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| Market News: News Archive : Morning News Call week ending |
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Mar 26, 2010
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FRIDAY, MARCH 26, 2010, CANADIAN EDITION
TOP NEWS
• Biovail buys respiratory depression treatments
• UBS cuts 200 jobs in U.S. brokerage unit
• CVTech Group posts Q4 loss
• Strongco Q4 loss narrows
BEFORE THE BELL
Firmer commodity prices is seen to lift Toronto’s main stock index on Friday after euro zone leaders agreed to create a joint financial safety net with the IMF for debt-laden Greece. With no major data set for release, markets will take cues from Wall Street, which is also set to open higher ahead of data on consumer sentiment and growth. European shares retreated from annual highs as markets remain cautious about peripheral economies in the region. Asian stocks rallied with Nikkei outperforming the region helped by buying of large exporters and technology stocks. Oil rose above US$81 per barrel as dollar lost ground though gains were limited on concerns of weak demand for crude. Gold gained half a percent helped by steady purchases in Asia.
STOCKS TO WATCH THIS MORNING
• Biovail Corp. (BVF). The drugmaker on Friday said it bought respiratory depression treatments from Cortex Pharmaceuticals in a deal worth US$10 million. The company said it paid an upfront fee of US$9 million for the Ampakine compounds and expects to pay an additional US$1 million at the completion of a transition period.
• Bridge Resources Corp. (BUK). The company said it retained Stellar Energy Advisors Ltd to market the sale its UK Southern North Sea Gas area and that it will pursue the sale of its wholly-owned Bridge North Sea Ltd subsidiary. The proceeds from the sale will be used to retire debt, the company said.
• Cominar Real Estate Investment Trust (CUF_u). The trust said it will raise $100 million to repay debt and to fund future acquisitions and developments.
• CVTech Group Inc. (CVT). The electrical services provider on Friday posted a fourth-quarter loss, partly hurt by weakness at its CVT systems and related products segment. Net loss for the quarter was $25,000, or breakeven on a per share basis.
• Hydrogenics Corp. (HYG). The fuel-cell maker on Friday posted a fourth-quarter profit, helped by a gain, despite a 52 percent slide in revenue. The company earned US$1.64 per share, compared with a net loss 53 U.S. cents per share, a year ago.
• Midway Energy Ltd. (MEL). The company reported a fourth-quarter loss of 4 cents a share, on petroleum and natural gas revenue of $3.7 million. The company also said it sees 2010 capital expenditures of about $39 million to $41 million.
• Painted Pony Petroleum Ltd. (PPYa). The exploration and development company's fourth-quarter profit rose on higher petroleum and natural gas revenue.
• Peyto Energy Trust (PEY_u). The company said banking syndicate, lead by Bank of Montreal (BMO), has expanded its revolving credit facility to $625 million.
• Sentry Select Primary Metals Corp. (PME). Shareholders of the company have approved its restructuring proposal and the company said the proposal is not expected to affect the corporation's current monthly dividend.
• Strongco Income Fund (SQP_u). The maker of engineered systems and equipment on Friday posted a narrower fourth-quarter loss, helped by higher margins, and said its current order book for new construction equipment has nearly doubled from the end of 2009. The net loss narrowed to 20 cents a share, from a loss of 25 cents a share, a year ago.
• Volta Resources Inc. (VTR.). The Environmental Protection Agency of Ghana has informed Volta that Ghanaian Environmental Permits for Mineral Exploration will not renew licenses for some of the company’s properties in Ghana. Volta said it has suspended exploration activities on these properties and given the uncertainty of the current situation, the company has determined to write down the value of the contested licenses to a nominal valuation.
CORPORATE EVENTS
10:00 Franco Nevada Corp. (FNV). Q4 earnings conference call
10:00 Hydrogenics Corp. (HYG). Q4 earnings conference call
ANALYST RECOMMENDATIONS
• ATS Automation Tooling Systems (ATA) price target raised to $8.85 from $8.60; rating buy at Versant
• Fortuna Silver Mines (FVI) price target raised to $3.30 from $3.25; rating buy at Versant
• Macquarie Power & Infrastructure Income Fund (MPT_u) price target raised to $7.50 from $7; rating neutral at Macquarie
• Petroamerica Oil (PTA) price target raised to $1.10 from $1; rating outperform at Raymond James
• UTS Energy (UTS) price target raised to $2.90 from $2.65; rating buy at UBS
EXDIVIDENDS
• Logistec Corp. (LGTa). Amount $0.0775
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Obama's healthcare win could boost foreign policy
President Barack Obama's domestic success on healthcare reform may pay dividends abroad as the strengthened U.S. leader taps his momentum to take on international issues with allies and adversaries.
More than a dozen foreign leaders have congratulated Obama on the new healthcare law in letters and phone calls, a sign of how much attention the fight for his top domestic policy priority received in capitals around the world.
Analysts and administration officials were cautious about the bump Obama could get from such a win: Iran is not going to rethink its nuclear program and North Korea is not going to return to the negotiating table simply because more Americans will get health insurance in the coming years, they said.
But the perception of increased clout, after a rocky first year that produced few major domestic or foreign policy victories, could generate momentum for Obama's agenda at home and in his talks on a host of issues abroad.
"It helps him domestically and I also think it helps him internationally that he was able to win and get through a major piece of legislation," said Stephen Hadley, former national security adviser to Republican President George W. Bush.
"It shows political strength, and that counts when dealing with foreign leaders."
Obama's deputy national security adviser Ben Rhodes said the Democratic president's persistence in the long healthcare battle added credibility to his rhetoric on climate change, nuclear nonproliferation and other foreign policy goals.
"It sends a very important message about President Obama as a leader," Rhodes told Reuters during an interview in his West Wing office.
"The criticism has been: (He) sets big goals but doesn't close the deal. So, there's no more affirmative answer to that criticism than closing the biggest deal you have going."
Foreign policy dividends have been minimal in the short amount of time since he signed the healthcare bill into law on Tuesday.
Exhibit A: a one-on-one meeting this week between Obama and Prime Minister Benjamin Netanyahu of Israel, a country that closely tracks U.S. domestic policy, yielded little sign of a breakthrough in a dispute over Jewish housing construction on occupied land in Israeli-annexed East Jerusalem.
A FOREIGN POLICY SUCCESS, TOO
Still, some specific foreign policy successes are looming.
U.S. and Russian officials say Washington and Moscow are close to announcing an agreement on a nuclear arms reduction treaty, which would require a two-thirds majority in the U.S. Senate for ratification.
Some analysts said Russia was watching Obama's domestic successes and failures throughout the process.
"I think there were some in the Kremlin saying, 'how strong is he? If he can't get some of these things through, does that give us more leverage to push him on arms control?'" said Steven Pifer, a former U.S. ambassador to Ukraine and now a senior fellow at the Washington-based Brookings Institution.
Administration officials played down a connection between healthcare and talks with Russia on the START nuclear arms treaty, though Rhodes said the processes that led to success on both issues were similar.
"Like healthcare, the START treaty has been a negotiation where at times we seemed very close to getting a deal done and then there were huge roadblocks," Rhodes said, crediting Obama and Russian President Dmitry Medvedev for sticking it out.
"So, it was a similar narrative of persistence, of refusing to throw in the towel at times when he could have."
Foreign leaders have noted the persistence.
German Chancellor Angela Merkel, French President Nicolas Sarkozy, and British Prime Minister Gordon Brown were among the leaders who congratulated Obama, and South Korean President Lee Myung-bak said the healthcare win would have a positive impact abroad, according to White House spokesman Robert Gibbs.
Analysts said the bill's passage showed Obama could deliver votes for domestic legislation with foreign policy components, such as rules to fight climate change, currently stalled in the Senate, which European leaders are eager to see advance.
James Lindsay, senior vice president at the Council on Foreign Relations in New York, who was skeptical that Obama's healthcare win would have a huge foreign policy benefit, said the law did free up the president to focus less on purely domestic issues.
"If the president had lost on healthcare, it would have further sapped his popularity as president, requiring him to spend even more time on domestic affairs and left him with less time to devote to foreign policy," he said.
"That's not the same as saying that because the healthcare bill has passed that the Iranians are going to be more pliable in their nuclear program, that the Israelis are going to rethink their settlement policy or the Chinese are going to become more agreeable on currency issues."
--- Jeff Mason, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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© 2010 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. Any copying, distribution or redistribution of this content is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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THURSDAY, MARCH 25, 2010, CANADIAN EDITION
TOP NEWS
• Thai court case won't stall Siam City deal – report
• Lululemon Q4 profit up on running wear, economy
• Ambac may seek bankruptcy protection
• Dubai offers US$9.5 bln for debt deal; no haircuts
• ConAgra Q4 profit up helped by consumer foods
BEFORE THE BELL
Toronto’s main stock index may open higher on Thursday as commodity prices regain some strength and ahead of an EU meeting while plans by Dubai to support its debt-laden firms provide relief. U.S. stocks are also set for a firmer start ahead of jobless claims data and the seven-year treasury auction. Traders will also be listening to Fed Chairman Ben Bernanke’s testimony to Congress on monetary policy. European shares hit 17-month high, led by buoyant banks, as EU looked to work out aid for debt laden Greece. Dubai's debt issues were in focus again after the emirate's government said it would support the restructuring of Dubai World and its Nakheel subsidiary by providing US$9.5 billion in new funding. Asian shares were mixed with Nikkei led higher by technology shares. Oil hovered around US$81 a barrel crude as inventories indicated demand was slow to pick up and dollar held near 10-month highs. Gold prices rose to trade at US$1093.45 an ounce, recovering some of the previous session's hefty losses.
COMPANIES REPORTING RESULTS
• Franco-Nevada Corp. (FNV). Expected to report Q4 earnings of 10 U.S. cents a share, according to Thomson Reuters I/B/E/S
• Richelieu Hardware Ltd. (RCH). Expected to report Q1 earnings of 25 cents a share
STOCKS TO WATCH THIS MORNING
• ARISE Technologies Corp. (APV). The company on Thursday reported lower fourth-quarter loss of 5 cents a share helped by increase in demand.
• ATS Automation Tooling Systems Inc. (ATA). The company on Thursday agreed to acquire the Sortimat Group, maker of specialized assembly systems for medical products. The final purchase price is expected to be up to about $62 million. The company also said acquisition is expected to be accretive to EBIT and cash flow
• Azure Dynamics Corp. (AZD). The maker of hybrid electric components and powertrain systems reported on Wednesday a narrower loss in fourth-quarter helped in part by lower engineering, research and other related costs. Net loss for the period was $8 million, or 2 cents a share, compared with a loss of $14.5 million, or 4 cents a share, a year earlier.
• Bank of Nova Scotia (BNS). Thanachart Bank, 49 percent owned by Bank of Nova Scotia, said on Thursday it was on track to acquire a stake in Siam City Bank despite criminal charges hanging over two of its executives, which could in theory scupper the deal, Thailand's biggest in four years.
• Crocotta Energy Inc. (CTA). The oil and natural gas company swung to a fourth-quarter profit on Thursday, as stabilizing commodity prices propped up oil and gas revenue. The company posted net income of 5 cents a share, compared with a loss of 7 cents a share, a year ago.
• Cyberplex Inc. (CX). The provider of web advertising solutions posted fourth-quarter earnings that missed market expectations on lower revenue and a foreign exchange loss. Net income for the period was $1.3 million, or 2 cents a share, compared with earnings of $4.9 million, or 9 cents a share, last year.
• Ivanhoe Mines (IVN). The mineral exploration and development company said on Wednesday it will consider spinning off its 50 percent owned Altynalmas Gold venture, as it works toward bringing the Kyzyl gold project in Kazakhstan into commercial production.
• Keystone North America Inc. (KNA). Funeral home operator Service Corp International said it received U.S. regulatory clearance for the US$200 million acquisition of rival Keystone.
• Lululemon Athletica (LLL). The retailer reported strong fourth-quarter results on Thursday, helped by its growing line of running gear and a rebound in consumer confidence. The company said it had earned 40 U.S cents a share, in the fourth quarter, up from 16 U.S. cents a share, a year earlier.
• Maxim Power Corp. (MXG). The independent power producer reported a lower profit for the fourth-quarter hurt mainly by lower average Alberta power prices. Net income for the period was $505,000, or 1 cent a share, compared with $7.5 million, or 15 cents a share, a year earlier.
• Orleans Energy Ltd. (OEX). The company reported on Wednesday a loss of 2 cents a share for the fourth-quarter, on petroleum and natural gas revenue of $12.1 million.
• Petrominerales Ltd. (PMG). The company said it would forgive the US$9 million loan facility advanced to Veraz Petroleum and retain its 55 percent working interest in Block 126 in Peru.
CORPORATE EVENTS
08:30 OccuLogix Inc. (TLB). Q4 earnings conference call
09:00 Lululemon Athletica Inc. (LLL). Q4 earnings conference call
09:00 UTS Energy Corp. (UTS). Q4 earnings conference call
09:30 Toronto Dominion Bank (TD). Shareholders meeting
10:00 Theratechnologies Inc. (TH). Shareholders meeting
11:00 Endeavour Silver Corp. (EDR). Q4 earnings conference call
11:00 Richelieu Hardware Ltd. (RCH). Shareholders meeting
15:00 Richelieu Hardware Ltd. (RCH). Q1 earnings conference call
ANALYST RECOMMENDATIONS
• Air Canada (ACa) price target to $3.50; rating outperform at Raymond James
• Canadian National Railway (CNR) rating raised to outperform from neutral at Macquarie
• Canadian Pacific Railway (CP) price target raised to $64 from $61; rating outperform at Macquarie
• Cyberplex Inc. (CX) rating cut to hold from buy at Paradigm
• Quadra Mining (QUA) rating raised to buy at Paradigm
• Theratechnologies (TH) rating raised to outperform from sector perform at RBC
• Torstar Corp. (TSb) rating cut to sector perform from outperform at RBC
EXDIVIDENDS
• Canadian Imperial Bank of Commerce (CM). Amount $0.87
• HOMEQ Corp. (HEQ). Amount $0.07
• IGM Financial Inc. (IGM). Amount $0.5125
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Obama tackles Wall Street reform in next big push
Fresh from his victory on landmark healthcare legislation, U.S. President Barack Obama is ready to take on Wall Street.
In the same week Obama signed into law his sweeping healthcare plan, his administration began a publicity blitz to sell his proposal to reshape the financial regulatory system.
Obama held a strategy session on Wednesday with two Democrats, Senate Banking Committee Chairman Christopher Dodd and House of Representatives Financial Services Committee Chairman Barney Frank, who are leading the effort to pass the plan in Congress.
Democrats hope the healthcare win will lend momentum to the push on financial reform, an issue the White House hopes will be a political winner as the party seeks to stave off potential losses in the November congressional elections.
"The good news is that, whereas the Republican message machine managed to convince a lot of Americans that the healthcare bill was bad for them, I think they will have a harder time with the financial reform," said Princeton University professor Alan Blinder. "Rightly or wrongly everybody hates Wall Street and the banks right now."
The White House has sought to tap into public fury over Wall Street's excesses to push its case for financial reform.
Carroll Doherty, an associate director at the Pew Research Center, said that anger at big financial companies cuts across the party lines of Republicans, Democrats and Independents.
A Pew Research poll in February showed that while Republicans are less supportive than Democrats of tougher financial regulations, 67 percent of Republicans held an unfavorable view of major banks. That was almost as high as the 72 percent of Democrats who felt that way.
Obama, who last year lashed out at the big bonuses of "fat cat" bankers, devoted his Saturday radio and Internet address to financial regulation.
Treasury Secretary Timothy Geithner and other officials have fanned out to hammer the message that a crackdown on Wall Street is needed to prevent another financial meltdown.
CRITICAL PHASE
The financial regulation bill moved into a critical phase on Monday after Dodd's committee approved it on a Democratic party-line vote, clearing the way for the full Senate to take it up once Congress returns next month from a two-week recess.
Dodd said he hopes the Senate can pass the bill within a month. The House has already passed a version of it, so the two chambers would need to iron out their differences.
Obama's healthcare win seemed to give an initial boost to the financial reform effort.
Republican Senators Judd Gregg and Bob Corker on Wednesday gave upbeat assessments on financial reform's prospects though they both differed with aspects of the Dodd bill.
The measure could gain further political traction in the next few weeks, predicted Calvin Jillson, a political science professor at Southern Methodist University.
Jillson said he believed Obama's approval rating -- now at just below 50 percent -- might tick upward by about five percentage points because of the passage of the healthcare bill, strengthening his ability to push other initiatives.
"I do think the outcome of the healthcare debate will rejuvenate the Democrats and Obama," Jillson said.
But former Bush administration official Tony Fratto saw little overlap between the healthcare win and the prospects for for financial reform.
COMPLEX BILL
"There is not a rush of support for the agenda of the Obama administration," he said, adding that steering the complex bill through the Senate will be an extremely difficult task. "It's the single most broad and complex piece of legislation ever to be brought to the floor of the Senate," Fratto said.
Blinder, a former Federal Reserve vice chairman, said Obama must use "a combination of cajoling, persuading and arm-twisting" of lawmakers if he wants to pass a strong bill.
A procedural maneuver known as "reconciliation" is enabling Democrats to pass some changes to healthcare with a simple majority of 51 votes, rather than the 60 votes usually needed to cut off debate. On financial reform, that avenue won't be available so any bill will need some bipartisan support.
Some Republicans have suggested that their outrage over Democratic procedural maneuvers could hurt the chances for potential compromises this year.
Financial industry analysts also wonder whether the White House may decide it is less interested in cutting a deal with Republicans in a congressional election year than in giving the Democrats a potent issue to run on in November.
The White House insists it is committed to getting a bill and one that is robust.
White House deputy communications director Jen Psaki cast the financial reform debate as "a choice between changing outdated rules that hurt the American people and standing with the financial sector that's fighting against reform."
"That's a choice that Republicans and people who oppose the legislation are going to have to make," Psaki said.
"We feel good about where we are," she added.
--- Caren Bohan, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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© 2010 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. Any copying, distribution or redistribution of this content is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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WEDNESDAY, MARCH 24, 2010, CANADIAN EDITION
TOP NEWS
• Google to phase out China search partnerships
• General Mills Q3 profit beats estimates
• BG, CNOOC ink Australia's biggest LNG supply deal
• JPMorgan closes in on tax refund deal with FDIC - report
• Aeterna returns to profit on licensing revenue
BEFORE THE BELL
Toronto’s main stock index could open lower on Wednesday, snapping a two-session gain, after Fitch lowered Portugal's rating to AA- from AA, with a negative outlook. The resource-heavy market could also be pressured by weaker commodity prices as the greenback rose to a fresh 10-month high against the euro and ahead of an announcement by the Finance minister Jim Flaherty. Wall Street is set for a lower start on concerns that the down grade of Portugal could have a wider impact on sovereign debt crisis. With no data set for release in Canada, markets will be closely following the reports on U.S. durable goods and new home sales. European shares turned negative with banks among the worst performers. Markets will also await British finance minister Alistair Darling's pre-election budget. Asian stocks rose following previous gains in U.S. but were limited as rising yen weighed on Japanese exporters. Oil fell over US$1 per barrel to trade around US$80.60 ahead of the EIA weekly inventory report. Gold was down at US$1094.60 an ounce.
COMPANIES REPORTING RESULTS
• AGF Management (AGFb). Expected to report Q1 earnings of 35 cents a share, according to Thomson Reuters I/B/E/S
• Endeavour Silver Corp. (EBR). Expected to report Q4 earnings of 7 U.S. cents a share
• Wescast Industries (WCSa). Expected to report Q4 loss of 20 cents a share
STOCKS TO WATCH THIS MORNING
• Aeterna Zentaris Inc. (AEZ). The drugmaker said on Wednesday that it returned to a fourth-quarter profit, as the company benefited from higher licensing fees and lower research expenses. The company earned 19 U.S. cents a share compared with a loss of 27 U.S. cents a share for the same time a year earlier.
• Agnico-Eagle Mines Ltd. (AEM). The company said on Tuesday it acquired 9.1 million units of Alexandria Minerals Corp at 20 cents per unit. With this purchase Agnico now has 9.9 percent ownership in Alexandria.
• Bank of Montreal (BMO). CEO Bill Downe said on Tuesday regulatory uncertainty will have lifted enough by the second half of 2010 for the bank to make acquisitions, and that waiting any longer would be a mistake.
• Black Diamond Group Ltd. (BDI). The company reported a decline in fourth-quarter revenue hurt in part by couple of large projects undertaken in the latter part of 2008 as well as the general utilization rates across all segments of the business being lower than in the prior year.
• Enbridge Inc. (ENF_u). Aboriginal groups on Canada's Pacific Coast vowed on Tuesday to block Enbridge’s proposed Northern Gateway pipeline to carry oil sands crude to export markets including China.
• IMAX Corp. (IMX). The company on Wednesday agreed to install a digital IMAX(R) theatre system at Shaw Theatres Pte Ltd, of Singapore and said the IMAX installation scheduled to open in spring of 2011.
• Madison Pacific Properties Inc. (MPC). The company reported an increase in 2009 full-year earnings from continued operations. Net income from continued operations for the period was $7.5 million, or 13 cents per share, compared with $2.7 million, or 5 cents a share, in the prior year.
• Martinrea International Inc. (MRE). The auto parts maker posted a narrower fourth quarter loss on lower charges, and said it expected gross margins to improve in the first quarter. The company posted a net loss of $5.4 million, compared with a net loss of $286.5 million a year ago.
• Theratechnologies Inc. (TH). The biotechnology company posted a narrower first quarter loss, partly helped by lower research and development costs. The company reported a net loss of $4.3 million, or 7 cents a share, compared with $10.8 million, or 18 cents a share, a year earlier.
• TransAlta Corp. (TA). The company’s 406-megawatt Unit 4 at the Sundance coal-fired power plant in Alberta returned to service on Wednesday, the Alberta Electric System Operator said in a report.
• Twin Butte Energy Ltd. (TBE). The company reported a narrower fourth-quarter loss helped in part by 68 percent increase in petroleum and natural gas sales.
• WestFire Energy Ltd. (WFE). The company reported on Wednesday an increase in fourth-quarter profits as oil and gas revenue rose. Net income for the period was $11.8 million, or 43 cents a share, compared with $0.934 million, or 6 cents a share, a year earlier.
CORPORATE EVENTS
08:00 Martinrea International Inc. (MRE). Q4 earnings conference call
10:00 Aeterna Zentaris Inc. (AEZ). Q4 earnings conference call
11:00 AGF Management Ltd. (AGFb). Q4 earnings conference call
11:00 Ember Resources Inc. (EBR). Q4 earnings conference call
11:00 Quest Capital Corp. (QC). Q4 earnings conference call
ANALYST RECOMMENDATIONS
• Black Diamond Group (BDI) price target cut to $22 from $22.50; rating outperform at Raymond James
• Bombardier (BBDb) price target raised to $7.6 from $7.5; rating outperform at Macquarie
• CAE Inc. (CAE) rating cut to market perform from outperform at Raymond James
• FNX Mining Co. (FNX) price target raised to $18.27 from $16; rating buy at UBS
• Genivar Income fund (GNV_u) price target raised to $32 from $31; rating outperform at Macquarie
• Glacier Media (GVC) price target raised to $3 from $2.50; rating outperform at RBC
• Innergex Renewable Energy (INE) price target raised to $8.85 from $8.20; keeps neutral rating at Versant
• Osisko Mining (OSK) price target raised to $11.75 from $11.50; rating buy at UBS
• Quadra Mining (QUA) price target cut to $21.55 from $23.75; keeps buy rating at Desjardins
• RioCan REIT (REI_u) rating cut to market perform from outperform at Raymond James
• Stornoway Diamond (SWY) price target raised to $0.80 from $0.60; rating market perform at Raymond James
EXDIVIDENDS
• Canadian Pacific Railway (CP). Amount $0.2475
• Ensign Energy Services Inc. (ESI). Amount $0.0875
• First Capital Realty Inc. (FCR). Amount $0.32
• Utility Corp. (UTCc). Amount $0.065
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Reuters Summit - Oil sand producers girded for next labor shortage
Albertan oil sands producers want to avoid relying on foreigners to meet skilled-labor shortages that emerge in the future, even if workers from abroad remain a useful safety valve for managing wage costs.
Executives at the Reuters Canadian Oil Sands Summit in Calgary spoke about how tough it was to find capable employees back in 2007, before the economic crash forced them to put most of their projects on hold.
"The labor situation at the time was kind of insane," said Stephen Wuori, executive vice president of liquids pipelines for Enbridge. "You had projects being built by people that maybe should have been trimming grass at a golf course."
Rick George, chief executive of Suncor Energy Inc, Canada's biggest energy company, thought the growing domination of oil sands production by major oil companies meant there would be more discipline through the next cycle.
"Your first line of defense is let's not overheat this thing and create our own firestorm around inflation again," he said, adding he would like to see more workers recruited from across Canada, while retaining the option of bringing in people from abroad.
Yet despite the thousands of people who flocked to Alberta a few years ago, wages still shot out of control.
"I don't care how many welders from the Philippines you get ... there just wasn't the capacity in Canada, or Alberta, to handle all of these projects," said Chris Seasons, president of Devon Energy Corp's Canadian division.
"In the boom times, you hoped that somebody left a gym bag behind so that they'd come back and work the next shift because they had to pick up the gym bag -- not a joke!" he added.
While he believed a return to the rampant cost inflation of 2006 and 2007 was possible, he said: "I would like to think that we all learned something along the way."
The bonuses and incentives, on top of hourly wages of up to $50, are now gone, and workers' productivity has improved.
The influx of workers had a severe impact on the local communities around the oil sands, from runaway price inflation for goods and housing to overwhelmed schools and healthcare.
Companies can now avoid those problems by flying workers in to project sites from far away.
Imperial Oil CEO Bruce March said his company, which is 70 percent owned by Exxon Mobil Corp, was now flying workers in and out of its Kearl project instead of having them spend up to three hours driving there.
March also cited the advantages of being active during the downcycle. "Our company hired 400 people last year," he said. "We've been pretty quiet about that."
Jackie Forrest, Calgary-based director of global oil for energy consultancy IHS CERA, said the industry had employed 16,000 workers from outside Alberta at the peak.
That was unlikely to reoccur, however, because current oil sands projects, which do not include plans for upgrader facilities, would require only a quarter of the workforce.
--- Braden Reddall, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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© 2010 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. Any copying, distribution or redistribution of this content is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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TUESDAY, MARCH 23, 2010, CANADIAN EDITION
TOP NEWS
• Quadra, FNX Mining to merge in $1.54 bln deal
• Google risks China's ire with slap to censorship
• Walgreen second-quarter profit rises
• Quest Capital posts FY09 loss on higher provisions
BEFORE THE BELL
Toronto’s main stock market could open negative on Tuesday pressured by lower commodity prices. On the macro front, Canada's composite leading indicator for February is expected to gain 0.8 percent, compared to a rise of 0.9 percent in the previous period, according to a Reuters poll. Wall Street is poised for a higher open, building on gains from the earlier session as markets cautiously eye housing data. European shares rose on better-than-expected results from Legal & General while Greece wants a European solution to its debt crisis and expects positive results from a summit later this week. Asian markets were mixed with tech stocks being supported by gains in their U.S. peers while investors cautiously watched moves in the yen. Oil slipped towards US$81 a barrel, under pressure as the dollar firmed. Gold eased below US$1,100 an ounce but physical buying is expected to support the market as prices reach lower levels.
COMPANIES REPORTING RESULTS
• DundeeWealth Inc. (DW). Expected to report Q4 earnings of 17 cents a share, according to Thomson Reuters I/B/E/S
• Martinrea International Inc. (MRE). Expected to report Q4 earnings of 14 cents a share
STOCKS TO WATCH THIS MORNING
• AltaGas Income Trust (ALA_u). The energy infrastructure firm said it will raise $200 million in a notes offering to repay debt and use it for general corporate purposes.
• Barkerville Gold Mines Ltd. (BGM). The company has begun mining and hauling ore at QR Mine and said it sees about $34.5 million in capital expenditure by previous operator to offset initial start-up costs.
• Brookfield Asset Management (BAMa). Elliott Management Corp, a major shareholder and creditor of General Growth Properties, is in talks to join Brookfield in its plan for the mall owner to exit bankruptcy as an independent company, a source familiar with the discussion said on Monday.
• Capstone Mining Corp. (CS). The company reported a rise in full-year earnings helped in part by increase in sales from copper. The adjusted EPS for the period was 35 cents on gross sales revenue of $250.4 million.
• Coast Wholesale Appliances Income Fund (CWA_u). The supplier of major household appliances reported a decline in fourth-quarter profits, hurt partly by slowdown in contract business with developers and builders. The basic and diluted net income per unit for the period was 17 cents on revenue of $35.6 million.
• Inspiration Mining Corp. (ISM). Pursuant to the proposed restructuring plan, the company intends to spin out its subsidiary Metal Mines as a separate public company whose shares would be listed on the Toronto Stock Exchange.
• Jaguar Mining Inc. (JAG). The company reported on Tuesday a profit for the fourth-quarter, with adjusted earnings for the period being 1 U.S. cent a share, before items, on revenue of US$39.5 million.
• Legacy Oil Plus Gas Inc. (LEG). The company reported a loss of 9 cents a share for the fourth-quarter, on petroleum and natural gas sales $31.5 million.
• Monterey Exploration Ltd. (MXL). The company reported on Monday a loss of 6 cents a share for three-month ended December 31, 2009 and maintained it 2010 first half production outlook.
• Quadra Mining (QUA). The copper miner and its rival FNX Mining Co (FNX) agreed to merger in a $1.54 billion all stock deal, creating a mid-sized base metal firm with assets in Canada, the U.S. and Chile. Under the terms of the deal, each FNX share will be exchanged for 0.87 Quadra shares, valuing each FNX share at $15.12, a premium of 2 percent over its Monday close of $14.85.
• Quest Capital Corp. (QC). The mortgage financier on Tuesday reported a net loss for 2009 as it set aside more money for bad loans, and said it was able to fully repay all bank debt.
• Romarco Minerals Inc. (R). The gold miner said it would raise about $120 million in a bought deal, and use the proceeds to develop the company's flagship Haile gold-exploration project in South Carolina.
• SouthGobi Energy Resources Ltd. (SGQ). The company reported on Monday wider loss for the fourth-quarter, hurt in part by increase in cost of sales. For the period, the company reported a loss of 52 cents a share on revenue of $10 million.
• Suncor Energy Inc. (SU). The energy company is turning to outside experts to help boost the reliability of its problem-plagued oil sands upgraders, CEO Rick George said at the Reuters Canadian Oil Sands Summit on Monday.
ECONOMIC CALENDAR
08:30 Leading indicators for Feb: Prior 0.9% Expected 0.8%
CORPORATE EVENTS
10:00 DundeeWealth Inc. (DW). Q4 earnings conference call
10:30 Bank of Montreal (BMO). Shareholders meeting
ANALYST RECOMMENDATIONS
• Brett Resources (BBR) rating cut to hold from speculative buy at Canaccord Adams
• Flint Energy Services Ltd. (FES) price target raised to $17 from $15; rating overweight at Thomas Weisel
• MDA (MDA) rating raised to outperform from market perform at Raymond James
• Osisko Mining (OSK) price target raised to $11.75 from $11.40; rating speculative buy at Canaccord Adams
EXDIVIDENDS
• Wall Financial Corp. (WFC). Amount $1.00
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Reuters Summit-Rising C$ likely won't curb oil sands growth
The rising Canadian dollar has squeezed revenues for Canada's oil sands producers but its short-term gains against the U.S. dollar may not noticeably slow the quickening pace of development.
The Canadian dollar has gained nearly 5 percent since Feb. 5 to a value of more than 98 U.S. cents.
Numerous energy companies have moved forward with Canadian oil sands plans this year as the economy and oil prices recover.
"Everything that we sell is pretty much in U.S. dollars, and the bulk of our costs are in Canadian dollars. It's put a squeeze on revenues at the end of the day," Imperial Oil Ltd CEO Bruce March said at the Reuters Canadian Oil Sands Summit in Calgary.
"A higher dollar means less cash flow," said Cenovus Energy Inc CEO Brian Ferguson later at the Summit.
In the short term, the Canadian dollar's move toward parity with the U.S. greenback probably will not cause any company to cancel an oil sands project, March said. A near-parity dollar for five to 10 years would have a greater impact, he said, but called that scenario unlikely.
"We don't think it will be that bad, that long."
The Canadian dollar's rise is generally a drag on oil sands growth, said Chris Seasons, president of the Canadian division of Devon Energy Corp, noting that crude oil is priced in U.S. dollars.
But since the life span of oil sands projects are 25 to 30 years, companies weigh long-term forecasts for currency fluctuations with many other factors such as price projections for crude oil and natural gas, he said.
"It's not just the dollar (to consider)," Seasons said. "It's not simple."
The stronger dollar's negative impact on Canadian oil companies is partly muted by the fact it reflects higher light crude oil futures, which influence Canada's commodity-based economy. Crude futures have gained 14 percent since Feb. 5 to surpass US$81 per barrel.
Capital costs go up when Canadian dollars are converted into the U.S. currency, said Jean-Michel Gires, president of the Canadian unit of French oil major Total SA.
"But it's in the context of a healthier crude price," he said.
For TransCanada Corp, Canada's biggest pipeline and power company, a stronger dollar has lowered the cost of buying materials in U.S. dollars for expanding its pipelines in the United States, said chief operating officer Russ Girling.
"But given that we purchased those months ago, I don't think the recent strength of the Canadian dollar is going to be materially beneficial to us."
--- Rod Nickel, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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MONDAY, MARCH 22, 2010, CANADIAN EDITION
REUTERS CANADIAN OIL SANDS SUMMIT, MARCH 22-23
Reuters Canadian Oil Sands Summit will bring together the biggest players in the development of Canada's vast reserves of petroleum trapped in the sandy soils of northern Alberta. Reuters will talk to the industry leaders behind the new projects, their critics and the groups that have pushed to make a remote corner of northern Alberta a key factor in global oil markets.
For more on the Summit, click here
TOP NEWS
• Arrow bows to US$3.1 bln bid from Shell, Petrochina
• Osisko to buy Brett Resources for $372 million
• Tiffany Q4 profit falls short, outlook beats Street
• Williams-Sonoma Q4 results beat estimates
• Chinese shrug at possible Google pullout
BEFORE THE BELL
Toronto’s main stock index may open lower on Monday weighed by fall in commodity prices, with oil and copper down more than a percent each. Wall Street is also set for a lower start as the passage of U.S. healthcare reform and uncertainty over Greece's debt crisis revived risk aversion. European shares extended previous session losses, led by banks and commodity stocks. Most of Asian markets were down as investors fretted over further monetary tightening in emerging markets after a surprise interest rate hike by India. Oil fell towards US$79 a barrel, weighed by a firmer dollar and ample oil supplies. Gold traded down at US$1100.85 an ounce.
COMPANIES REPORTING RESULTS
• Altus Group Income Fund (AIF_u). Expected to report Q4 earnings of 10 cents a share, according to Thomson Reuters I/B/E/S
STOCKS TO WATCH THIS MORNING
• Angiotech Pharmaceuticals Inc. (ANP). Haemacure Corp said it received permission from the Superior Court of the Province of Quebec to sell its assets to Angiotech, a secured creditor of Haemacure.
• Bombardier (BBDb). The planemaker is hitting targets for containing costs by producing in Mexico and is confident it can hold productivity when the market rebounds, its senior local executive said on Friday.
• Dundee Corp. (DCa). The asset management company said on Friday it acquired about 10 million units of Energizer Resources Inc at a price of 30 U.S. cents per unit.
• Electrovaya Inc. (EFL). The company said on Monday former Chrysler CEO Thomas W. LaSorda joins the company’s board and has been appointed as special advisor to CEO Sankar Dasgupta.
• Holloway Lodging Real Estate Investment Trust (HLR_u). The company said on Friday President and COO Michael Jackson has resigned.
• Manulife Financial Corp. (MFC). The company said on Friday it cut its adjusted earnings from operations estimates for the last part of 2009 and for each quarter of 2010 after determining it overstated actual and expected gains.
• Medical Facilities Corp. (DR_u). The company reported fourth-quarter loss hurt partly by increase in expenses.
• Mundoro Capital Inc. (MUN). The mineral exploration company said it received a letter from its Chinese partner, suggesting the termination of the Maoling gold project and liquidating the joint venture company, citing environmental and drinking water regulatory issues in China.
• Osisko Mining Corp. (OSK). The exploration company said it will buy Brett Resources Inc (BBR) for about $372 million in an all stock deal, which establishes the company as a diversified gold producer.
• TMX Group Inc. (X). The operator of the Toronto Stock Exchange said on Friday it will reduce trading fees for securities trading at $1 and higher on the TSE and the TSX Venture Exchange.
CORPORATE EVENTS
15:00 Altus Group Income Fund (AIF_u). Q4 earnings conference call
ANALYST RECOMMENDATIONS
• Bird Construction Income Fund (BDT_u) rating raised to strong buy from outperform at Raymond James
• Cineplex Galaxy Income Fund (CGX_u) price target raised to $22 from $19; rating overweight at Thomas Weisel
• Black Diamond Group (BDI) resumed coverage with outperform rating and $22.50 target price at Raymond James
• Fortress Paper (FTP) reinstated coverage with strong buy rating and price target of $28 at Raymond James
EXDIVIDENDS
• Kinross Gold Corp. (K). Amount US$0.05
Note: All values in Canadian currency, unless otherwise stated
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INSIGHT
Investor fears lift ahead of healthcare vote
Healthcare investors see little in a modified U.S. reform bill expected to pass this weekend that will hurt the sector or cause them to lose sleep -- at least for now.
The U.S. House of Representatives will vote on Sunday on a bill that would expand coverage to 32 million uninsured, capping more than a year of negotiations that have sent insurance company stocks on a roller coaster ride.
On Friday, as the terms of the final bill became clearer, investors pushed insurance stocks, as measured by the Morgan Stanley Healthcare Payor Index up 2.2 percent. Insurer shares were also helped by a better-than-expected first-quarter view from Aetna Inc.
"The cloud has lifted," said Gabe Hoffman, who manages US$140 million in healthcare assets for hedge fund Accipter Capital Management. "People finally know that nothing bad is going to happen."
If approved by the House, the bill would be sent to the Senate under a process known as reconciliation that would require 51 votes to be passed, instead of the 60 votes needed to prevent Republicans from blocking it with a filibuster.
While pharmaceutical companies, hospitals and others will benefit from the increased number of insured patients, who are expected to use more goods and services, there is nothing in the bill that would allow the government to cap prices and premiums, which would have hurt drug makers and insurers.
"I think the new features that come in the reconciliation bill in some instances are more positive for the sector than the Senate bill," said Dan Hunt, who helps manage US$135 million in assets for the RCM Wellness Fund.
"As it stands right now there are very few mechanisms in the bill that control the costs of healthcare goods and services."
Health insurance company stocks rallied on Friday. Aetna rose 3.7 percent and Cigna Corp gained 3.5 percent. UnitedHealth Group Inc rose 2.4 percent and Wellpoint Inc rose 2 percent.
Hoffman is more bullish on commercial managed care companies such as Wellpoint than those, such as Humana Inc, that have more exposure to cuts in government payments to Medicare Advantage, the private health alternative to Medicare. But he is not betting against any of the insurers.
"All that talk about a federal government regulator is not in the new revised bill," Hoffman said.
OPTIONS TRADERS BULLISH ON INSURERS
Indeed, options traders bought up call options on Aetna, Wellpoint and UnitedHealth Group, betting on a rally of as much as 10 percent over the next few months.
Some investors said that, while the bill is unlikely to hurt healthcare companies in the short term -- especially as some of the proposed fees and taxes have been pushed out several years -- the longer-term picture is less clear.
"If this is the first step towards more government intervention in the healthcare industry it will be a long-term negative," said Glenn Welling, who manages about US$1.5 billion in healthcare investments for Relational Investors LLC, an activist investment fund with more than US$6 billion in assets.
Relational has taken big, concentrated bets in biotechnology company Genzyme Corp and medical device maker Baxter International Inc. Welling said his main concern about the biotech companies was that the government would give generic alternatives a fast route to the market.
That turns out not to be the case.
"The 12-year exclusivity period that is in the bill is significantly better than where the administration had started, with five years," he said.
Big pharmaceuticals companies have agreed to provide somewhat more in savings than their original US$80 billion agreement, investors said, but the bill creates more customers for their drugs. In return, the government will not impose drug price caps.
"There is nothing in the bill regarding price negotiation for drugs or reimportation of drugs," said Robert Hodgson, who manages a combined US$850 million in the Blackrock Healthcare Fund and BGF World Health Science Fund. "I've actually upped my weighting in pharma for valuation reasons and they should also benefit from unit volume increases."
Hodgson said the increased number of enrolled patients will also help diagnostic laboratories such as Quest Diagnostics Inc. And although hospitals may receive lower reimbursement for services, they may not have to write off as much bad debt generated by treating uninsured patients.
On Friday, President Barack Obama said that, unless the government passes the bill, the insurance industry will "continue to run wild."
But from an investor standpoint, even if the bill is passed, it will be business as usual.
"The end product doesn't seem like it's that horribly bad," said David Heupel, a portfolio manager at Thrivent Investment Management. "I think we all gained comfort that every one of these industries is going to have to ante up some money, but in most instances they can adjust to it."
--- Toni Clarke, Reuters
NEWS ACCESS MADE EASY
Reuters Top News page displays a range of market and sector-specific subjects including: US, Europe and Asian companies, fixed income, credit, the global economy, emerging markets, corporate finance and industry sectors.
To access Top News
-- Thomson ONE: Click News tab, Select Front Page from top right, Click Top News.
-- 3000 Xtra: Click Top News tab from the menu bar.
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This publication is not, nor is it to be construed as, a solicitation or recommendation to investors to purchase, sell or hold any of the securities referred to in this publication. Global Securities Corporation is a member of the Canadian Investor Protection Fund.
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(Please note Canadian quotes are delayed 15 min)
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