VIEWPOINT OCTOBER 26 TO NOVEMBER 20, November 23, 2015 DOWNGRADES ATCO LTD. (ACO.X) - SELL IAMGOLD CORP. (IAG) - SELL

Transcription

1 November 23, 2015 VIEWPOINT W e e k l y u p d a t e o f o u r E q u i t y R a t i n g s OCTOBER 26 TO NOVEMBER 20, 2015 DOWNGRADES ATCO LTD. (ACO.X) - SELL IAMGOLD CORP. (IAG) - SELL UPGRADES TRANSCANADA CORP. (TRP) - BUY COVERAGE DROPPED EXCHANGE INCOME CORP. (EIF) SUMMARY PAGES 3-10 V-LIST 11 WATCHLIST 12 RATING PAGES 13-98

2 Viewpoint November 23, 2015 C O M P A N Y R A T I N G P A G E S Click on company name below for a link to the rating page Shading indicates an updated rating page Agnico-Eagle Mines Ltd. 13 Aimia Inc. 14 ARC Resources Ltd. 15 ATCO Ltd. 16 AutoCanada Inc. 17 Avigilon Corp. 18 Bank of Montreal 19 Bank of Nova Scotia 20 Barrick Gold Corp. 21 Baytex Energy Corp. 22 BCE Inc. 23 BlackBerry Ltd. 24 Bombardier Inc. 25 Bonavista Energy Corp. 26 Brookfield Renewable Energy Partners, LP27 CAE Inc. 28 Callidus Capital Corp. 29 Cameco Corp. 30 Canadian Imperial Bank of Commerce 31 Canadian Natural Resources Ltd. 32 Canadian Oil Sands Ltd. 33 Canadian Tire Corp. 34 Canadian Utilities Ltd. 35 Canadian Western Bank 36 Capital Power Corp. 37 Capstone Infrastructure Corp. 38 Cenovus Energy Inc. 39 CGI Group Inc. 40 Choice Properties REIT 41 Cogeco Cable Inc. 42 Crescent Point Energy Corp. 43 CT Real Estate Investment Trust 44 DirectCash Payments Inc. 45 Dollarama Inc. 46 Eldorado Gold Corp. 47 Emera Inc. 48 Empire Company Ltd. 49 Enbridge Inc. 50 Encana Corp. 51 Enerplus Corp. 52 Fortis Inc. 53 George Weston Ltd. 54 Goldcorp Inc. 55 Hudson s Bay Company 56 Husky Energy Inc. 57 Hydro One, Ltd. IAMGOLD Corp. 58 IMAX Corp. 59 Imperial Oil Ltd. 60 Kinross Gold Corp. 61 Linamar Corp. 62 Loblaw Companies Ltd. 63 MacDonald Dettwiler & Associates Ltd. 64 Magna International Inc. 65 Manitoba Telecom Services 66 Manulife Financial Corp. 67 Maple Leaf Foods Inc. 68 Martinrea International Inc. 69 Metro Inc. 70 National Bank of Canada 71 Newmont Mining Corp. 72 Northland Power Inc. 73 Open Text Corp. 74 Pengrowth Energy Corp. 75 Penn West Petroleum Ltd. 76 Peyto Exploration & Development Corp. 77 PrairieSky Royalty Ltd. 78 Progressive Waste Solutions Ltd. 79 Quebecor Inc. 80 Republic Services Inc. 81 Rogers Communications Inc. 82 Royal Bank of Canada 83 Silver Wheaton Corp. 84 Shaw Communications Inc. 85 Sun Life Financial Inc. 86 Suncor Energy Inc. 87 Telus Corp. 88 The Jean Coutu Group Inc. 89 Toronto Dominion Bank 90 TransAlta Corp. 91 TransAlta Renewables Inc. 92 TransCanada Corp. 93 Valeant Pharmaceuticals Intl. Inc. 94 Vermilion Energy Inc. 95 Waste Connections Inc. 96 Waste Management Inc. 97 Yamana Gold Inc. 98

3 Viewpoint November 23, 2015 R ECENT P UBLICATIONS COMPANY TICKER RATING ACCOUNTING ALERTS PUBLISHED RATING CHANGE DATE CGI Group Inc. GIB.a- - - Nov Genworth MI Canada Inc. MIC - - Nov Valeant Pharmaceuticals International Inc. VRX Sell - Oct Valeant Pharmaceuticals International Inc. VRX Sell - Oct FLASHES PUBLISHED Barrick Gold Corp. & Kinross Gold Corp. - Even Trades ABX/KGC Buy/Sell - Nov CNQ and PSK Flash: Pooling Better Than Selling at the Bottom Nov Suncor Energy Inc. - Capex Guidance Pushing Uphill The Great Canadian Housing Conference - Lessons Learned About Canadian Housing Nov REPORTS PUBLISHED Canadian Housing Market Update - Condo Prices Divorced from Economic Reality Nov Oil & Gas Sector Update Nov ARC Resources Ltd. ARX Buy - Baytex Energy Corp. BTE Sell - Bonavista Energy Corp. BNP Buy - Crescent Point Energy Corp. CPG Buy - Enerplus Corp. ERF Buy - Pengrowth Energy Corp. PGF Sell - Penn West Petroleum Ltd. PWT Sell - PrairieSKy Royalty Ltd. PSK Sell - Vermilion Energy Inc. VET Buy - Toronto Dominion Bank TD Buy - Nov COMPANY NEED-TO-KNOWS PUBLISHED TICKER RATING RATING CHANGE DATE COMPANY TICKER RATING RATING CHANGE Aimia Inc. AIM Sell - Nov Husky Energy Inc. HSE Sell - Nov Agnico-Eagle Mines Ltd. AEM Sell - Oct Hydro One Ltd. H Buy - Nov ATCO Ltd. ACO.x Sell Downgrade Oct IAMGOLD Corp. IAG Sell Downgrade Nov AutoCanada Inc. ACQ Sell - Nov IMAX Corp. IMAX Sell - Oct Barrick Gold Corp. ABX Buy - Oct Kinross Gold Corp. KGC Sell - Nov BCE Inc. BCE Sell - Nov Linamar Corp, LNR Buy - Nov Bombardier Inc. BBD.b Sell - Oct Loblaw Companies Ltd. L Buy - Nov Brookfield Renewables BEP Sell - Nov Magna International Inc. MGA Buy - Nov CAE Inc. CAE Sell - Nov Manitoba Telecom Services MBT Sell - Nov Cameco Corp. CCO - - Nov Manulife Financial Corp. MFC Buy - Nov Canadian Natural Resource CNQ Sell - Nov Maple Leaf Foods Inc. MFI Buy - Nov Canadian Oil Sands Ltd. COS Sell - Nov Martinrea International Inc. MRE - - Nov Canadian Tire Corp. CTC.a Buy - Nov Metro Inc. MRU Buy - Nov Canadian Utilities Ltd. CU Buy - Oct Newmont Mining Corp. NEM Sell - Nov Capital Power Corp. CPX Buy - Oct Pengrowth Energy Corp. PGF Sell - Nov Cenovus Energy Inc. CVE Sell - Nov Peyto Exploration PEY Sell - Nov Choice Properties REIT CHP.un Buy - Nov Progressive Waste Solutions BIN Buy - Nov Cogeco Cable Inc. CCA Buy - Oct Quebecor Inc. QBR.b Buy - Nov CT REIT CRT.un Buy - Nov Silver Wheaton Corp. SLW - - Nov DirectCash Payments Inc. DCI Sell - Nov Suncor Energy Inc. SU Sell - Nov Eldorado Gold Corp. EGO Buy - Nov Sun Life Financial Inc. SLF Sell - Nov Emera Inc. EMA Sell - Nov Telus Corp. T Buy - Nov Encana Corp. ECA Sell - Nov TransAlta Corp. TA Sell - Nov Exchange Income Corp. EIF Coverage Dropped Nov TransCanada Corp. TRP Buy Upgrade Nov Fortis Inc. FTS Buy - Nov Yamana Gold Corp. AUY Sell - Nov Goldcorp Inc. GG Sell - Nov DATE

4 Telecommunications & Technology Desmond Lau Name Ticker Analyst Ranking Recommendation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value Quality Rating Accounting Cash Flow Balance Sheet Business Operations Corporate Governance Total Cogeco Cable Inc. CCA Lau Buy 7/11/ /30/ Better Quebecor Inc. QBR.b Lau Buy 5/9/ /9/ Better Rogers Communications Inc. RCI.b Lau Buy 1/13/ /23/ Better Telus Corp. T Lau Buy 2/13/ /6/ Better BCE Inc. BCE Lau Sell 10/6/ /6/ Better BlackBerry Ltd. BBRY Lau Sell 6/24/2015 9/28/2015 USD 7.77 USD 6.00 Neutral Manitoba Telecom Services MBT Lau Sell 1/23/ /5/ Better Shaw Communications Inc. SJR.b Lau Sell 1/13/ /23/ Better Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Viewpoint November 23, 2015 Page 1

5 Financial Services Mike Rizvanovic Name Ticker Analyst Ranking Recommend ation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value Quality Rating Accounting Cash Flow Balance Sheet Business Operations Corporate Governance Total Canadian Imperial Bank of Commerce CM Rizvanovic Buy 8/28/2015 8/28/ Better Manulife Financial Corp. MFC Rizvanovic Buy 8/10/ /13/ Neutral Royal Bank of Canada RY Rizvanovic Buy 4/13/2011 8/27/ Best Toronto Dominion Bank TD Rizvanovic Buy 4/18/ /4/ Better Bank of Montreal BMO Rizvanovic Sell 12/6/2013 9/11/ Better Bank of Nova Scotia BNS Rizvanovic Sell 7/30/2015 8/31/ Better Canadian Western Bank CWB Rizvanovic Sell 3/7/2013 9/4/ Better DirectCash Payments Inc. DCI Dusseldorp Sell 9/18/ /16/ Risky National Bank of Canada NA Rizvanovic Sell 4/18/ /2/ Better Sun Life Financial Inc. SLF Rizvanovic Sell 2/12/ /5/ Better Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Viewpoint November 23, 2015 Page 2

6 Consumer Staples & Consumer Discretionary Kathleend Wong Name Ticker Analyst Ranking Recommend ation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value Quality Rating Accounting Cash Flow Balance Sheet Business Operations Corporate Governance Total Canadian Tire Corp. CTC.a Wong Buy 9/21/ /13/ Neutral Choice Properties REIT CHP.un Wong Buy 8/29/ /12/ Better CT Real Estate Investment Trust CRT.un Wong Buy 10/29/ /11/ Better Empire Company Ltd. EMP.a Wong Buy 6/20/2013 9/11/ Neutral George Weston Ltd. WN Wong Buy 3/8/2011 8/4/ Better Loblaw Companies Ltd. L Wong Buy 9/30/ /19/ Better Maple Leaf Foods Inc. MFI La Bell Buy 3/18/ /30/ Better Metro Inc. MRU Wong Buy 9/30/ /19/ Better The Jean Coutu Group Inc. PJC.a Wong Buy 10/14/ /8/ Better Aimia AIM Wong Sell 3/1/ /16/ Neutral AutoCanada Inc. ACQ Mehrotra Sell 12/16/ /9/ Risky Dollarama Inc. DOL Wong Sell 6/13/2013 9/11/ Better Hudson's Bay Company HBC Wong Sell 11/26/ /21/ Under Review Neutral IMAX Corp. IMAX Dusseldorp Sell 1/22/ /2/2015 USD USD Better Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Viewpoint November 23, 2015 Page 3

7 Industrials Varun Mehrotra Name Ticker Analyst Ranking Recommend ation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value Quality Rating Accounting Cash Flow Balance Sheet Business Operations Corporate Governance Total Linimar Corp. LNR Mehrotra Buy 6/23/ /5/ Better Magna International Inc. MGA Mehrotra Buy 1/15/ /6/2015 USD USD Better Progressive Waste Solutions Ltd. BIN McCoubrey Buy 4/2/ /2/2015 USD USD Better Republic Services Inc. RSG McCoubrey Buy 2/11/2015 7/23/2015 USD USD Better Waste Management Inc. WM McCoubrey Buy 2/11/2015 7/24/2015 USD USD Better Bombardier Inc. BBD.b Mehrotra Sell 2/13/ /30/ Risky CAE Inc. CAE Mehrotra Sell 2/9/ /12/ Neutral Martinrea International Inc. MRE Mehrotra Sell 10/1/ /10/ Neutral Waste Connections Inc. WCN McCoubrey Sell 2/11/2015 7/27/2015 USD USD Better Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Viewpoint November 23, 2015 Page 4

8 Precious Metals Sid Subramani Name Ticker Analyst Ranking Recommend ation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value Quality Rating Accounting Cash Flow Balance Sheet Business Operations Corporate Governance Total Barrick Gold Corp. ABX Subramani Buy 2/15/ /30/2015 USD 7.19 USD 8.50 Better Eldorado Gold Corp. EGO Subramani Buy 5/7/ /2/2015 USD 3.05 USD 4.10 Better Agnico-Eagle Mines Ltd. AEM Subramani Sell 1/10/ /30/2015 USD USD Better Goldcorp Inc. GG Subramani Sell 8/5/ /2/2015 USD USD Better IAMGOLD Corp. IAG Subramani Sell 11/5/ /5/2015 USD 1.44 Under Review Neutral Kinross Gold Corp. KGC Subramani Sell 6/11/ /12/2015 USD 1.75 USD 1.30 Neutral Newmont Mining Corp. NEM Subramani Sell 10/31/ /9/2015 USD USD Better Yamana Gold Inc. AUY Subramani Sell 10/30/ /3/2015 USD 1.82 Under Review Neutral Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Viewpoint November 23, 2015 Page 5

9 Industrials & Utilities Darryl McCoubrey Name Ticker Analyst Ranking Recommend ation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value Quality Rating Accounting Cash Flow Balance Sheet Business Operations Corporate Governance Total Canadian Utilities Ltd. CU McCoubrey Buy 11/2/ /26/ Neutral Capital Power Corp. CPX McCoubrey Buy 9/4/ /27/ Neutral Capstone Infrastructure Corp. CSE McCoubrey Buy 8/21/ /19/ Better Fortis Inc. FTS McCoubrey Buy 8/4/ /11/ Better Northland Power Inc. NPI McCoubrey Buy 2/25/ /19/ Better TransCanada Corp. TRP McCoubrey Buy 11/9/ /9/ Better ATCO Ltd. ACO.x McCoubrey Sell 10/26/ /26/ Under Review Neutral Brookfield Renewable Energy Partner BEP McCoubrey Sell 5/6/ /5/2015 USD Under Review Neutral Emera Inc. EMA McCoubrey Sell 5/14/ /18/ Neutral Enbridge Inc. ENB McCoubrey Sell 7/22/ /18/ Better TransAlta Corp. TA McCoubrey Sell 2/28/ /3/ Neutral TransAlta Renewables Inc. RNW McCoubrey Sell 5/4/ /19/ Under Review Better Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Viewpoint November 23, 2015 Page 6

10 Healthcare & Pharmaceuticals Dimitry Khmelnitsky Name Ticker Analyst Ranking Recommend ation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value Quality Rating Accounting Cash Flow Balance Sheet Business Operations Corporate Governance Total Valeant Pharmaceuticals Intl. Inc. VRX Khmelnitksy Sell 7/23/ /13/2015 USD Under Review Torpedo Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Viewpoint November 23, 2015 Page 7

11 v Energy Nima Billou Name Ticker Analyst Ranking Recommendation Date Most Recent Ratings Review Closing Price (Nov 20/15) Intrinsic Value: Base Case US $75.00 Case US $85.00 Case Quality Rating Accounting Cash Flow Balance Sheet Business Corporate Operations Governance Total ARC Resources Ltd. ARX Billou Buy 8/27/ /12/ Neutral Bonavista Energy Corp. BNP Billou Buy 3/1/ /12/ Neutral Crescent Point Energy Corp. CPG Billou Buy 5/11/ /12/ Neutral Enerplus Corp. ERF Billou Buy 5/18/ /12/ Neutral Vermilion Energy Inc. VET Billou Buy 8/27/ /12/ Better Baytex Energy Corp. BTE Billou Sell 5/6/ /12/ Risky Canadian Natural Resources Ltd. CNQ Billou Sell 8/27/ /6/ Neutral Canadian Oil Sands Ltd. COS Billou Sell 4/29/ /3/ Neutral Cenovus Energy Inc. CVE Billou Sell 12/22/ /3/ Neutral Encana Corp. ECA Billou Sell 8/27/ /13/2015 USD 7.74 USD 6.50 USD USD Neutral Husky Energy Inc. HSE Billou Sell 12/22/ /5/ Neutral Imperial Oil Ltd. IMO Billou Sell 1/31/ /20/ Neutral Pengrowth Energy Corp. PGF Billou Sell 12/22/ /12/ Risky Penn West Petroleum Ltd. PWT Billou Sell 12/22/ /12/ Risky Peyto Exploration & Development Corp. PEY Billou Sell 12/22/ /18/ Neutral PrairieSky Royalty Ltd. PSK Billou Sell 8/27/ /12/ Neutral Suncor Energy Inc. SU Billou Sell 12/22/ /20/ Neutral Veritas Sector Rankings Buy: Security has upside potential, with minimal downside. Sell: Security is expected to decline in value under certain scenarios believed to be likely. Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model. Commodity Case $65 Oil - Base Case $75 Oil Case $85 Oil Case WTI Oil Price HH Gas Price USD/CAD Exchange Rate 40 / / / / / / / / / 0.92 Viewpoint November 23, 2015 Page 8

12 THE LIST V e r i t a s ' M o d e l P o r t f o l i o November 20, 2015 Portfolio Yield: 3.0% COMPANY TICKER DATE ADDED PRICE (C$) 20-Nov-2015 INTRINSIC VALUE ESTIMATE CURRENT YIELD QUALITY RATING (out of 25) TARGET WEIGHTING Capital Power Corp. CPX 9-Apr-15 $18.76 $ % % Choice Properties REIT CHP-U 25-Nov-14 $11.50 $ % % Empire Company Ltd. EMP/A 27-Jun-13 $26.84 $ % % Fortis Inc. FTS 2-Sep-15 $38.00 $ % % Linamar Corp. LNR 24-Jun-15 $72.20 $ % % Loblaw Companies Ltd. L 9-Apr-15 $68.45 $ % % Magna International Inc. MGA 4-May-15 $44.94 USD $ % % Manulife Financial Corp. MFC 27-May-13 $16.41 $ % % Maple Leaf Foods Inc. MFI 29-Oct-04 $20.78 $ % % Metro Inc. MRU 25-Nov-14 $38.15 $ % % Northland Power Inc. NPI 13-Mar-13 $18.40 $ % % Progressive Waste Solutions Ltd. BIN 14-Feb-14 $30.47 $ % % Quebecor Inc. QBR/B 9-May-14 $33.02 $ % % Rogers Communications Inc. RCI/B 19-Jan-15 $52.49 $ % % Telus Corp. T 6-Oct-15 $41.77 $ % % The Jean Coutu Group Inc. PJC/A 24-Jun-15 $20.96 $ % % Toronto Dominion Bank TD 8-Oct-14 $54.75 $ % % Cash 12.00% Veritas Investment Research Corporation owns the copyright in this report. This report may not be reproduced in whole or in part without Veritas express prior written consent. Any such breach of this copyright is contrary to ss. 27(1), 34, 35 and 42 of the Copyright Act, R.S.C. 1985, c. C-42 and will be liable for damages. Veritas Investment Research, 100 Wellington Street West, TD West Tower, Suite 3110, P.O. Box 80, Toronto, Ontario, M5K 1E7,, Page 9

13 A C C O U N T I N G W A T C H L I S T C o m p a n i e s w i t h a c c o u n t i n g a n d d i s c l o s u r e - r e l a t e d r i s k s RISK AREAS N O V E M B E R 1 3, Company Ticker Analyst Date Added Organic Growth Earnings Quality Cash Flow Sustainability Liquidity / Leverage / Off-B/S Concerns Non-GAAP Metrics Cloud Financial Performance Mgmt. Comp. Structure & Corp. Governance Disclosure Tax Aimia Inc. TSX-AIM Wong 3-Sept-14 Avigilon Corp. TSX-AVO Dusseldorp 31-Jul-14 Callidus Capital Corp. TSX-CBL Georgopoulos 16-Apr-15 Cameco Corp. TSX-CCO NYSE-CCJ Khmelnitsky 30-Apr-14 CGI Group Inc. TSX-GIB.A NYSE-GIB Dusseldorp 3-Nov-11 DirectCash Payments Inc. TSX-DCI Dusseldorp 18-Sep-13 MacDonald Dettwiler & Assoc. Ltd. TSX-MDA Khmelnitsky 3-Nov-11 Open Text Corp. TSX-OTC NASDAQ-OTEX Khmelnitsky 16-Nov-10 Silver Wheaton Corp. TSX-SLW NYSE-SLW Khmelnitsky 13-Oct-15 Valeant Pharmaceuticals Intl. Inc. TSX-VRX NYSE-VRX Khmelnitsky 5-Jan-12 Veritas Investment Research Corporation ("Veritas") its directors, officers, employees and their immediate families are prohibited from trading any position in the securities profiled in a report thirty (30) days before and five (5) days after the publication date where the report involves coverage initiation or a change of opinion. Veritas has not offered any consulting, financial advisory, investment banking or underwriting services to the companies mentioned. Veritas does not accept research fees from the companies profiled herein. The information contained in this report has been obtained from sources believed reliable however the accuracy and/or completeness of the information is not guaranteed by Veritas, nor does Veritas assume any responsibility or liability whatsoever. All opinions expressed are subject to change without notification. This report is for information purposes only and does not constitute and should in no way be construed as a solicitation to buy or sell any of the securities mentioned herein. The contents of this research report do not, in any way, purport to include any manner of legal advice or opinion. The intention of this report is to provide a forthright discussion of business, accounting and financial reporting issues, as well as generally accepted accounting principles and the limits of their usefulness to investors. As such, please do not infer from this report that the accounting policies of any company mentioned herein are not allowed within the broad range of generally accepted accounting principles, or that the policies employed by that company were not approved by its auditor(s). This report may not be reproduced in whole or in part without the express prior written consent of Veritas. Veritas is a 100% employee owned firm Veritas Investment Research Corporation. Veritas Investment Research, 100 Wellington Street West, TD West Tower, Suite 3110, P.O. Box 80, Toronto, Ontario, M5K 1E7,, Page 10

14 Updated October 30, 2015 AGNICO EAGLE MINES LTD. TSX-AEM; NYSE-AEM SELL Current Price C$37.00 / US$28.10 Intrinsic Value US$18.50 Current Yield 1.1% T O O H I G H O F A P R E M I U M Agnico Eagle delivered a strong performance in Q3 with production rising by 25% y-o-y. Cash costs for Q3 also decreased 30% on the back of higher production and favorable exchange rates, a theme we have got to know quite well over the last few quarters. Despite the company s operational achievements, however, we remain unable to stomach the premium on the stock. With no margin of safety, we continue to rate Agnico as Sell, and have revised our valuation to $18.50 assuming $1,100 gold and giving credit for the lower costs. Accounting & Disclosure 4/5 Long-Term Gold Price Intrinsic Value Estimate Agnico switched from U.S. GAAP to IFRS in Q3F14. We estimate that the change helped capitalize $25/oz of stripping costs that would have previously been expensed, resulting in a CFO and EBITDA boost of approximately $30 million per year. Adjusted Cash Flows 3/5 Agnico tacitly admitted a cash flow problem is on the horizon by cutting its dividend by two-thirds last year. But at current gold prices, few producers have held dividends steady. The Balance Sheet 3/5 Agnico s $1.1 billion of net debt is about 24% our estimated EV. We worry additional growth spending could further stretch the balance sheet. Business Operations 4/5 Arctic mines turned Agnico into a high-cost producer. However, the company has excelled at maximizing throughput across its portfolio and surprising the market with higher-than-expected grades at Meadowbank, while operating in relatively safe jurisdictions. Corporate Governance 2/5 In our view, Agnico s results in the Arctic highlight the company s broken growth-by-acquisition strategy. Acquisitions should not need a higher gold price to be accretive, as investors can bet on the commodity themselves. US$1,100 per ounce Fiscal year ends December 31 US$ millions, except as noted US$18.50 per share +/- US$100 per ounce +/- US$9 per share Our valuation excludes Meliadine, as we estimate the project is uneconomic at current gold prices. F13 F14 F15 9mos Closing price, end of period Shares outstanding, millions Market cap 4,590 5,645 5,494 Gold production, 000s oz 1,099 1,429 1,249 Revenue 1,638 1,897 1,502 CFPS Cash flow per ounce Price to cash flow 9.6x 8.0x 11.6x Net debt to EV 15% 17% 15% SID SUBRAMANI ssubramani@veritascorp.com Page 11

15 Updated November 16, 2015 AIMIA INC. TSX-AIM SELL Current Price C$9.65 Intrinsic Value C$9.50 Current Yield 7.7% Q M I S S ; M A N A G E M E N T R E D U C E D F C F G U I D A N C E B Y 2 0 % Aimia reported a 23%1 decline in free cash flow ( FCF ) to $59 million in Q This marked the third consecutive quarter of regular mile issuance decline at Aeroplan. For the first nine months of 2015, Aeroplan suffered a 20% decline in margin spread (i.e. Gross Billings Cost of Redemptions), prompting management to reduce its 2015E FCF target by about 20% to $180-$190 million. We have reduced our 2016E FCF by $31 million to $163 million, taking into account the worse-than-expected regular Aeroplan miles issuance, higher-than-expected redemption cost per Aeroplan mile, $10 million HP transition costs and $10 million increase in capital expenditures, partly offset by $20 million in annual restructuring savings expected. We advise investors to continue to stay on the sidelines given the poor economic outlook, unproven success of the enhanced Aeroplan Canada program, upcoming devaluations of certain business class flight rewards and renewal risk associated with the Air Canada contract expiring in June Accounting & Disclosure 2/5 Management provides disclosure on mile issuance, redemptions, selling prices/costs to value Aeroplan s current business and future liabilities. Aimia provides little information on its U.K., U.S./APAC operations, making it difficult to value their free cash flow. Adjusted Cash Flows 2/5 We reduce our 2015E FCF at $143 million ($0.85 per share), which is below management s lowered guidance of $180 million to $190 million. We expect the dividend payout ratio to increase from the historical average of 49% to 90%+ starting in The Balance Sheet 3/5 Aimia has a reserve of $492 million (held in cash and investments), with $300 million designated for Aeroplan Canada and the remaining $192 million for Nectar programs. Aimia s net debt-to-total capital ratio is 10% at the end of Q Business Operations 3/5 Aimia reported a 65% decline in normalized FCF in 2014 due to the launch of the enhanced Aeroplan program on Jan. 1, 2014, which led to a significant increase in redemption cost per Aeroplan mile. The enhanced Aeroplan Canada program has yet to drive sufficient miles issuance to offset the significant increase in redemption costs. As a result, Aeroplan Canada experienced a $27 million decline in margin spread (gross billings less redemption costs) in Q compared to one year ago, the third quarter of margin spread decline. Corporate Governance 3/5 Eight out of nine (89%) members on Aimia s Board of Directors are independent. We use a sum-of-the-parts / DCF model to derive a new $9.50 intrinsic value (down from $10.30) for Aimia. The $9.50 intrinsic value consists of: 1) $10.10 from Aeroplan Canada; 1) $2.40 from the EMEA operations; 1) $2.40 from other investments; and 1) ($5.40) net debt, including our estimated redemption reserve of $705m (higher than company disclosure of $492m). FY end December (C$ Millions, except as noted) E 2016E Aeroplan Miles Issuance Growth Rate 5.7% (4.0%) 1.0% Aeroplan Mile Redemption Growth Rate 7.0% 2.7% 0.0% Burn/Earn Ratio 85% 91% 90% Selling Price/Aeroplan Mile (cents) Redemption Cost/Aeroplan Mile (cents) Aeroplan Normalized Margin Spread 28.0% 22.1% 20.6% Aimia s Normalized FCF (Aeroplan Canada + Other Businesses) $94 $143 $163 Aimia s Normalized FCF per Share $0.52 $0.85 $0.97 Dividends per Common Share $0.71 $0.75 $0.76 Dividend Payout Ratio 152% 101% 89% KATHLEEN WONG kwong@veritascorp.com Page 12

16 Updated November 12, 2015 ARC RESOURCES LTD. TSX-ARX BUY Current Price C$18.26 Intrinsic Value C$22.50 Current Yield 6.6% C A R R Y O N G R O W I N G ARC is one of the few companies still investing sufficient capital to grow. Management is guiding to volume growth of ~5% in 2016, on a flat capital budget versus 2015, which reflects the startup in late 2015 of a new plant at Sunrise and an oil battery at Tower. The dividend may yet be trimmed, but with projected funds flow of $2.50 per share in 2017 at US$65 WTI and US$3.25 NYMEX, we currently see a good entry point on the stock. BUY. Accounting & Disclosure 2.5/5 ARC recorded impairment charges of $326.6 million in Q3 F15 primarily driven by reduced assumptions about future commodity prices and concentrated among its higher cost light oil and liquids heavy gas plays (Northern Alberta, Pembina, Redwater). Adjusted Cash Flows 2.5/5 We see a continued risk of a dividend cut next year as the majority of ARC's dividend requires financing below US$50 oil in The Balance Sheet 3/5 ARC had $1.09B in debt at the end of 2015 Q3 drawn on its $2.3B credit facility. The facility remains open through November Business Operations 3/5 With the startup of ARC's new Sunrise plant and expanded Tower battery in Q4, production is expected to increase to 116,000 to 120,000 boe/d. The company should be able to maintain this production range in 2016 with spending of $550MM or $1.60 per share, matching with our funds flow forecast at the current strip. Corporate Governance 3/5 ARC's chairman Mac Van Wielingen announced he will be stepping down as chair on December 31, 2015, after almost 20 years at ARC. The chairman role will be taken up by current board member Hal Kvisle, most recently of Trans- Canada and Talisman. We do not expect any radical change of strategy. Commodity Case WTI Oil Price HH Gas Price Company Profile Cash Flow and Dividends USD/CAD XR mos Price Shares (millions incl. exch.) Market cap. ($ millions) 9,288 8,036 6,072 Revenue ($ millions) 1,448 1,986 1,071 CFPS Price to YTD CFPS 11.6x 7.0x 8.9x ROE (annualized) 7.1% 11.0% (10.9%) Dividends per share Production (boe/d) 96, , ,457 CFO* per boe Net debt to EV 9% 12% 13% Net debt to CFO* 1.12x 0.92x 1.29x mos Reported CFO* , Capital expenditures (874.2) (1,007.6) (394.0) Available cash (shortfall) (72.5) Dividends declared % of CFO* 47% 33% 55% % of available cash N/A 261% 239% Intrinsic Value $65 Oil - Base Case 40 / / / $75 Oil Case 44 / / / $85 Oil Case 55 / / / Our conservative case values ARC at $22.50 per share, reflecting a return to US$65 oil and US$3.75 gas in * CFO is cash from operations after working capital, cash interest and asset retirement expenditures a Financial statement data are based on IFRS. NIMA BILLOU nbillou@veritascorp.com Page 13

17 Updated October 26, 2015 ATCO LTD. TSX-ACO.X SELL Current Price C$40.24 Intrinsic Value C$40.00 Current Yield 2.5% A S A F E R W A Y T O B E T O N A B P O W E R For investors interested in some exposure to potential long-term upside in Alberta spot power prices, ACO.X and CU are safer alternatives than the likes of Capital Power and TransAlta due to underlying portfolios of lower risk, regulated assets in Canada and Australia. Accounting & Disclosure 3.5/5 Better disclosure of financial results in its Energy segment and a more detailed look at expenditures enhances the relative transparency of ACO.X s financial results compared to its Canadian peers. Adjusted Cash Flows 2/5 Although lower pricing is impeding financial performance in ACO.X s S&L and Energy segments, a stillrobust rate base growth profile for the Utilities suggest ample EPS and FCF growth prospects in the longerterm. Our intrinsic value estimate is $40.00 per share, which assumes an 18% holding company discount is applied to its controlling equity stake in Canadian Utilities. Period Ending (Amounts in C$) F13 F14 Q3-F15 Price (ACO.X) $46.66 $47.66 $39.20 Shares (millions) Market capitalization (millions) $5,372 $5,486 $4,514 The Balance Sheet 2/5 ACO.X s leverage continued to increase in Q3-F15, alongside deteriorating business conditions in S&L and Energy. Net debt (millions) $6,040 $7,309 $7,793 Enterprise value (millions) $11,412 $12,795 $12,307 Business Operations 2/5 Adjusted EBITDA (TTM, millions) $1,693 $1,690 $1,421 The market has already priced-in a glim outlook for the Energy and S&L segments and regulatory risk is muted by recent cost of capital decisions. Corporate Governance 3.5/5 The merits of a relatively low payout ratio are evidenced during challenging business conditions for a utility with a higher business risk profile. Adjusted EPS (TTM) $3.38 $3.24 $2.75 EV/EBITDA (TTM) 6.7x 7.6x 8.7x P/E (TTM) 13.8x 14.7x 14.3x Net debt-to-ebitda 3.6x 4.3x 5.5x DARRYL MCCOUBREY dmccoubrey@veritascorp.com Page 14

18 Updated November 9, 2015 AUTOCANADA INC. TSX-ACQ SELL Current Price C$29.34 Intrinsic Value C$29.00 Current Yield 3.2% M A I N T A I N D I S T A N C E AutoCanada s stock declined by roughly 6% on November 6, 2015 based on a disappointing quarter, largely resulting from its overexposure to Alberta. In our Q2-F15 commentary, we discussed that ACQ s gross margin could be squeezed in Q3-F15 because of inventory pressures and the company might have to renegotiate its existing debt covenant. Now that both of these things have happened, we still expect that the revenue and earnings growth for ACQ to remain lackluster in the near-term. We maintain our SELL rating and intrinsic value estimate of $29 per share as the Alberta crisis hasn t bottomed out and auto sales are currently at cyclical peak. Accounting & Disclosure 3/5 The company has improved its disclosure on region wise sales, which helps in estimating the risk related to a potential slowdown in Alberta s economy. Adjusted Cash Flows 1/5 Although Q3-F15 FCF remains negative $2 million, ACQ s operating cash flow has improved significantly to $20 million compared to $9 million over the same quarter last year. We estimate that FCF will remain negative for F15 and F16 because of significant investment in dealership relocations and renovations. The Balance Sheet 2/5 ACQ successfully renegotiated its debt covenants, which were at the verge of a breach. We now believe that the company will have sufficient liquidity to fund its future acquisitions. Business Operations 2/5 New vehicle gross margins in Q3-F15 were under pressure as ACQ pushed out its inventory. We expect the margins to stabilize for Q4-F15 as our review of days inventory outstanding for the past six years shows that days inventory outstanding has stabilized at historical levels. Further, wholesale used vehicle margins for Q3- F15 showed some improvement at 0.7% compared to 0.2% in Q2-F15, but it is significantly below the 1.8% margin achieved in Q3-F14. Corporate Governance 1/5 Corporate governance is deficient as key executives are permitted to build their own competing mini- AutoCanadas funded by ACQ stock sales. The Board Chair personally owns at least seven dealerships. Our intrinsic value estimate of $29 reflects, on average, three dealership acquisitions per year through 2021; a decline in gross margins in 2015 and 2016 because of ACQ exposure to Western provinces whose economies will be adversely impacted by the meltdown in oil prices; a higher equity risk premium to reflect the acquisitive nature of the business and its reliance on key executives/employees which present flight risk. We used a WACC of 10.4% and a terminal growth of 2.0% to discount our future cash flows. $ Thousands Q3-F13 Q3-F14 Q3-F15 Number of dealerships Revenues Gross margin EBITDA Market capitalization 865 1, Net debt (1) EV/EBITDA (TTM) ROE (TTM) 19.0% 11.4% 11.3% Shares outstanding (in millions) VARUN MEHROTRA vmehrotra@veritascorp.com Page 15

19 Updated November 12, 2015 AVIGILON CORP. TSX-AVO Current Price $11.89 Market Capitalization (millions) $539 EARNINGS QUALITY RISKS REMAIN Right before Q1-F14 results, Avigilon s CFO, Bradley Bardua, abruptly left the company. Judging by the ~30% drop in Avigilon s share price, there was serious concern among investors that something pervasive was amiss. Since then, high management turnover has continued. Most recently, Avigilon s share price fell by ~12% on September 2, 2015, following the announcement that two executives would be leaving the Company in connection with a management reorganization. In addition to the high management turnover at the company, our accounting and disclosure review has identified risks related to earnings quality Risk Areas Corporate governance / other High management turnover and deep relationships and collaboration between the company and channel intermediaries increase the risk of premature revenue recognition and channel stuffing. Disclosure / earnings quality Changes in revenue recognition disclosures during F12 indicate that accounting policies may have changed, which could have accelerated revenue recognition. A significant increase in the run rate of capitalized development costs which began in Q1-F15 is concerning given the highly subjective nature of the accounting treatment for these costs. Updates Since Last Report Avigilon s share price fell by ~12% on November 4, 2015 after the Company reported Q3-F15 results, which included guidance for Q4 that was below investors expectations. KEVIN DUSSELDORP kdusseldorp@veritascorp.com Page 16

20 Updated September 11, 2015 BANK OF MONTREAL TSX-BMO; NYSE-BMO SELL Current Price C$69.38 / US$52.44 Intrinsic Value C$70.50 Current Yield 4.7% M O D E S T L Y A C C R E T I V E D E A L A D D S S C A L E T O U S B U S I N E S S BMO s recently announced acquisition of General Electric Capital Corporation s Transportation Finance business was a positive but, adding further scale to the bank s existing US footprint where it is primarily a commercial lender. While we are encouraged by the bank s ability to deploy some of its excess capital into an accretive purchase, we remain concerned about BMO s unsustainably low loan losses reported in recent quarters, the bank s continuing challenges in the Canadian P&C banking business, and its lower relative profitability with a group-low return on equity among the Big Six banks. As such, we maintain our SELL recommendation. Accounting & Disclosure 2/5 Purchased performing items are no longer adjusted for by the bank. The other adjusting item of note is purchased credit impaired (PCI) recoveries. There has been a steady decline in PCI and other credit related items. Over the course of F12 and F13, the recoveries added an average of $210M quarterly to reported earnings. In Q3-F15, PCI recoveries are $19M while credit impact from purchased performing portfolio is $26M. Capital 4/5 BMO s CET1 capital ratio ended Q3 at 10.4%, with management reiterating a comfort level in and around the 10% mark. The announced acquisition of GE Transportation Finance business is expected to reduce BMO s CET1 ratio by 70 bps; management guided to CET1 ratio in the range of 9.9% at the end of Q1-F16 when the deal close. Credit 4/5 Credit was a strong tailwind in Q3-F15 with a consolidated loan loss ratio of 19 bps, well below 24 bps reported in Q2-F15 and the 26 bps reported in the prior year period. We do not view this as a sustainable level given the weakness in the Canadian economy. Management guided to a loan loss ratio of roughly 40 bps in a scenario where oil prices average $35/bbl for next 12 months and $50/bbl in the 12-month period afterwards. Business Operations 3/5 Canadian P&C earnings growth was 5% YoY in Q3-F15, largely due to lower loan losses which accounted for about 60% of the YoY increase in pre-tax earnings. U.S. P&C delivered strong 15% YoY earnings growth, entirely driven by lower PCLs. On a positive note, we saw NIM stabilization in both P&C businesses. The Wealth segment delivered 10% earnings growth YoY. Corporate Governance 3.5/5 No items noted. Our intrinsic value estimate for BMO is $70.50, calculated by applying a multiple of 10.6x on our F2016 EPS estimate of $6.92 and a multiple of 1.2x on our BV estimate of $56.13 at the end of F2016, and taking the average of the two. FY end Oct. 31 C$ F13 F14 Q3-F15 Common equity tier 1 ratio (BIII) 9.9% 10.1% 10.4% Closing Share Price $72.62 $81.73 $72.98 EPS (TTM) $6.19 $6.44 $6.34 P/E (TTM) 11.8x 12.7x 11.5x BV/share $43.22 $48.18 $55.36 P/BV 1.7x 1.7x 1.3x Dividend yield 4.1% 3.8% 4.5% Market capitalization (millions) 46,777 53,047 46,876 ROE 14.9% 14.0% 13.6% Net interest margin (AEA) 1.79% 1.60% 1.55% # shares outstanding (millions) BUSINESS COMPOSITION BMO s retail/wholesale earnings mix is approximately 79%/21%. Canadian P&C banking contributes approximately 43% of earnings, excluding the corporate segment, while U.S. P&C banking contributes approximately 18% of earnings. MIKE RIZVANOVIC mrizvanovic@veritascorp.com Page 17

21 Updated August 31, 2015 BANK OF NOVA SCOTIA TSX-BNS; NYSE-BNS SELL Current Price C$59.60 / US$45.17 Intrinsic Value C$56.00 Current Yield 4.7% I N T E R N A T I O N A L W E A K W I T H O U T C U R R E N C Y T A I L W I N D Our thesis on the bank s International Banking business remains intact as earnings in the segment have contracted by 3% year-to-date Q3-F15 when adjusted to exclude the favorable impact of currency changes. The Pacific Alliance countries, which represent management s primary area of focus in the International business, are heavily dependent on various commodities, the recent sell-off of which has led to moderating economic activity. We expect that weaker GDP growth in the region will lead to a more competitive environment in the financial services sector that will favor banks with greater scale. We maintain our SELL recommendation. Accounting & Disclosure 3/5 BNS has realigned its reporting segments. The Canadian and International operations previously included within the Global Wealth & Insurance segment are now included in the Canadian Banking and International Banking (IB) segments respectively. Since wealth management and insurance results are now part of Canadian Banking and IB, there is reduced transparency on the underlying P&C results. Additionally, the Asia operations which were previously reported in IB (except for Scotia s associated corporations Thanachart Bank and Bank of Xi an, which remain part of IB), have been moved into Global Banking & Markets. Comparatives have been provided back to Q1-F13. Capital 4/5 The CET1 ratio was 10.4% as of Q3-F15, a comfortable level in our view and in line with the large Canadian banks. BNS reported a leverage ratio of 4.1% in Q3-F15, flat sequentially. We maintain intrinsic value of $56.00, calculated by applying a multiple of 10.4x to our F2016 EPS estimate of $5.73 and a multiple of 1.2x to our BV per share estimate of $44.17 at the end of F2016, and taking the average of the two. FY end Oct. 31 C$ F13 F14 Q3-F15 Common equity tier 1 ratio (BIII) 9.1% 10.8% 10.4% Closing share price $63.39 $69.02 $64.19 EPS (TTM) $5.15 $5.69 $5.35 P/E (TTM) 12.3x 12.1x 12.0x BV/share $33.23 $36.96 $40.30 Credit 3/5 The PCL ratio was 42 bps in Q3-F15, up 5bps YoY and 1 bp higher QoQ. BNS did not get a boost from better credit as most of its peers did in Q3, which is the result of the bank s push into higher spread lending products in Canada. Business Operations 3/5 Canadian Banking reported 10% earnings growth YoY as the bank continued pushing into higher margin products, such as credit cards, auto loans and commercial lending. The International Banking segment reported 11% earnings growth YoY; however, after removing the favourable FX impacts in the quarter, growth was a much more modest 4%. Our thesis on the bank s international business remains intact, as much of the CA&C countries are facing strong economic headwinds while the Pacific Alliance countries are facing slowing economic activity resulting from declining commodity prices. Corporate Governance 4/5 Good. P/BV 1.9x 1.9x 1.6x Dividend yield 3.8% 3.7% 4.2% Market capitalization (millions) 76,612 83,969 77,529 ROE 16.6% 16.1% 14.7% Core Margin (AEA) 2.31% 2.39% 2.40% # shares outstanding (millions) 1,209 1,217 1,208 BUSINESS COMPOSITION Excluding the Other segment, BNS retail/wholesale earnings mix is approximately 78%/22%. The International Banking segment (new segment definition) accounts for 27% of earnings and has exposures to Caribbean and Central America, Mexico, Chile, Peru, Colombia, and parts of Asia. Canadian Banking (new segment) contributes approximately 48% of earnings. MIKE RIZVANOVIC mrizvanovic@veritascorp.com Page 18

22 Updated October 30, 2015 BARRICK GOLD CORP. TSX-ABX; NYSE-ABX BUY Current Price C$10.31 / US$7.82 Intrinsic Value US$8.50 Current Yield 1.0% D E L I V E R I N G T H E G O O D S Barrick delivered a strong third quarter with cash costs of $570/oz and AISC of $771/oz on production of 1.66 Moz. In our view, Newmont is a valid proxy for Barrick as both have many commonalities. Yet, based on our analysis, Barrick continues to trade at a undeserved material discount to its closest peer. Applying Newmont s forward EBITDA multiple (based on its most recent closing price of $19.89) to Barrick, we arrive at a $9.85 per share valuation. However, as we think that Newmont is over-valued we value Barrick at $8.50. Correspondingly, we maintain our buy. Accounting & Disclosure 3/5 Long-Term Gold Price Intrinsic Value Estimate Under IFRS, the company now capitalizes certain expenses which boosts operating cash flows, but makes it more comparable to peers. Adjusted Cash Flows 3/5 We estimate adjusted FCF for the quarter to be $110 million excluding the impact of the accretive $610 Pueblo Viejo stream transaction. The suspension of Pascua-Lama allows Barrick to generate free cash flows. The Balance Sheet 2/5 US$1,100 per ounce US$8.50 per share +/- US$100 per ounce +/- US$2.50 per share We value Barrick at $8, and see upside to the company s new tone at the top. Asset sales, improvements in corporate governance, and free cash flows are all catalysts that could push the share price towards our valuation. Fiscal year ends December 31 US$ millions, except as noted F13 F14 F15 9 mos Closing price, end of period Barrick should be able to comfortable meet its $3-billion debt reduction plan for 2015 with the announced sales of Zaldivar, Cowal and Porgera and Nevada non-core assets in Q3, Barrick s intention of reducing debt through asset sales seems to be on track in a challenging environment and should be credited for getting favourable prices. Business Operations 4/5 Despite cost inflation, Barrick has below-average costs in its gold business. If only it had the same success with copper. Corporate Governance 3/5 Shares outstanding, millions 1,165 1,165 1,165 Market cap 20,613 12,384 7,409 Gold production, 000s oz 7,166 6,249 4,498 Revenue 12,527 10,239 6,791 CFPS Cash flow per ounce John Thornton succeeded Peter Munk as Chairman. Recent changes to the management structure and decentralization of operations is a positive move and seems to be having a positive impact on cost reduction. Price to cash flow 4.8x 5.4x 3.9x Net debt to EV 34% 46% 55% SID SUBRAMANI ssubramani@veritascorp.com Page 19