp PRQ -2.0%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgMaterials Cia Siderurgica Nacional SA SID US 5.8% Titanium Metals Corp TIE 9.3% Silvercorp Metals Inc SVM 5.0%
Vale SA VALE/P US 4.3% Cliffs Natural Resources Inc CLF 6.9% HudBay Minerals Inc HBM 4.0%
BlueScope Steel Ltd BSL AU 3.6% United States Steel Corp X 4.9% Lundin Mining Corp LUN 3.9%
European Aeronautic Defence an EAD FP -2.1% Norfolk Southern Corp NSC -0.3% TransForce Inc TFI -0.8%
BAE Systems PLC BA/ LN -2.2% Union Pacific Corp UNP -0.4% Canadian Pacific Railway Ltd CP -0.9%
All Nippon Airways Co Ltd 9202 JP -6.0% Lockheed Martin Corp LMT -1.1% Canadian National Railway Co CNR -1.1%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgCons Disc OPAP SA OPAP GA 8.7% JC Penney Co Inc JCP 5.1% Linamar Corp LNR 4.0%
Li & Fung Ltd 494 HK 4.7% Lennar Corp LEN 4.7% Corus Entertainment Inc CJR/B 2.4%
Sony Corp 6758 JP 3.6% AutoNation Inc AN 4.2% Thomson Reuters Corp TRI 1.6%
Volkswagen AG VOW GR -4.4% Expedia Inc EXPE -2.3% Canadian Tire Corp Ltd CTC/A -0.1%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgCons Stap Henkel AG & Co KGaA HEN3 GR 4.0% Kraft Foods Inc KFT 3.5% North West Co Fund NWF-U 1.6%
Carlsberg A/S CARLB DC 2.0% CVS Caremark Corp CVS 2.1% Cott Corp BCB 1.6%Grupo Modelo SAB de CV GMODELOC MM 2.0% Mead Johnson Nutrition Co MJN 1.7% Saputo Inc SAP 1.4%
Wilmar International Ltd WIL SP -0.8% Coca-Cola Enterprises Inc CCE -0.5% Loblaw Cos Ltd L 0.1%
Asahi Breweries Ltd 2502 JP -1.2% Dr Pepper Snapple Group Inc DPS -0.6% Maple Leaf Foods Inc MFI -0.6%
Unilever PLC ULVR LN -1.6% Philip Morris International In PM -0.9% Metro Inc MRU/A -0.8%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgHealth Care Elan Corp PLC ELN ID 2.7% Pfizer Inc PFE 2.3% MDS Inc MDS 2.2%
Novo Nordisk A/S NOVOB DC 1.4% Waters Corp WAT 2.1% Biovail Corp BVF 1.1%
Sonic Healthcare Ltd SHL AU 0.9% Watson Pharmaceuticals Inc WPI 1.8% CML Healthcare Income Fund CLC-U 0.5%
Eisai Co Ltd 4523 JP -1.6% Quest Diagnostics Inc/DE DGX -1.2% SXC Health Solutions Corp SXC -0.0%
CSL Ltd CSL AU -1.7% WellPoint Inc WLP -1.2%
Fresenius Medical Care AG & Co FME GR -2.0% Laboratory Corp of America Hol LH -2.5%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgFinancials Legal & General Group PLC LGEN LN 4.7% E*Trade Financial Corp ETFC 7.3% FirstService Corp FSV 2.4%
Alpha Bank AE ALPHA GA 3.5% Wells Fargo & Co WFC 2.2% CI Financial Corp CIX 1.6%
Daiwa House Industry Co Ltd 1925 JP -2.2% Goldman Sachs Group Inc/The GS -0.8% Dundee Real Estate Investment D-U -0.7%
Mitsui Fudosan Co Ltd 8801 JP -3.3% SunTrust Banks Inc STI -0.8% National Bank of Canada NA -0.7%Promise Co Ltd 8574 JP -3.6% ProLogis PLD -0.9% Home Capital Group Inc HCG -0.8%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg
Technology Infineon Technologies AG IFX GR 5.1% Lexmark International Inc LXK 5.5% Celestica Inc CLS 4.6%
Toshiba Corp 6502 JP 3.6% KLA-Tencor Corp KLAC 4.4% Research In Motion Ltd RIM 2.2%
ASML Holding NV ASML NA 3.1% Dell Inc DELL 4.1% MacDonald Dettwiler & Associat MDA 1.5%MediaTek Inc 2454 TT -2.1% Google Inc GOOG -1.5% CGI Group Inc GIB/A 0.0%
Asustek Computer Inc 2357 TT -2.1% Amphenol Corp APH -1.7% Open Text Corp OTC -0.2%
Redecard SA RDCD3 BZ -2.2% Yahoo! Inc YHOO -1.9%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgTelecom Telenor ASA TEL NO 2.0% Qwest Communications Internati Q 3.7% TELUS Corp T 1.5%
Portugal Telecom SGPS SA PTC PL 1.9% Sprint Nextel Corp S 3.4% BCE Inc BCE 0.5%
Singapore Telecommunications L ST SP 1.6% MetroPCS Communications Inc PCS 2.0% Bell Aliant Regional Communica BA-U 0.2%
Telstra Corp Ltd TLS AU -1.3% AT&T Inc T 0.6% Manitoba Telecom Services Inc MBT 0.1%
Tele Norte Leste Participacoes TNE US -1.9% CenturyTel Inc CTL 0.5% Rogers Communications Inc RCI/B -0.1%
Nippon Telegraph & Telephone C 9432 JP -2.3% Frontier Communications Corp FTR 0.3%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgUtilities Veolia Environnement VIE FP 4.1% Questar Corp STR 1.6% Capital Power Income LP CPA-U 1.8%
Suez Environnement Co SEV FP 3.4% FirstEnergy Corp FE 1.4% Fortis Inc/Canada FTS 1.1%
Cia Energetica de Minas Gerais CIG US 2.6% Oneok Inc OKE 1.2% TransAlta Corp TA 1.0%
United Utilities Group PLC UU/ LN -1.4% AES Corp/The AES -0.4% Atco Ltd ACO/X -0.1%
Osaka Gas Co Ltd 9532 JP -1.8% Sempra Energy SRE -0.5% Just Energy Income Fund JE-U -0.5%
Chubu Electric Power Co Inc 9502 JP -3.1% Xcel Energy Inc XEL -0.9% Atlantic Power Corp ATP -0.5%
Company Ticker Country Sector Industry MktCap Period TimeResolute Energy Corp REN US U. S. Energy OG E&P 630 Q4PetroChina Co Ltd PTR US China Energy Int O&G 24,580 YEndeavour Silver Corp EDR CN Canada Materials PrecMet 200 Q4 Bef-mktAlexis Minerals Corp AMC CN Canada Materials DvrsMng 80 Q4Commercial Metals Co CMC US U. S. Materials Steel 1,850 Q2Omnova Solutions Inc OMN US U. S. Materials SpecChm 320 Q1 21:00Eurasian Natural Resources Corp ENRC LN U.K. Materials DvrsMng 22,360 YNan Ya Plastics Corp 1303 TT Taiwan Materials ComdChm 15,780 YFormosa Plastics Corp 1301 TT Taiwan Materials ComdChm 13,510 YWacker Chemie AG WCH GR Germany Materials SpecChm 7,080 Y 16:00Israel Chemicals Limited ICL IT Israel Materials Fert&Ag 1,690 YHochschild Mining plc HOC LN U.K. Materials PrecMet 1,400 YMirabela Nickel Ltd MBN AU Australia Materials DvrsMng 790 S1Canadian Pacific Railway CP CN Canada Industrials Railroads 9,180 Q1Robbins & Myers Inc RBN US U. S. Industrials Ind Mach 860 Q2 Bef-mktGenCorp Inc GY US U. S. Industrials Aero&Def 280 Q1Q-Cells AG QCE GR Germany Industrials ElcCmpEq 840 YDP World Ltd 3DW GR UAE Industrials MarineSrv - YDollarama Inc DOL CN Canada CMR Disc GMrchStrs 1,560 Q4Wescast Industries Inc WCS.A CN Canada CMR Disc AutoParts 10 Q4Lennar Corporation LEN US U. S. CMR Disc HomeBld 2,500 Q1 Bef-mktCKE Restaurants Inc CKR US U. S. CMR Disc Rstaurnt 620 Q4 Aft-mktdELiA*s Inc DLIA US U. S. CMR Disc CatalgRtl 60 Q4 Bef-mktLi & Fung Ltd 494 HK Bermuda CMR Disc Distrib 19,570 YBelle International Holdings Ltd 1880 HK Cayman CMR Disc ApparlRtl 10,820 YChina Dongxiang Group Co 3818 HK Cayman CMR Disc Aprl&Gds 4,130 YMRV Engenharia e Participacoes SA MRVE3 BZ Brazil CMR Disc HomeBld 3,620 Y Aft-mktBellway PLC BWY LN U.K. CMR Disc HomeBld 1,340 S1Medion AG MDN GR Germany CMR Disc Distrib 540 YGeneral Mills Inc GIS US U. S. CMR Stap PkgFdMt 24,050 Q3 Bef-mktAEterna Zentaris Inc AEZ CN Canada Hlth Care Biotech 50 Q4 Bef-mktAGF Management Ltd AGF.B CN Canada Financials AsstMgmt 1,590 Q1 08:00Resolution Ltd RSL LN Guernsey Financials LifeHthIns 2,700 YGuangzhou R&F Properties Co Ltd 2777 HK China Financials REstDevl 1,610 YEspirito Santo Financial Group SA ESF PL Luxembourg Financials DiversBnk 1,560 Y 07:00Bank Hapoalim BM POLI IT Israel Financials DiversBnk 560 YPure Technologies Ltd PUR CN Canada Info Tech ElecInstr 150 Q4Cyberplex Inc CX CN Canada Info Tech InetSftSrv 60 Q4 Aft-mktPaychex Inc PAYX US U. S. Info Tech DataProc 11,740 Q3 Aft-mktRed Hat Inc RHT US U. S. Info Tech SystmSwr 5,660 Q4Epistar Corp 2448 TT Taiwan Info Tech Semi 2,590 YZTE Corp 763 HK China Info Tech ComEquip 2,050 YWPG Holdings Co Ltd 3702 TT Taiwan Info Tech TechDist 1,510 YRichtek Technology Corp 6286 TT Taiwan Info Tech Semi 1,470 YChina Unicom Ltd CHU US Hong Kong Telecom IntegTelSrv 28,110 YMobile Telesystems OJSC MBT US Russia Telecom WlsTelSrv 21,720 YA2A SpA A2A IM Italy Utilities MultiUtil 5,630 Y
Red = Canadian incorporated, Blue = U.S. incorporated, Highlighted = S&P Global 1200 Index member
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Relative Strength Filter March 24, 2010 Research Comment Quantitative/Technical Research Mark Steele (416) 359-4641 [email protected] Assoc: Tiberiu Stoichita
Euro Breakdown
CLICK HERE for a printer friendly version of this report including research disclosures.
The euro brok e to the down side at 4:40 a.m. this morning (before Fitch downgraded Portugal; and on this downgrade, we note that it is having little if any impact on Portuguese sovereign deb t so far – see BMO Chart). This euro break down follows a failed upsid e r eversal only eight sessions ago – Figure 1. Risk on the euro is to the 1.32 level. Headline risk is certainly the order of the week and year for the euro.
This euro weakness / dollar st rength will certainly weaken gold shares, which have dropped to a 6th decil e position in our Group Selection Report.
It will a lso hold Europ ean indi ces in four-bom b underperforming trends, and No rth American in dices in four-star outperforming patterns compared to the S&P Global 1200 – see link.
For equity investors - stay dollar bloc.
Figure 1: Euro With 200-, 50- and 26-Day Moving Averages at 6:40 a.m. This Morning
Source: BMO Capital Markets, Bloomberg, Thomson, Markit
On today’s docket… U.S. durable goods orders—February (@ 08:30): Sal Guatieri notes that they should rise 0.6%, boosted by a jump in Boeing orders. However, lower auto production likely acted as a slight headwind. Excluding transportation, orders are expected to retrace part of the prior month’s 1% decline. Core capital goods orders (a good proxy for business capital spending) which were particularly weak in January, plunging 4.1%, likely also rebounded, but probably not enough to erase the earlier decline.
U.S. new home sales—February (@ 10:00): Sal also notes that they are likely to hold flat at January’s record low 309,000. While the small increase in the NAHB index in February points to some potential gain, it was likely overwhelmed by the poor weather. And, with the NAHB falling in March, the outlook for housing remains negative. (Yesterday, existing sales slipped 0.6% to 5.02 mln, down for the third month in row).
Then cometh the Canadian policymakers… Finance Minister Jim Flaherty will hold a news conference @ 9:00. He’s apparently announcing the kickoff of pension reform consultations, as advertised in the recent budget.
Bank of Canada Governor Carney speaks on “The Virtue of Productivity in a Wicked World”. The text will be released @12:50, followed by a press conference @ 14:10. Any discussion on productivity will probably touch on the loftiness of the loonie and the need for Canadian firms to become more productive to compete in foreign markets and at home (with the C$ also providing a means to achieve this—cheaper imported capital goods). It could also touch on other implications of Canada’s poor productivity performance—it lowers the economic speed limit and has already been cited (in January’s MPR) as a culprit contributing to the “stickiness” of core inflation by keeping unit labour cost increases stubbornly high.
However, with it now looking like the BoC’s projections for Q1 core CPI inflation (1.6% y/y) and real GDP growth (3.5%) will both come up short, market participants will be scouring the text and Q&A for clues to the timing and magnitude of those first few policy rate hikes. While Mr. Carney might hint at an upgrade to the near-term projections to be presented in April’s Monetary Policy Report, we still wouldn’t be surprised if the Governor downplays the recent upside surprise in the core CPI (owing to Olympic-sized hotel price hikes) and run of reports pointing to a solid January GDP gain with February overflow (owing to the Olympics again along with pulled-forward housing activity and the temporary ripples from North American inventory restocking). The policy clues could be sparse.
The Province of Saskatchewan will table its FY2010/11 budget @ 16:15. Robert Kavcic notes that it’s expected to focus on spending restraint as resource revenues remain under pressure. In its latest FY2009/10 update, the Province penciled in a $425 mln surplus, but an $86 mln deficit before transfers from the reserve fund. The weakened fiscal position (which is still quite healthy relative to all other Provinces) is the result of a massive $2.1 bln decline in potash revenues from last year’s original budget plan—prices and production both fell sharply last year. The Province has already begun to reign in spending plans, lowering the FY2009/10 tally by $100 mln during the last year, and this year’s budget will likely take further aim at government expenses.
Yesterday afternoon, Manitoba tabled its budget. Rob reported that the province’s FY2010/11 plan takes a balanced approach to deficit reduction against a still-fragile economic backdrop, offering modest spending growth and some tax/user fee increases. It is projecting a $545 mln summary deficit in FY2010/11, slightly improved from an estimated $555 mln deficit in FY2009/10. The Province will lean on its Fiscal Stabilization Account for $129 mln. Longer term, the Province is anticipating four years of deficits before returning to a $185 mln surplus in FY2014/15… We get Ontario tomorrow.
Rounding out Wednesday’s docket… 10:30: U.S. DoE petroleum report for March 19th… 10:45: KC Fed Pres. Hoenig (the two-time FOMC dissenter) speaks on “The Financial Foundation for Main Street”… 12:05: C$3.2 bln auction of 3-year Government of Canada bonds… 13:00: US$42.0 bln auction of 5-year U.S. Treasury notes… 20:00: Fed Gov. Kohn speaks on “Homework Assignments for Monetary Policymakers”.
Just in… The ABC News consumer index decreased a notch to -44 for March 21st, still the second best reading in the past 11 weeks… The MBA mortgage index decreased 4.2% (-47.9% y/y) for March 19th.
OVERSEAS – Benjamin Reitzes
The US$ index is up strongly this morning, thanks mostly to a sizeable drop in the euro (see below). All the other majors are weaker as well, with the NZ$ lagging after Q4’s current account deficit widened much more than expected. Elsewhere, Japan’s February merchandise trade surplus came in higher than consensus, as exports rose 45.3% y/y. Export volumes were solid too, up 1.2% on the month and 44% y/y. But the decent data didn’t help the yen. The pound is softer ahead of a pre-election budget announcement by the ruling Labour party (who are trailing in the polls). The budget is expected to lay out the framework for returning to a more sustainable fiscal path. The strong US$ is weighing on commodities: oil is down 1.7% to $80.50, gold is $10 lower to $1095, base metals are down 1% to 2%, and grains are weaker as well. The euro fell to its lowest level since last May, as it appears that the IMF will be part of any aid package for Greece. Markets are concerned that IMF involvement could mean ever harsher austerity measures (since currency devaluation isn’t an option), which could prompt a potential exit from the Euro area by Greece. The push to get the IMF involved came solely from Germany who has strongly resisted providing any support to Greece, as it is politically extremely unpopular. IMF involvement would add some credibility to the process, as it is very experienced in these matters, but it certainly shows that the Euro area can’t take care of its own. This crisis is a test of the currency’s staying power, and if Greece is allowed to exit, that may only be the first step towards eventual dissolution of the Euro area. Greece isn’t the only country facing difficulty, as Fitch downgraded Portugal’s sovereign debt rating one notch to AA- and kept the negative outlook (meaning more downgrades are possible). Politics are
Sector Comment Economic Research
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starting to play a more prominent role in the crisis, which could spell trouble for heavily indebted Euro area countries. As long as the Greece situation drags on without resolution, the euro will likely remain under pressure. Moreover, if there’s no resolution soon, Portugal and Spain could soon be in the spotlight as well. Meantime, Euro area data were mostly solid. The manufacturing and services PMIs for March handily beat expectations. The manufacturing index rose to its best level since Dec. ’06, while the services measure hit a 28-month high. Germany’s Ifo survey of business confidence also beat expectations, rising 2.9 pts to 98.1 in March, a 21-month high. The current situation and expectations components both gained ground. The improvement in both the PMIs and the Ifo survey point to more solid growth in Q2 following a weather-dampened Q1. There was one bit of softer news though, as Euro area industrial new orders fell 2% in January. The consensus call was for a similar-sized gain. Bottom Line: Europe is recovering, but the pace remains sluggish. Asian equity markets closed higher, as the Nikkei rose 0.4%, the Hang Seng gained 0.1%, and China’s CSI 300 was flat. European markets are down; DAX (-0.7%), CAC (-0.9%), FTSE (-0.5%). U.S. equity futures are pointing to a lower open. U.S. treasuries are little changed. Gilts and Bund 10-yrs yields are flat as well. JGB 10-yr yields were down 1 bp.
Data Docket: Japan: Merchandise Trade Surplus (Feb) ¥651 bln, better than expected;
exports up 45.3% y/y Euro area: Manufacturing PMI (Mar A) 56.3, up 2.1 pts and better than
expected Services PMI (Mar A) 53.7, up 1.9 pts and better than expected Industrial New Orders (Jan) -2.0%, +7.0% y/y Germany: Ifo Survey (Mar) 98.1, up 2.9 pts and better than expected
AM CHARTS
Perhaps That 5% Q4 Growth Was No Fluke A Tale Of Two Housing Markets ON THE WEB: (Link to Chart)
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