Special Situations Review

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Special Situations Review
FEBRUARY 2001
Special Situations Review
TONY YUE, PH.D.
[email protected] / (604) 643-7542
HIGHLIGHTS
•
•
•
The Top January Winners:
Ø Versacold (ICE : TSE : $6.00)
up
26.3%
Ø Spar Aerospace (SPZ : TSE : $10.20)
up
23.6%
Ø Aastra Technologies (AAH : TSE : $10.75)
up
23.6%
Ø Strongco (SQP : TSE : $1.72)
up
22.9%
Ø MDS Inc. (MDS : TSE : $26.70)
up
20.3%
Ø CAE Inc. (CAE : TSE : $20.70)
down
15.2%
Ø Toromont Industries (TIH : TSE : $15.30)
down
12.6%
Ø The Boyd Group (BYD.A : TSE : $1.80)
down
10.0%
Ø COM DEV International (CDV : TSE : $14.00)
down
9.7%
Ø Aastra Technologies (AAH : TSE : $10.75)
up
23.6%
Ø CRS Robotics (ROB : TSE : $2.85)
up
6.0%
Ø Finning International (FTT : TSE : $12.10)
down
4.7%
Ø Gennum Corp. (GND : TSE : $14.00)
up
6.9%
Ø MDS Inc. (MDS : TSE : $26.70)
up
20.3%
Ø Patheon (PTI : TSE : $13.80)
down
7.1%
Ø Spar Aerospace (SPZ : TSE : $10.20)
up
23.6%
The Bottom January Losers:
Year-to-date Performance of Our 2001 Top Picks:
JANUARY 31, 2001
2001-040
MEMBER OF ALL CANADIAN STOCK EXCHANGES AND THE INVESTMENT DEALERS ASSOCIATION OF CANADA
VANCOUVER TORONTO CALGARY MONTREAL LONDON PARIS
SPECIAL SITUATIONS
TABLE OF CONTENTS
Aastra Technologies Limited (AAH : TSE) ................................................................................................3
Boyd Group Inc., The (BYD.A : TSE) ........................................................................................................3
Buhler Industries Inc. (BUI : TSE) ..............................................................................................................4
CAE Inc. (CAE : TSE).................................................................................................................................4
Canadian Medical Laboratories Limited (CLC : TSE)................................................................................5
COM DEV International (CDV : TSE) .......................................................................................................5
CRS Robotics Corporation (ROB : TSE) ....................................................................................................6
Finning International (FTT : TSE)...............................................................................................................6
Gennum Corporation (GND : TSE).............................................................................................................7
MDS Inc. (MDS : TSE) ...............................................................................................................................7
Patheon Inc. (PTI : TSE)..............................................................................................................................8
Spar Aerospace Limited (SPZ : TSE)..........................................................................................................8
Strongco Inc. (SQP : TSE)...........................................................................................................................9
Toromont Industries Ltd. (TIH : TSE).........................................................................................................9
Versacold Corporation (ICE : TSE)...........................................................................................................10
Wajax Limited (WJX : TSE) .....................................................................................................................10
JANUARY 31, 2001
2
SPECIAL SITUATIONS
Aastra Technologies (AAH : TSE : $10.75)
Recommendation:
STRONG BUY
12-month target price:
$20.00
52-week price range:
$17.00–5.00
Shares O/S:
basic
14.2M
fully diluted
14.7M
Float:
76%
Indicated dividend:
Nil
Weekly trading volume:
79,000
Market capitalization:
$152.7M
Y/E Dec 31
Sales
EBITDA
EPS
1998A
$37.2M
$2.3M
$0.16
1999A
$97.1M
$9.0M
$0.55
2000E
$190.0M
$27.5M
$1.25
2001F
$220.0M
$33.6M
$1.40
Sector:
Website:
•
•
P/E
67.2X
19.5X
8.6X
7.7X
Technology-Hardware
www.aastra.com
Although Aastra shares rebounded 23.6% in January market valuation of the company remains low given its
growth record, promising outlook and a strong, debt free balance sheet. Management faced considerable
challenges in f2000 but has met all these challenges well. We are convinced that Aastra can continue to grow
profitably. It appears that investors remain skeptical on the growth prospects of the company.
The company’s technology focus for growth includes continued enhancement of existing terminals and
network products, introduction and development of web-enabled appliance, enterprise voice over IP and
enterprise wireless products. Aastra is among our TOP PICKS for 2001.
The Boyd Group (BYD.A : TSE $1.80)
Recommendation:
STRONG BUY
12-month target price:
$4.50
52-week price range:
$3.15–1.45
Shares O/S:
basic
12.9M
fully diluted
18.0M
Float:
53%
Indicated dividend:
Nil
Weekly trading volume:
5,000
Market capitalization:
$23.2M
Y/E Dec 31
Sales
EBITDA
EPS
1998A
$28.7M
$2.8M
$0.050
1999A
$54.6M
$5.9M
$0.095
2000E
$95.0M
$10.4M
$0.170
2001F
$150.0M
$17.0M
$0.230
Sector:
Website:
P/E
36.0X
18.9X
10.6X
7.8X
Wholesale Distributors
www.boydgroup.com
•
Boyd shares continued to drift in spite of the company’s growth record and financial performance. It seems
that investors have little interest in an acquisition driven growth, consolidation story. While the collision
repair business may appear to be unexciting, GM has recently launched Goodwrench auto body centers with
the objective to establish a national recognized collision repair network. Caliber collision centers also added
over 20 stores in 2000. These activities suggest the appeal and profit potential of being a large player in the
industry. Note that Boyd also acquired 12 collision repair locations in US during 2000.
•
We expect Boyd will continue to be a leading consolidator in the highly fragmented, $40 billion collision
repair industry in North America. While BYD.A shares offer attractive value, investors will need patience.
JANUARY 31, 2001
3
SPECIAL SITUATIONS
Buhler Industries (BUI : TSE : $3.35)
Recommendation:
BUY
12-month target price:
$3.75
52-week price range:
$3.74-2.65
Shares O/S:
basic
24.2M
fully diluted
24.7M
Float:
35%
Indicated dividend:
$0.10
Weekly trading volume:
6,000
Market capitalization:
$81.1M
Y/E Sep 30
Revenue EBITDA
EPS
1998A
$89.2M
$16.9M
$0.29
1999A
$80.0M
$14.4M
$0.24
2000E
$116.7M
$15.9M
$0.30
2001F
$200.0M
$20.0M
$0.32
Sector:
Website:
P/E
11.6X
14.0X
11.2X
10.5X
Fabricating & Engineering
www.buhler.com
•
Reported exceptionally strong results for Q1/f01: EPS were up 120% to $0.11 and revenue increased 3.2-fold
to $59.2 million. Sales of Buhler Versatile tractors accounted for about 90% of the revenue growth, and
unusually low overhead vis-à-vis the higher revenue contributed to the income growth. The ongoing strike at
the newly acquired Versatile tractor plant will impact performance of future quarters.
•
Meanwhile, Buhler continues to build and expand its dealer network, to develop new products, and to position
itself for an eventual recovery in the farm economy. Buhler shares remain a BUY for patient investors.
CAE Inc. (CAE : TSE $20.70)
Recommendation:
MARKET PERFORM
12-month target price:
$24.00
52-week price range:
$25.30–10.25
Shares O/S:
basic
107.7M
fully diluted
110.4M
Float:
100%
Indicated dividend:
$0.20
Weekly trading volume:
898,000
Market capitalization:
$2.23B
Y/E Mar 31
Revenue
EBIT
EPS
P/E
1999A
$905.9M
$113.9M $0.66
31.4X
2000A
$1,164.3M
$141.5M $0.83
24.9X
2001E
$1,195.0M
$195.0M $1.12
18.5X
2002F
$1,265.0M
$218.0M $1.35
15.3X
Sector:
Website:
Technology-Hardware
www.cae.com
•
CAE recently announced the rationalization of its sawmill machinery operations in response to depressed
market conditions (lumber prices are at a five-year low) in the forest products industry. About 160 positions
or 20% of the work force of the Wood Products group, primary associated with the operations in Salmon
Arm, British Columbia and Portland, Oregon will be affected. However, the Pulp and Paper division will
remain intact. Note that Forestry Systems accounted for 28% or $163.4 million of f2001 first half revenue
($581.3 million) and also 28% or $27.6 million of the EBIT operating income ($100.2 million).
•
Nevertheless, management stated that CAE’s outlook for f2001 and the commitment to double net earnings
within a three-year time frame remain unchanged. The future for commercial simulation and training is
positive and the entry into the $13 billion global pilot training market should pay off.
JANUARY 31, 2001
4
SPECIAL SITUATIONS
Canadian Medical Laboratories (CLC : TSE : $19.00)
Recommendation:
BUY
12-month target price:
$20.00 (under review)
52-week price range:
$23.00–13.00
Shares O/S:
basic
20.4M
fully diluted
21.3M
Float:
54%
Indicated dividend:
Nil
Weekly trading volume:
656,500
Market capitalization:
$387.6M
Y/E Sep 30
Revenue EBITDA
EPS
P/E
1998A
$74.5M
$26.4M
$0.68
27.9X
1999A
$130.4M
$55.4M
$1.21
15.7X
2000E
$186.0M
$77.5M
$1.65
11.5X
2001F
$206.0M
$86.0M
$1.80
10.6X
Sector:
Website:
•
•
Biotech/Pharmaceuticals
www.canmedlab.com
Canadian Medical Laboratories shares recovered well after it announced in late 2000 the entry into the drug
development arena through a new subsidiary Cipher Pharmaceuticals Limited. Cipher has since completed
three licensing agreements with Galephar Pharmaceutical for the development of a novel lipid-lowering drug,
a new sustained release Tramadol for chromic pain syndromes treatment, and a new formulation of
Isotretinoin for severe nodular acne treatment. The company plans to capitalize its drug development costs.
Meanwhile, the company will continue to expand its SMO business that organizes and manages multi-site
clinical investigations on behalf of CROs. Patient investors could realize significant returns in two to three
years.
COM DEV International (CDV : TSE : $14.00)
Recommendation:
12-month target price:
52-week price range:
Shares O/S:
basic
fully diluted
Float:
Indicated dividend:
Weekly trading volume:
Market capitalization:
Y/E Oct 31
1998A
1999A
2000E
2001F
Revenue
$172.1M
$162.4M
$205.5M
$300.0M
Sector:
Website:
SPECULATIVE BUY
$20.00
$22.20-5.00
43.1M
47.8M
78%
Nil
441,000
$610.4M
EBITDA
$6.5M
$(6.9)M
$12.5M
$21.0M
EPS
$(0.57)
$(2.12)
$(0.11)
$0.15
P/E
n.a.
n.a.
n.a.
93.3X
Technology-Hardware
www.comdev.ca
•
COM DEV shares pulled back 10% in January after gaining 230% in 2000. We think COM DEV shares will
stay in a narrow trading range until progress is evidenced on M/ERGY, the new high-speed wireless Internet
data system. We believe that investors are now more cautious as an increased number of wireless equipment
suppliers have indicated a slower growth period ahead.
•
Although strong order input for both space and wireless products should fuel f2001 revenue growth to the
$300 million level, net earnings growth will be affected by high production costs in China and significant
R&D investment (about $30 million) for M/ERGY. While successful commercialization of M/ERGY will
provide significant return and will transform COM DEV into a system company from a component supplier,
the risk is also high. We rate COM DEV shares as a SPECULATIVE BUY for aggressive investors.
JANUARY 31, 2001
5
SPECIAL SITUATIONS
CRS Robotics (ROB : TSE : $2.85)
Recommendation:
STRONG BUY
12-month target price:
$6.00
52-week price range:
$5.00–2.00
Shares O/S:
basic
9.7M
fully diluted
10.5M
Float:
67%
Indicated dividend:
Nil
Weekly trading volume:
48,600
Market capitalization:
$27.6M
Y/E Dec 31
Sales
EBITDA
EPS
1998A
$13.5M
$1.1M
$0.09
1999A
$13.9M
$1.5M
$0.12
2000E
$18.3M
$1.6M
$0.11
2001F
$29.0M
$2.8M
$0.18
Sector:
Website:
P/E
31.7X
23.8X
25.9X
15.8X
Biotechnology/Pharmaceuticals
www.crsrobotics.com
•
While earnings growth in the first nine months of
f2000 was affected by the company’s decision to invest heavily in sales/marketing to grow sales, this strategy
should pay off beginning in f2001, and perhaps as early as in Q4/f00. Our EPS (before amortization of
goodwill associated with the Robocon acquisition) and sales forecast for f2000 and f2001 could be on the
conservative side. There is room for upside surprise.
•
The purchase of Robocon will add over $6 million of profitable sales, and it will increase the global presence
of CRS in lab automation. CRS has also expanded its product offerings to include diagnostic kits and
consumables. CRS recently announced an OEM agreement with Robbins Scientific, the release of enhanced
POLARA 1.3 software for the drug discovery and clinical trial markets, and a supply agreement with MDS
Proteomics for automated protein expression platforms. CRS is one of our TOP PICKS for 2001.
Finning International (FTT : TSE : $12.10)
Recommendation:
STRONG BUY
12-month target price:
$17.00
52-week price range:
$13.85–9.85
Shares O/S:
basic
76.3M
fully diluted
82.2M
Float:
100%
Indicated dividend:
$0.20
Weekly trading volume:
641,000
Market capitalization:
$923.2M
Y/E Dec 31
Revenue
CFPS
EPS
P/E
1998A
$2,585M
$2.89
$0.04
302.5X
1999A
$2,230M
$3.15
$0.75
16.1X
2000E
$2,450M
$3.40
$1.00
12.1X
2001F
$3,000M
$5.00
$1.25
9.7X
Sector:
Website:
Merchandising-Wholesale Distributor
www.finning.com
•
After an 18% gain in December 2000 to the $12.70 level, Finning shares have stayed in a narrow trading
range so far in 2001. During January, Finning acquired Hewden Stuart Plc, the Mak business operation (a
subsidiary of Caterpillar) in the UK and Ireland, as well as Sabre Perkins (also a subsidiary of Caterpillar).
•
The three acquisitions will add roughly C$615 million of profitable, annualized revenue, and will position
Finning as a leader in the UK equipment rental market, and the world’s first Cat dealer supplying the entire
range of marine engines manufactured by Caterpillar, from a single source in the UK. We are positive on the
repositioning strategy of Finning and we have selected Finning shares as a TOP PICK for 2001.
JANUARY 31, 2001
6
SPECIAL SITUATIONS
Gennum (GND : TSE : $14.00)
Recommendation:
BUY
12-month target price:
$20.00
52-week price range:
$19.45–11.75
Shares O/S:
basic
35.7M
fully diluted
35.7M
Float:
80%
Indicated dividend:
$0.12
Weekly trading volume:
50,000
Market capitalization:
$499.8M
Y/E Nov 30
Sales
CFPS
EPS
1999A
$93.6M
$0.62
$0.49
2000A
$106.5M
$0.72
$0.53
2001E
$126.0M
$0.80
$0.60
2002F
$155.0M
$1.00
$0.78
Sector:
Website:
P/E
28.6X
26.4X
23.3X
17.9X
Technology-Hardware
www.gennum.com
•
Although Gennum only posted a modest 8.2%
increase in EPS for f2000 and management only expects stronger earnings growth to resume in the second
half of f2001, we envision that the company will enter into another period of rapid growth beginning in f2002,
similar to the growth period of f1994-f1998. High-speed datacom IC’s will be a key driver in the next phase
of growth.
•
Gennum will begin to market new digital hearing products in f2001 and will also introduce its datacom IC’s.
Meanwhile, sales of analog hearing products are holding up well, and demand for video products (for digital
signal conversion and HDTV) also continues strong. Gennum is one of our TOP PICKS for 2001.
MDS Inc. (MDS : TSE C$26.70 / MDZ : NYSE : US$17.75)
Recommendation:
BUY
12-month target price:
C$28.00 (under review)
52-week price range:
C$32.38–15.13 (TSE)
Shares O/S:
basic
139.5M
fully diluted
145.8M
Float:
80%
Indicated dividend:
C$0.08625
Weekly trading volume:
2.3M
Market capitalization:
C$3.7B
Y/E Oct 31
Revenue
EBITDA
EPS
P/E
1999A
$1.19B
$191.4M
$0.70
38.1X
2000A
$1.44B
$203.3M
$0.86
31.0X
2001E
$1.67B
$255.0M
$0.73
36.6X
2002F
$1.84B
$299.0M
$0.87
30.7X
Sector:
Website:
•
Biotechnology/Pharmaceuticals
www.mdsintl.com
MDS shares rebounded 20% in January. The confirmed commitment of an IPO for MDS Proteomics has
removed considerable uncertainty. This subsidiary has made significant progress in building corporate
infrastructure, including management team, capabilities, joint ventures and client base. Meanwhile, MDS
Sciex has reached an agreement with Micralyne of Alberta to jointly develop microfluidic technology for use
in drug discovery instrumentation. MDS itself has also acquired a majority interest in GenerationMD, a
provider of web-based medical education for physicians, as part of the company’s e-health strategy.
JANUARY 31, 2001
7
SPECIAL SITUATIONS
•
While the high expenditures planned for MDS Proteomics will impact f2001 results, we should see stronger
earnings growth beginning in f2002. Progress at MDS Pharma Services will be an important factor. We like
the risk/reward of investing in MDS and we have selected MDS shares as a TOP PICK for 2001.
Patheon (PTI : TSE : $13.80)
Recommendation:
STRONG BUY
12-month target price:
$17.00
52-week price range:
$16.85–7.00
Shares O/S:
basic
46.0M
fully diluted
49.3M
Float:
85%
Indicated dividend:
Nil
Weekly trading volume:
223,000
Market capitalization:
$641.7M
Y/E Oct 31
Revenue EBITDA
EPS
1999A
$127.4M
$20.0M
$0.18
2000A
$256.3M
$34.2M
$0.31
2001E
$320.0M
$45.0M
$0.42
2002F
$385.0M
$60.0M
$0.56
Sector:
Website:
•
•
P/E
76.7X
44.5X
32.9X
24.6X
Biotechnology/Pharmaceuticals
www.patheon.com
Growth momentum continues very strong. EPS
for f2000 increased 70% to $0.31 and revenues more than doubled to $256.3 million. While the BourgoinJallieu (France) and Swindon (UK) sites acquired from Aventise in Q1/f00 accounted for 83% of the revenue
increase, North American operations also posted an organic growth of 23%. Year-end backlog rose to $65
million from $32.3 million.
Management expects 20-25% internal growth for the North American operations in f2001, about 10% growth
for the European operations, and some improvement in margins. Ongoing business development activities
will lead to substantial growth in Europe in f2002. New contracts, expanded development services and
acquisition should drive f2003 revenue to the $500 million range. Patheon is a TOP PICK for 2001.
Spar Aerospace (SPZ : TSE : $10.20)
Recommendation:
STRONG BUY
12-month target price:
$11.00 (under review)
52-week price range:
$10.25–6.30
Shares O/S:
basic
14.6M
fully diluted
15.9M
Float:
54%
Indicated dividend:
$0.76
Weekly trading volume:
163,000
Market capitalization:
$145.9M
Y/E Dec 31
Revenue EBITDA
EPS
P/E
1998A
$123.1M
$7.9M
$0.38
26.8X
1999A
$136.6M $13.1M
$0.08
127.5X
2000E
$132.0M $19.5M
$0.95
10.7X
2001F
$145.0M $22.0M
$1.25
8.2X
Sector:
Website:
•
Technology-Hardware
www.spar.ca
Spar shares had an impressive total return of 26% in January. The company received regulatory approval to
purchase up to 752,000 shares, as well as the authorization to proceed with a $16 million upgrade of airborne
collision avoidance and radar altimeter systems on DND’s C130 fleet. Spar also booked a net gain of
$0.22/share from the sale of its interest in Vistar Telecommunications to NSI Communications in January.
JANUARY 31, 2001
8
SPECIAL SITUATIONS
•
Supported by a cash-rich balance sheet, management is committed to grow Spar’s aviation services business,
internally and through acquisitions. Enterprise Capital Management now has ownership or control and
direction over 3.35 million or 23.5% of Spar shares through recent private agreements reached with I.M.P.
Group and K.C. Rowe. Spar continues to offer attractive risk/reward and is among our TOP PICKS for 2001.
Strongco (SQP : TSE : $1.72)
Recommendation:
SPECULATIVE BUY
12-month target price:
$3.00
52-week price range:
$3.85–1.21
Shares O/S:
basic
9.4M
fully diluted
10.1M
Float:
70%
Indicated dividend:
Nil
Weekly trading volume:
66,400
Market capitalization:
$16.2M
Y/E Dec 31
Revenue
CFPS
EPS
P/E
1998A
$607.8M $2.09
$1.00
1.7X
1999A
$571.3M $0.58
$(0.15)
n/a
2000E
$530.0M $1.35
$0.10
17.2X
2001F
$550.0M $1.49
$0.30
5.7X
Sector:
Website:
Fabricating & Engineering
www.strongco.com
•
Strongco recently sold its entire equipment
distribution operation in the Mid-Atlantic States of Virginia, Pennsylvania and New Jersey, for about $76
million. This divestment will eliminate about $0.07/share of losses, result in a pre-tax gain of roughly $3
million, and improve the total debt-to-equity ratio to 2.2 times from 3.1 times. The $13 million of cash
proceeds will be used to improve Canadian operations.
•
While this transaction is a major step to reduce Strongco’s balance sheet leverage, the debt level remains high.
Management needs to strengthen further the company’s financial position and operations to rekindle investor
interest. Notice that the current share price represents a 72% discount to the $6.12 tangible book value.
Toromont Industries (TIH : TSE : $15.30)
Recommendation:
BUY
12-month target price:
$20.00
52-week price range:
$20.75–14.50
Shares O/S:
basic
28.9M
fully diluted
30.2M
Float:
70%
Indicated dividend:
$0.32
Weekly trading volume:
70,500
Market capitalization:
$442.2M
Y/E Dec 31
Revenue
CFPS
EPS
1998A
$683.5M
$1.43
$0.96
1999A
$723.9M
$1.61
$1.09
2000A
$800.5M
$1.79
$1.12
2001E
$830.0M
$1.96
$1.25
Sector:
Website:
•
P/E
15.9X
14.0X
13.7X
12.2X
Fabricating & Engineering
www.toromont.com
Despite the adverse impact of the Concord strike
in mid-year that reduced EPS by about $0.08, Toromont posted record results for f2000. While revenues
were up 10.6% to $800.5 million, EPS increased 2.8% to $1.12. High conversions of equipment under the
rent-to-own options, strong results from Battlefield Equipment Rentals, and a healthy increase in shipments of
gas compression packages by Toromont Process Systems contributed to the record performance.
JANUARY 31, 2001
9
SPECIAL SITUATIONS
•
Although the overall operating environment remains positive at this time, management is “guarded” about the
outlook for f2001, citing weakness in the economy, declining credit availability and gyrations in financial
markets. However, with a strong balance sheet Toromont will be able to weather a downturn and to pursue
expansion opportunities. Toromont is a BUY at the current level for long-term, portfolio investors.
Versacold (ICE : TSE : $6.00)
Recommendation:
MARKET PERFORM
12-month target price:
$6.00
52-week price range:
$8.00–4.30
Shares O/S:
basic
9.7M
fully diluted
10.5M
Float:
27%
Indicated dividend:
Nil
Weekly trading volume:
2,000
Market capitalization:
$58.2M
Y/E Dec 31
Sales
EBITDA
EPS
P/E
1998A
$117.8M
$26.2M
$0.42
14.3X
1999A
$120.2M
$21.5M
$0.16
37.5X
2000E
$128.0M
$23.4M
$0.22
27.3X
2001F
$125.0M
$25.5M
$0.30
20.0X
Sector:
Web site address:
Wholesale Distributors
www.versacold.com
•
The thinly traded Versacold shares recovered 26%
in January and they are now selling above the $5.50 book value. The company recently appointed Brent
Sugden as president and CEO, as well as a director. Mr. Sugden has held senior management positions with
Tibbett & Britten Gorup North America, Overwaitea Food Group in Alberta, and Associated Grocers, also in
Alberta.
•
Versacold has experienced considerable growing pains in developing its logistics, distribution and supply
chains capability. The experience of Mr. Sugden should help Versacold to better manage its customers’
combined refrigerated and dry goods supply chains requirement. Hopefully, better days are ahead.
Wajax (WJX : TSE : $4.15)
Recommendation:
12-month target price:
52-week price range:
Shares O/S:
basic
fully diluted
Float:
Indicated dividend:
Weekly trading volume:
Market capitalization:
Y/E Dec 31
1998A
1999A
2000E
2001F
Revenue
$992.3M
$1,038.4M
$1,155.0M
$1,250.0M
Sector:
Website:
•
BUY
$8.00
$5.50–3.25
15.7M
16.3M
52%
Nil
300,000
$65.2M
CFPS
$1.29
$1.81
$1.82
$2.06
EPS
$0.60
$0.25
$0.70
$0.85
P/E
6.9X
16.6X
5.9X
4.9X
Fabricating & Engineering
www.wajax.com
While Wajax has achieved significantly improved profitability and debt reduction in f2000, it will take
another four years for the repositioning strategy to be fully deployed. The strategy lies in transforming the
foundation of the company’s business to an after-market and service orientation that will be supported by a
wholesale goods and parts distribution business, delivered through a low-cost logistics network, and managed
with a stat-of-the-art information system. A significant downturn in the economy will detour this plan.
JANUARY 31, 2001
10
SPECIAL SITUATIONS
•
Despite the positive progress made by management, Wajax shares continue to sell at a deep discount to the
$8.52 tangible book value and at very low P/Es. The thinly traded Wajax shares are a BUY and the down
side risk is small. We expect Wajax will soon decide its course of action on subsidiary Pacific North
Equipment.
JANUARY 31, 2001
11
SPECIAL SITUATIONS
Canaccord Capital Corporation may have assumed an underwriting liability and/or entered into an agency
agreement with respect to the securities mentioned herein.
JANUARY 31, 2001
12
SPECIAL SITUATIONS
Canaccord Capital Corporation
VANCOUVER – HEAD OFFICE
TORONTO
MONTRÉAL
CALGARY
LONDON
PARIS
P.O. Box 10337 Pacific
Centre
2200 – 609 Granville Street
Vancouver, BC V7Y 1H2
Phone: (604) 643-7300/
(800) 663-1899
Fax: (604) 643-7606
P.O. Box 6
1200 – 320 Bay Street
Toronto, Ontario M5H
4A6
Phone: (416) 869-7368/
(800) 896-1058
Fax: (416) 869-7356
1010, rue Sherbrooke
ouest
Bureau 1100
Montréal, Québec H3A
2R7
Phone: (514) 844-5443
Fax: (514) 844-5216
Suite 400, 409 – 8th Ave.
S.W.
Calgary, Alberta T2P 1E3
Phone: (403) 508-3800
Fax: (403) 508-3810
Canaccord Capital
(Europe) Limited
1st Floor, Brook House
27 Upper Brook Street
London W1Y 1PD
Phone: 44-20-75182777
Fax: 44-20-7518-2778/9
Canaccord Capital
(Europe) Limited
3rd Floor
42, avenue de la Grande
Armée
75017 Paris, France
Phone: 33-1 56 68 33 00
Fax: 33-1 56 68 99 58
RESEARCH
Director of Research
James Muir, CFA, Toronto
Research Editor & Administration
Beth Claridge, Toronto
Capital Markets Strategy
Michael Manford, Toronto
Portfolio Strategy
Nick Majendie, Vancouver
(416) 869-3290
(416) 869-3403
(604) 643-7542
44-20-7518-7368
(604) 643-7067
(416) 869-6595
(604) 643-7005
Jinsong Shu, Associate, Vancouver
(604) 643-7758
MINING
Metals & Minerals
Greg Barnes, Toronto
Roger Chaplin, London
Graeme Currie, Vancouver
Gold & Precious Minerals
Brian Christie, Toronto
Michael Jones, London
Brad Humphrey, Associate, Toronto
Commodities (Metals)
Rhona O’Connell, London
(416) 869-3092
44-20-7518-7364
(604) 643-7405
(416) 869-7918
44-20-7518-7365
(416) 869-3650
44-20-7518-7362
ENERGY
Oil & Gas
Gord Currie, CFA, Calgary
Jeffrey Fiell, CFA, Calgary
Martin Pelletier, Associate, Calgary
Charlie Sharp, London
Royalty Trusts & Income Funds
Doug Sims, Calgary
Oilfield Services & Environmental
Sara Elford, CFA, Vancouver
NEW ECONOMY
Technology
Software
Paul Bradley, Toronto
Robert Silgardo, Associate, Toronto
Hardware
Jonathan Hykawy, Ph.D., Toronto
Electronic Commerce & Internet
Jeff Rath, CFA, Toronto
Jim Zadra, CA, Vancouver
Electronic Commerce & Merchandising
Jamie Spreng, Montréal
Health Sciences & Biotechnology
Wayne Schnarr, Ph.D., Toronto
Communications & Media
Benoît Dubé, Montréal
Simon Simonian, Associate, Montréal
Telecommunications
Mark Horn, London
Nick Strube, CFA, Toronto
ABBOTSFORD
200 – 32071 South Fraser Way
Abbotsford, BC V2T 1W3
Phone: (604) 504-1504
Fax: (604) 504-0420
RESEARCH (CONT’D)
Special Situations
Tony Yue, Ph.D., VP, Vancouver
Raj Karia, London
Royalty Trusts & Income Funds
Alan Berge, CFA, Vancouver
AMOS
131 First Avenue West
Suite 300
Amos, PQ J9T 1V1
Phone: (819) 732-7733
Fax: (819) 732-1700
EDMONTON
Suite 2700 Manulife Place
10180 – 101st Street
Edmonton, Alberta T5J 3S4
Phone: (780) 408-1500
Fax: (780) 408-1501
KELOWNA
Landmark Square II
Suite 602 – 1708 Dolphin Ave.
Kelowna, BC V1Y 9S4
Phone: (250) 712-1100
Fax: (250) 712-1140
AURORA
128 Treegrove Circle
Aurora, Ontario L4G 6L9
KINGSTON
The Woolen Mill
#208 – 4 Cataraqui Street
(403) 508-3805
(403) 508-3860
(403) 508-3804
44-20-7518-7366
(403) 508-3806
(604) 643-7739
(416) 869-7920
(416) 869-3260
PUBLICATIONS
Beth Claridge, Editor, Toronto
3403
Corrine Kubota, Daily Letter, Vancouver
7334
Faith Van Wart, Desktop Publisher, Toronto
3515
Irene Wong, Desktop Publisher, Vancouver
7087
(416) 869(604) 643(416) 869(604) 643-
PRIVATE CLIENT INVESTMENTS
Manager
Gord Chan, Vancouver
Market Analysts
Andrew Muir, CFA, Vancouver
Colin Cieszynski, Toronto
4543
US Research Co-ordinator
Brent Woyat, Vancouver
7485
(604) 643-7054
(604) 643-7008
(416) 867(604) 643-
INSTITUTIONAL EQUITIES
Director of Sales & Trading
Matthew Gaasenbeek, Toronto
Ruth Sternberg, Sales Assistant, Toronto
(416) 869-3625
(416) 869-3414
Equities Sales
Steve Anderson, Toronto
Glen Milne, Toronto
Graham Saunders, Toronto
Carolyn Tanner, Toronto
Paul Bernard, Montréal
Mark Shannon, Montréal
Rod Matheson, Calgary
Vince Tattersall, Vancouver
Laura Werth, Sales Assistant, Vancouver
(416) 869-3548
(416) 869-3666
(416) 869-3888
(416) 869-3614
(514) 844-3506
(514) 284-3902
(403) 508-3822
(604) 643-7384
(604) 643-7052
Equities Trading
Bob Lee, Toronto
Jim McMerty, Toronto
Jake Poulstrup, Toronto
Chris Rigby, Toronto
Ron Campbell, Montréal
Julie Walsh, Montréal
Daren Rahal, Vancouver
(416) 869-3761
(416) 869-3178
(416) 869-7924
(416) 869-3326
(514) 844-3547
(514) 844-2982
(604) 643-7061
(416) 869-7922
(416) 869-3325
(604) 643-7031
(514) 844-3790
(416) 869-3028
(514) 844-3630
(514) 844-3621
44-20-7518-7369
(416) 869-3073
BRANCHES
NANAIMO
75 Commercial Street
Nanaimo, BC V9R 5G3
Phone: (250) 754-1111
Fax: (250) 754-4266
EQUITY CAPITAL MARKETS
Ron Sedran, Director of Syndication, Toronto
Sandy Kipping, Syndication
OTTAWA
World Exchange Plaza
Suite 830, 45 O’Connor Street
Ottawa, Ontario K1P 1A4
Phone: (613) 233-3158/(888) 8999994
Fax: (613) 233-9338
PRINCE GEORGE
1520 – 3rd Ave.
Prince George, BC V2L 3G4
(416) 869-3198
(416) 869-3349
SIMCOE
49 Robinson Street
Simcoe, Ontario N3Y 1W5
Phone: (519) 428-7525
Fax: (519) 428-1198
VICTORIA
Suite 100, 880 Douglas Street
Victoria, BC V8W 2B7
Phone: (250) 388-5354
Fax: (250) 978-5300
VANCOUVER – BENTALL
Suite 1200 – 595 Burrard
Street
Vancouver, BC V7X 1J1
Phone: (604) 688-0133
Fax: (604) 682-2574
WATERLOO
Suite 101, 80 King Street South
Waterloo, Ontario N2J 1P5
Phone: (519) 886-1060
Fax: (519) 886-1686
VERNON
3108 – 30th Ave.
Vernon, BC V1T 2C2
WHITEHORSE
206D Jarvis Street
Whitehorse, YT Y1A 2H1
The information contained in this report is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor
n providing it does Canaccord Capital Corporation (“Canaccord Capital”) assume any liability. This information is given as of the date appearing on this report,
and Canaccord Capital assumes no obligation to update the information or advise on further developments relating to these securities. This report is intended for
distribution in those jurisdictions where Canaccord Capital is registered as an advisor or a dealer in securities. Any distribution or dissemination of this report in
any other jurisdiction is strictly prohibited. Canaccord Capital, its affiliated companies and holdings of their respective directors, officers and employees and
companies with which they are associated may, from time to time, include the securities mentioned in this report.
SPECIAL SITUATIONS
Phone: (905) 713-2464
Fax: (905) 713-1250
Kingston, Ontario K7K 1Z7
Phone: (613) 547-3997
Fax: (613) 547-4472
Phone: (250) 562-7255
Fax: (250) 562-1022
Phone: (250) 558-5431
Fax: (250) 558-5439
Phone: (867) 668-7111
Fax: (867) 668-6150
CAMPBELL RIVER
1196 Elm Street
Campbell River, BC V9W 3A2
Phone: (250) 287-8807
Fax: (250) 287-8248
The information contained in this report is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor
n providing it does Canaccord Capital Corporation (“Canaccord Capital”) assume any liability. This information is given as of the date appearing on this report,
and Canaccord Capital assumes no obligation to update the information or advise on further developments relating to these securities. This report is intended for
distribution in those jurisdictions where Canaccord Capital is registered as an advisor or a dealer in securities. Any distribution or dissemination of this report in
any other jurisdiction is strictly prohibited. Canaccord Capital, its affiliated companies and holdings of their respective directors, officers and employees and
companies with which they are associated may, from time to time, include the securities mentioned in this report.