**March 27th Issue of The JMRD Market Observer**
In This Week’s Market Observer
- Canadian Financial Services – Key Takeaways from our 13th Annual Canadian Financial Services Conference
- eDelivery: Electronic Tax Slips – A “How-To” for clients
- JMRD Basket Corner
- Retirement Corner
- Week at a Glance
- Reads of the week
- Economic Calendar
- Earnings Reports
Canadian Financial Services (Thematic Research) – Key Takeaways from our 13th Annual Canadian Financial Services Conference
On March 24 and 25, 2015, National Bank Financial held our 13th annual Canadian Financial Services Conference in Montréal. Senior leaders from 19 different companies participated in interviews with our analysts. In this document, we compile the key takeaways for nine of the large capitalization bank and life insurance companies that we cover. Our colleagues from the Diversified Financials team (Shubha Khan and Jaeme Gloyn) have written their own note on nine other financials that presented at our conference. With the Big Six Banks facing stiff headwinds in their personal & commercial banking platforms, the importance of capital markets to bank earnings growth has returned to the spotlight. Therefore, for the first time at a Canadian financial service conference, we focused our discussion exclusively on the capital markets business line. During the conference, each bank stressed the important differences in the nature of Canadian bank capital markets activity in the pre- and post-financial crisis world. In particular, the banks attempted to dispel investor perceptions about capital markets by emphasizing the return to high quality and stable businesses (lending, foreign exchange, advisory) versus riskier and more volatile business lines (proprietary trading, structured credit). In addition, our lunch time speakers – Stéfane Marion, NBF Chief Economist & Strategist and Pierre Fournier, NBF Geopolitical Analyst – offered insightful and topical presentations about the global macroeconomic and political climates. Mr. Marion pointed to encouraging signs for global economic growth in the face a global oil shock. Mr. Fournier enlightened the audience with a review of global geopolitical stress points, including the Middle East and Ukraine.
For further detail, please refer to the conference webcast, available in English and French
(Full report is attached)
eDelivery: Electronic Tax Slips – A “How-To” for clients
Once again tax season is upon us and if you are enrolled in our online and e-delivery services, you will be able to retrieve your tax slips when you log into your account.
This message is intended to help maximize your experience when using our Online Services and accessing your electronic Tax Slips. ThePCIS_E-Delivery pdf attachment will also be very useful to you if you are having trouble finding the slips.
Accessible On Line
When retrieving your tax slips on line, please ensure you are accessing your documents via “All accounts” to prevent you from missing any important slips. The attachment to this email will help walk you through the process. Your Tax Slips are available under the last day of the fiscal year, December 31, 2014.
As well, if you are invested in Real Estate Investment Trust (REIT) and Closed-End Funds, you should receive two separate Tax Slips on line entitled Investment Income Summary. These Tax Slips will appear as two different versions, both of which you will need when filing your taxes.
By Regular Mail
Your Tax Slips for Mutual Funds will be sent through regular post directly by the Mutual Funds companies.
In addition, and if applicable, please note that the following Tax Slips will still be sent to you by regular post:
- Saskatchewan Mineral Exploration Tax Credit
- Interest and capital gains/losses to be reported for stripped coupons
- §T5008 (options only)
- Estate Tax Slips
- Contribution Receipts
Should you have any tax-related on online questions, please contact Faith Hatt at 519-439-6219.
JMRD Basket Corner
Dollarama (DOL) – Dollarama reported Q4 results this week with Q4/F15 EPS of $0.76 vs. NBF at $0.72 and consensus at $0.75; last year was $0.59 (1) Dollarama delivered a solid quarter, supported by strong sales growth, margin expansion, reasonably good cost control and increased capital return. The EPS beat vs. NBF was largely due to a higher than expected gross margin rate (added $0.02 to EPS), a lower than expected SG&A rate (added $0.01) and a lower than expected tax rate (added $0.01). (2) Same store sales growth (sssg) was 8.5%, in line with NBF; last year was 1.1%. Basket growth was 4.7% vs. NBF at 4.0%; transaction growth was 3.6% vs. NBF at 4.5%. As speculated in our Q4/F15 preview note, Dollarama benefited from favourable weather in December 2014 relative to the y/y comp. Revenue was $669 mln vs. NBF at $674 mln and cons. at $685 mln; last year was $582 mln. (3) EBITDA was $151 mln vs. NBF at $145 mln and cons. at $148 mln; last year was $131 mln. (4) The company also increased its quarterly dividend to $0.09/share from $0.08/share, in line with NBF expectation. (5) DOL opened 27 net new stores during the quarter vs. our forecast of 26 stores. (6) Management indicated plans to open 70-80 net new stores in F2016, with 60
net new stores thereafter. The shares traded higher by 7.5% on the week to a new year-high of $70.00
All Cap Growth Basket
Boyd Group (BYD.un) – Boyd reported EBITDA in-line with expectations at $19.0M and Q4 sales of $239.6M, the U.S. Same Store Sales Growth was quite strong at +8.6%. In addition, management highlighted $175-200M in “dry-powder” for growth while remaining conservatively leveraged (which we read to imply less than 2x). The shares traded higher by 4% on Friday to a new year-high of $52.25
Restaurant Brands (QSR) – “Time to Buy Restaurant Brands Intl. (QSR), Piper Jaffray Says; 50% Upside in Less than 5 Years”
1) Top Tax Breaks that are often overlooked: http://canadaam.ctvnews.ca/finance/top-tax-breaks-that-are-often-overlooked-1.2298032
Week at a Glance
(See attached Week at a Glance report)
Reads of the Week
- NBF Hot Charts: S&P/TSX Energy: Much bad news is already priced in (see attached chart) We are staying with our overweight recommendation for the Canadian Energy sector. As today’s Hot Chart shows, equity analysts have slashed their earnings expectations for Canada’s energy producers to the point where the consensus now expects profits to collapse to their level of 2002. In our view, much bad news has now been priced in. A rise in energy prices due to the combined effect of U.S. production cutbacks and a tamer greenback could reignite interest in this sector.
- “Low Rates? Get Used to It” (Bloomberg)
- “Reading the Fine Print in the Heinz-Kraft Deal” (New York Times)
- “The March Madness Theory of Investing – Bloomberg View”
- “Important Stories Worth Paying Attention to” (The Motley Fool)
- “Investor Transcripts Released” (A Wealth of Common SenseA Wealth of Common Sense)
- “How Different Sectors of the Market Perform Once the Fed Starts Hiking Rates” (Bloomberg)
- The great central bank freak-out of 2015 (Globe and Mail)
- Two Finance Phrases I Could Do Without – A Wealth of Common SenseA Wealth of Common Sense
- “How Aequitas plans to build a kinder, gentler stock market” Some of Bay Street’s biggest players hope their new exchange will be able to shut out high-frequency traders /
- “The World in ‘Scope” (Tech Crunch)
Monday March 30th – Canadian Industrial Product Price Index, Canadian Raw Materials Price Index, U.S. Personal Income, U.S. Personal Spending, U.S. Pending Home Sales
Tuesday March 31st– Canadian GDP, U.S. Consumer Confidence Index
Wednesday April 1st – RBC Canadian Manufacturing PMI, U.S. ADP Employment Change, U.S. ISM Manufacturing
Thursday April 2nd – U.S. Initial Jobless Claims, U.S. Trade Balance, U.S. Factory Orders
Friday April 3rd – U.S. Unemployment Rate, U.S. Change in Nonfarm Payrolls, North American markets closed for Good Friday holiday
Monday March 30th – None
Tuesday March 31st– Amaya Inc
Wednesday April 1st – Monsanto Co
Thursday April 2nd – Micron Technology
Friday April 3rd – None