Canadian Research at a Glance

Transcription

EQUITY RESEARCH
CANADIAN RESEARCH AT A GLANCE
November 19, 2014
First Glance Notes
! Conifex Timber Inc.
! Ivanhoe Mines Ltd.
! Teck Resources Limited
Summary
The Deputy Chief Forester has ruled
Summary
Preparations underway for resumption of Platreef site work
Summary
Elk Valley Water Quality Plan approved by BC Ministry of Environment
Summary
Investor Day Preview
Summary
Increased mining rate key to re-rating
Summary
Pre-heating the oven, favourable outlook unchanged
! Bulking Up – RBC's Weekly Review
! Canadian Asset Managers
! Canadian REITs And REOCs
! Paper & Forest Products Weekly
! Q4/14 Global Mining Best Ideas
Summary
IODEX nears $70/t amid oversupply and poor steel demand
Summary
Mutual fund industry flows were surprisingly strong in October
Summary
Q3/14 Recap: High hit ratio; on track for ~4% annual earnings growth
!
! RBC International E&P Daily
! Uranium Weekly
Summary
Potential upside to North American potash producers from Uralkali brine inflow
Summary
GPX; CNE; PRE; WZR
Summary
Ux spot price up $2.25/lb to $44.00/lb; TradeTech up $2.00/lb to $44.00/lb
Earnings Preview
! Corus Entertainment Inc.
Company Comments
! Detour Gold Corporation
! George Weston Limited
Industry Comments
Portfolio
RBC Fertilizer Insights
Summary
Summary
Investment Strategy Research
! OPEC Meeting - Three Days in
Summary
November
Priced as of prior day's market close, EST (unless otherwise noted).
For Required Non-U.S. Analyst and Conflicts Disclosures, see Page 12.
EQUITY RESEARCH
U.S. RESEARCH AT A GLANCE
November 19, 2014
Price Target Revisions
! Dick's Sporting Goods Inc.
! Qlik Technologies Inc.
! The Home Depot, Inc.
! ThyssenKrupp AG
Summary
EPS in-line, but comp trends remain challenging; cannibalization concerns remain
Summary
Highlights from Qlik World Conference
Summary
Another solid quarter reinforces our positive view; Maintaining forward outlook
Summary
Previewing FY14 results
Summary
Key points and our thesis from AHA analyst meeting on PCSK-9
Summary
Key Analyst Day Takeaways
Summary
Summary
Updating Estimates For Transaction Timing, Debt Issuance And Preferred Redemption
Summary
Q3 beat, expecting the strong demand to continue
Summary
In-Line F2Q; All Eyes on the January 6th Shareholder Meeting
Summary
Investor Day #1: +$10 in EPS in 2019
Summary
Roadshow takeaways
Summary
2 More UDW Now Idle
First Glance Notes
! Amgen Inc.
! Sunoco LP
! Teck Resources Limited
Company Comments
! Duke Realty Corporation
! JA Solar Holdings Co., Ltd.
! Medtronic, Inc.
! National Oilwell Varco, Inc.
! Ryder System, Inc.
! Transocean Ltd.
Industry Comments
! Biotech: ASH planner and data we're Summary
AMGN, CELG, PCYC, GILD, SGEN, KITE, JUNO, BMY, NVS, INFI, SNSS, ABBV, JNJ
!
! Housing Market Monthly
! October WK Sales data: CBST, CRIS,
Summary
Summary
Summary
Key trends in the housing market
Summary
Cubicin (-), Angiomax(neut.), Erivedge (+), Fusilev (++), Kadcyla (neut.)
!
! RBC European Industrials Daily
! RBC Fertilizer Insights
! RBC International E&P Daily
! The Healthcare REIT Pulse:
Summary
focused on
Bulking Up – RBC's Weekly Review
IMGN, MDCO, SPPI
Paper & Forest Products Weekly
!
Summary
In-line IMS from Melrose; Nuclear industry woes
Summary
Summary
GPX; CNE; PRE; WZR
Summary
Fundamentals remain healthy, but a
few concerns exist
WK Oct Sales: GILD, PCYC, BIIB,
Summary
AMGN, CELG
Interest rates and senior housing supply are still the major concerns
Harvoni in-line, Tecfidera not flat like IMS scripts, PCYC looks in-line for Q4
Summary
November
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EQUITY RESEARCH
In-Depth Reports
! Jarden Corp.
Summary
Staples-like consistency at a discount
3
EQUITY RESEARCH
UK & European Research at a Glance
November 19, 2014
Price Target Revisions
! PostNL NV
! ThyssenKrupp AG
Summary
Price dependence continues
Summary
Previewing FY14 results
Summary
Share price weakness looks overdone
Summary
Summary
Summary
European mobile back in Vogue
Company Comments
! Aquarius Platinum Limited
Industry Comments
! Bulking Up – RBC's Weekly Review
! European Telecom - The Wireless
Phonebook
Summary
November
Find our Research at:
RBC Insight (www.rbcinsight.com): RBC's global research destination on the web. Contact your RBC Capital Markets' sales representative to
access our global research site, or use our iPad App "RBC Research"
Thomson Reuters (www.thomsononeanalytics.com)
Bloomberg (RBCR GO)
SNL Financial (www.snl.com)
FactSet (www.factset.com)
4
First Glance Notes
Conifex Timber Inc.(TSX: CFF; 5.91)
Paul C. Quinn (Analyst)
(604) 257-7048; [email protected]
Hamir Patel (Analyst)
Rating:
Outperform
Risk Qualifier: Speculative Risk
52 WEEKS
29NOV13 - 17NOV14
9.00
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Rel. S&P/TSX COMPOSITE INDEXMA 40 weeks
All values in CAD unless otherwise noted.
Rating:
Outperform
Preparations underway for resumption of Platreef site work
52 WEEKS
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All market data in CAD; all financial data in USD.
Fraser Phillips, P.Eng. (Analyst)
Steve Bristo, CFA (Associate)
Thomas Klein (Associate)
416 842 5339; [email protected]
• BC's Deputy Chief Forester announces a 47.5% increase to the AAC in the
Mackenzie TSA – In a development that was not particularly well publicized on
Friday, BC Deputy Chief Forester Diane Nicholls determined that the Mackenzie
TSA's AAC will increase to 4.5MM cubic metres per year (from the 3.05MM cubic
metres per year previously set in 2001) so the dead pine inventory within the TSA
may be utilized. As one of the two largest tenure holders in the 6.41MM hectare
TSA, Conifex should be a major beneficiary.
• Increased AAC presents an opportunity for Conifex to grow – For the last
several months, Conifex has been considering whether to rebuild its idled Site
I mill, upgrade the operating Site II mill, or build a new sawmill adjacent to
the bioenergy project. This decision is dependent on future timber supply. With
the determination of future harvest levels in the TSA now finalized (albeit at
a somewhat lower level than the 5.1MM cubic metres originally outlined by
the Ministry), the allocation of this additional volume is next (decision expected
in H115). While we anticipate that the majority will go to area First Nations,
Conifex's strong economic and social ties to these bands puts the company is a
solid position to negotiate long-term timber supply. We expect that Conifex will
provide an update on its expansion strategy when appropriate, but note that this
is a positive outcome for the company (and Canfor too!) as additional timber
volume gives the company more options.
Ivanhoe Mines Ltd.(TSX: IVN; 1.05)
N D
The Deputy Chief Forester has ruled
N
• Preparations underway for resumption of Platreef site work: Following the
formal activation of the Platreef Mining Right on November 4, Ivanhoe has begun
preparing for a resumption of site work as soon as possible. Formal notifications
of a return to work have been provided to provincial authorities and landowners.
Plant and earthmoving equipment are being moved back on to the site of the
first planned shaft. The principal priority continues to be the completion of the
excavation at the box cut to establish access for construction of Shaft #1, which
is planned to be used to collect a mineralized bulk sample in 2017. Work is also
proceeding on the primary components for Shaft #2, the primary production
shaft, for which design and engineering of headgear and early works is expected
to begin in Q1/15. The Phase 1 Pre-Feasibility Study continues to be expected
in Q4/14.
• Funds on hand expected to cover planned development work next year:
Ivanhoe stated it has working capital of more than $100 million dedicated to
Platreef which it expects to cover currently planned development work during
2015. As part of the company's investment in the local workforce, Ivanhoe will
invest a total of C$16 million in the development of job skills and local economic
development projects over the next five years, including building a training
facility in the area (C$2.6 million). Ivanhoe's cumulative investment on Platreef
to date now totals approximately $236 million.
Teck Resources Limited(TSX: TCK.B; 18.28; NYSE: TCK)
Rating:
Outperform
5
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29NOV13 - 17NOV14
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• Bottom line: The approval of the Elk Valley Water Quality Plan removes the risk
of the plan approval process causing delays in permitting new mining areas. In
addition, costs are not expected to be materially different from those previously
outlined as part of the draft valley-wide selenium management pan, which is a
positive as the company was previously guiding for costs to vary under the new
plan.
• Elk Valley Water Quality Plan approved: The plan establishes short-, medium-,
and long-term water quality targets for selenium, nitrate, sulphate, and
cadmium, as well as a plan to manage calcite formation.
• Costs not expected to differ materially from previous estimates; new estimates
expected with Q4 results: Teck had previously estimated a cost of about $600
million over a five year period for the installation of water diversions and
water treatment facilities, including $120 million already invested to build the
water treatment facility at Line Creek, currently being commissioned. Teck also
previously estimated costs of about C$40 million per year (~C$1.50/t) beginning
in year 5, and growing to C$140 million per year (C$6.00/t) after 10 to 15
years. Teck expects that the costs will not vary materially from these previously
disclosed costs, and expects to provide an update with its 2014 year end results.
Earnings Preview
Corus Entertainment Inc.(TSX: CJR.B; 21.26)
Haran Posner (Analyst)
Drew McReynolds, CFA, CA (Analyst)
26.00
52 WEEKS
Rating:
Price Target:
29NOV13 - 17NOV14
Sector Perform
23.00
Investor Day Preview
With financial guidance for F2015 recently provided, our focus will be on:
(i) drivers that can return the company to positive organic revenue growth;
(ii) content and digital strategy in light of rising structural headwinds for
broadcasting; and (iii) potential implications from new regulation coming out of
Let's Talk TV.
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EPS, Ops Diluted
2013A
1.65
2014A
1.77
2015E
1.97
2016E
2.09
P/E
12.9x
12.0x
10.8x
10.2x
N
• Annual Investor Day to be held this Thursday. Corus will hold its annual Investor
Day on Thursday, November 20th, at Corus Quay in Toronto. The event will run
from 9:00am to 11:30am ET. Normally, the immediate focus is the company's
financial outlook for the coming year. This time, guidance was already provided
with the company's 4Q14 release.
• Our focus for the event. We expect management to provide an operational
update on the company's businesses (Corus Kids, Women & Family, Pay TV, Radio,
Corus Média) and to highlight opportunities for renewed growth. In particular,
our focus will be on (i) the conditions (macro) and key drivers required for
returning Corus to positive organic revenue growth; (ii) the strategic importance
of owning and controlling more content going forward (partnerships/output
deals, acquisitions, development of Corus-owned original series); (iii) increasing
direct consumer interaction and building linear/non-linear integration (native
advertising, multichannel networks, mobile apps); and (iv) regulatory views on
the heels of Let's Talk TV and the potential implications for Corus (namely with
respect to skinny basic + unbundling).
Company Comments
Dan Rollins, CFA (Analyst)
Mark Mihaljevic (Associate)
Detour Gold Corporation(TSX: DGC; 9.55)
Rating:
Outperform
Price Target: 13.00
Increased mining rate key to re-rating
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52 WEEKS
29NOV13 - 17NOV14
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With the mill nearing design levels, an improving mining rate in our view is key to
delivering a sustained re-rating. Increased mining rates will enhance Detour's ability
to ensure the highest possible grade ore is fed to the mill which in turn should
maximize cash flows. Given the company's current valuation, re-rating potential
and long-term optionality, we reiterate our Outperform rating.
4.00
Ramp-up of mill progressing well
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EPS, Adj Diluted Prev.
2013A
(0.55)
2014E
(0.49)↑
(0.56)
2015E
(0.18)↑
(0.20)
2016E
0.07↓
0.15
P/E
All market data in CAD; all financial data in USD; dividends paid in
CAD.
• Milling rates continue to improve with the ramp-up tracking well with other large
scale operations. Prior to a scheduled shut down in mid-October, the mill rate
averaged 57.0 Ktpd for a period of 55 days. Although further work is required to
stabilize the circuit, management remains confident in exiting the year at steady
state levels.
Improving mining rates key to maximizing grade to the mill
• Although mining rates have stagnated this year, management appears confident
that rates will improve as the pit is opened up. With an average mining rate of
245 Ktpd needed to deliver on 2015 production outlined in the mine plan, an
increasing mining rate is critical to a sustained re-rating. Higher rates should allow
for the highest possible grade ore to be directed to the mill as lower grade ore
is stockpiled.
• As the pit opens up and inventory of broken rock increases, utilization rates
should improve as equipment is moved less often in order to accommodate
blasts.
Balance sheet manageable at spot prices
• We do not expect Detour to issue additional equity over the next couple of
years assuming gold and the Canadian dollar remain at spot levels. However, the
potential need for equity at lower prices is a risk. Although we expect Detour
will be able to refinance $500 million of convertible debt due in 2017, investor
concerns over current debt levels is likely to remain elevated within the current
price environment.
George Weston Limited(TSX: WN; 94.50)
Irene Nattel (Analyst)
Martin Gravel, CFA (Associate)
Alex Carette (Associate)
52 WEEKS
Rating:
Price Target:
Outperform
118.00
Pre-heating the oven, favourable outlook unchanged
29NOV13 - 17NOV14
96.00
92.00
88.00
84.00
We maintain our constructive view on WN based on our favourable outlook
for both Loblaw and Weston Foods, which remains focused on restoring growth
notwithstanding the challenging environment. Looking ahead, management noted
that WN is in the midst of a strategic planning process centered on driving growth
in the baking segment, with details forthcoming in conjunction with the Q4 release
on March 5, 2015.
80.00
76.00
WN Foods delivers solid operating earnings despite challenging
market conditions
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EPS, Ops Diluted
2013A
4.27
2014E
5.06
2015E
6.01
2016E
7.10
P/E
22.1x
18.7x
15.7x
13.3x
N
• Third quarter results reflect ongoing competitive intensity and higher input costs,
along with investments in plant start-up costs and marketing and innovation.
Adjusted EBITDA from Food Processing declined 2.9% to $102 MM but handily
beat forecast $93 MM, and was a significant sequential improvement from Q2
-15% Y/Y. EBITDA margin -91 bps Y/Y to 17.8%, 200 bps above expectations. EPS
ex-items of $1.59 vs. $1.28, +24.5%, and a tick higher than forecast of $1.56.
Q4 outlook more favourable than Q3
• Management noted that challenging conditions will persist in Q4, but impact is
moderating and outlook for Q4 is for only "slight decline" in operating income.
Re: Loblaw and the Competition Bureau
7
• On the call, Weston President Pavi Binning noted that the current Competition
Bureau investigation into Loblaw pricing/programs is part of the follow-up
process around the L/SC acquisition. Loblaw is complying with all Bureau
requests and believes it is compliant with the terms of the Consent Agreement.
Reiterating constructive view, WN Foods trading well below our
estimate of fair value
• The implied value of WN’s food processing assets and cash on hand is ~$4, lower
than our fundamental value calculation of $15. Although our $118 target price
for WN is primarily driven by gains at Loblaw, we continue to see upside in the
value of WN Foods.
Industry Comments
Bulking Up – RBC's Weekly Review
Melissa Oliphant (Associate)
• What's Hot: Thermal coal price rose with tighter supply in the CIF ARA market.
• What's Not: IODEX plunged by $4/t on Tuesday to $71.25/t.
• Our View: Iron ore prices continue to decline on poor market confidence, weak
demand, oversupply, and tight credit in Asia. However, we see limited downside
from current levels on a 12-month view. Although supply remains strong, we still
expect some degree of restocking heading into Q1/15, when Chinese domestic
supply and Australian and Brazilian exports are typically seasonally impacted.
• Home prices in China fell in October, down 2.6% YoY. The slowing property
market has dampened steel outlook and is exerting downward pressure on iron
ore and met coal prices.
• A free trade agreement will remove China's 3% import tax on Australian coking
coal in four to five months. The 6% tax on thermal coal will be phased out over
the next two years.
• Metallurgical coal prices posted modest gains. Buying interest was hindered by
a poor steel outlook and uncertainty surrounding the impact of the AustraliaChina free trade agreement.
• Thermal coal: FOB Newcastle and Richards Bay rose by 2.5%. Shipments sold into
the Mediterranean at a premium tightened supply in northwest Europe, boosting
CIF ARA to a two-month high.
• Iron ore: IODEX fell by 6.3% to $71.25/t as weak demand, tight credit, and
oversupply took their toll.
• Steel: Rebar prices were stable. HRC prices were unchanged in North America,
down in Europe, and mixed in China.
• Iron ore and coal freight rates declined.
Ken Tham, CFA (Analyst)
+61 2 9033 3064; [email protected]
Chris Drew, CFA (Analyst)
All values in USD unless otherwise noted.
Geoffrey Kwan, CFA (Analyst)
Canadian Asset Managers
Charan Sanghera (Associate)
Key takeaway: October mutual fund flows were +$2.4B (+$3.1B in September, +
$3.6B in August), remaining surprisingly strong despite the significant pullback in
equity markets in mid-September to mid-October (S&P/TSX -12%, S&P500 -8%)
and continue to sustain the trend of the best net sales activity so far this cycle.
October mutual fund sales data is encouraging and we believe asset manager share
prices (particularly the fundcos) should benefit from continued strength in mutual
fund industry net flows and the recent recovery in equity markets.
Mutual fund industry flows were surprisingly strong in October
October mutual fund industry net sales were +$2.4B, +46% Y/Y vs. +$1.6B in
October 2013. Balanced funds remain the best sellers and given the pullback in
equity markets during mid-September to mid-October, bond funds, unsurprisingly,
were the 2nd best seller, but equity funds had a relatively good sales month all
things considered, remaining in positive territory with +$51MM in net sales.
Fundco share prices underperformed YTD within our coverage, despite
performing slightly better in recent weeks. Outperform-rated CIX and IGM are
8
trading below long-term average EV/EBITDA multiples, yet have close to net debt
free balance sheets and are in position to increase dividends and share buybacks.
Neil Downey, CFA, CA (Analyst)
Canadian REITs And REOCs
Kevin Cheng, CFA (Associate)
• Q3/14 "trend-line" earnings growth stabilizes at 3% – Post Q3 reporting
season results, the aggregate data shows that "trend-line" earnings growth
registered 3%, down modestly from 4% in Q2/14 and in-line with our 3% forecast.
Entities that posted out-sized operating earnings growth in Q3 included: Melcor
Developments (+151%), Regal Lifestyle Communities (+50%) and Leisureworld
Senior Care Corp. (+33%). In contrast, Q3 laggards included: Pure Industrial
REIT (-20%), Extendicare (-9%), and Artis REIT (-7%). "Trend-line" Q3/14 sameproperty NOI growth averaged 2%, flat versus Q2/14's 2%, and ~100bps above
Q3/13's 1%.
• High hit ratio – Approximately 78% (28 of 35) of reporting entities posted
Q3/14 results (i.e., FFO/unit or FFO/share) that were in line with our forecast.
Approximately 8% (3 of 35) fell short of expectations (down from 5 in Q2), while
11% (4 of 35) exceeded expectations (down from 7 in Q2). Exhibit 1 summarizes
the quarterly results. Subsequent to Q3, we initiated on Agellan Commercial
REIT, bringing our total coverage universe to 36 REITs/REOCs.
• No change to our 2014 forecast – With few surprises in Q3/14 results, we
continue to forecast growth of 4% for 2014, with potential moderation in 2015
(3-4% forecast trend-line growth), with organic growth taking the lead role in
driving results.
• Recommended REITs & REOCs – "Outperforms" include AP.un, BAM.a, CAR.un,
CSH.un, FCR, MRD, MST.un, MRT.un, MRG.un, AAR.un and WIR.u.
• Exhibits 2 and 3 – "REIT valuation table" and "NAV summary".
Michael Smith, CFA (Analyst)
Ben Halm, CPA, CA (Associate)
Paul C. Quinn (Analyst)
Hamir Patel (Analyst)
Stephen D. Walker (Analyst)
Paper & Forest Products Weekly
• Comparable valuation tables, commodity prices, and total return performance
for our North American Paper & Forest Products coverage universe.
Q4/14 Global Mining Best Ideas Portfolio
• We are publishing our weekly update to our Global Mining Best Ideas portfolio.
• For the quarter-to-date, the Q4/14 Global Mining Best Ideas List is down 10%
compared to the MSCI World Metals & Mining Index, which is down 12%.
Dan Rollins, CFA (Analyst)
Sam Crittenden, P.Eng., CFA (Analyst)
Timothy Huff (Analyst)
Des Kilalea (Analyst)
Chris Drew, CFA (Analyst)
Jonathan Guy (Analyst)
Andrew D. Wong (Analyst)
Andrew D. Wong (Analyst)
RBC Fertilizer Insights
9
Our view:
We believe Uralkali's Solikamsk-2 potash mine brine inflow and subsequent
suspension of production is a potential positive for the potash market as it helps
tighten near-term S&D and may have longer-term implications depending on the
severity of the incident. We think a medium-term outage (2-6 months) has been
priced into share prices based on the price movement yesterday, and there is
potential upside if the mine were closed permanently.
Historical brine inflow events provide some context: At Uralkali Berezniki-1 (2006),
the brine inflows were severe and resulted in the closure of the mine within 10days. We note that the Berezniki mining area is only 30 kilometers away from the
Solikamsk mining area where the current brine inflow event is located. We cannot
say at this time whether the brine inflow event at Solikamsk-2 is comparable to
what happened at Berezniki-1 in 2006, but there may be similar geological features
shared by the two areas that indicate the possibility of a severe mine flood that
could result in a significant production outage or permanent loss of the mine.
Potential scenarios point to upside for Canpotex members: We think Canpotex
members (Agrium, Mosaic, PotashCorp) may benefit from potentially higher prices
and market share gains. In the near-term, we think a tighter S&D market may
provide leverage to potash producers in their ongoing 2015 potash contract
negotiations with China and India.
Al Stanton (Analyst)
RBC International E&P Daily
Nathan Piper (Analyst)
GPX.L: Secures $20m financing with Arawak deal Sentiment; CNE.L: Senegal drilling
programme completed, no further hydrocarbons encountered at SNE-1; OPEC
Meeting – Three days in November; PRE.TO: Karoon encounters positive signs
from Kangaroo appraisal well; Colombia - Peace process suspended; WZR.V: Raises
C$200m with Crest’s Backing;
Victoria McCulloch, CA (Analyst)
Haydn Rodgers, CA (Associate)
GPX; CNE; PRE; WZR
Uranium Weekly
• Ux spot price indicator was up $2.25/lb to $44.00/lb and TradeTech was up $2.00/
lb to $44.00/lb.
• Ux term price indicator was unchanged at $45.00/lb, and TradeTech was
unchanged at $45.00/lb (quoted monthly at month-end).
• Uranium Participation Corp. (UPC) traded flat over the past week to close at
C$5.69 per share (vs. S&P/TSX +1.2%).
• We estimate UPC is discounting a uranium price of $38.25/lb, a 13.1% discount
to spot. Last week we estimated that UPC discounted a uranium price of $37.97/
lb, a 9.1% discount to the then-prevailing spot price.
• We rate Uranium Participation Corp. Outperform with a target price of C$5.75
per share.
Ux spot price up $2.25/lb to $44.00/lb; TradeTech up $2.00/lb to $44.00/lb
Helima Croft (Analyst)
Jay Govender, CMT (Analyst)
OPEC Meeting - Three Days in November
• We believe the outcome of the OPEC meeting will hinge on whether a deal is
reached between Iran and the P5+1 on Nov 24th.
• Our bias remains unchanged. We look for an extension of talks but believe
there is a 35% chance of a deal being done.
• In our view a deal would put downward pressure on prices and would
strengthen the hand of those clamoring for a cut.
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Required disclosures
Non-U.S. analyst disclosure
Al Stanton;Nathan Piper;Victoria McCulloch;Haydn Rodgers;Geoffrey Kwan;Charan Sanghera;Andrew D. Wong;Paul C.
Quinn;Hamir Patel;Fraser Phillips;Melissa Oliphant;Ken Tham;Chris Drew;Steve Bristo;Thomas Klein;Haran Posner;Drew
McReynolds;Neil Downey;Kevin Cheng;Michael Smith;Ben Halm;Irene Nattel;Martin Gravel;Alex Carette;Dan Rollins;Mark
Mihaljevic;Sam Crittenden;Timothy Huff;Des Kilalea;Jonathan Guy (i) are not registered/qualified as research analysts with the
NYSE and/or FINRA and (ii) may not be associated persons of the RBC Capital Markets, LLC and therefore may not be subject
to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading
securities held by a research analyst account.
Conflicts disclosures
This product constitutes a compendium report (covers six or more subject companies). As such, RBC Capital Markets chooses
to provide specific disclosures for the subject companies by reference. To access current disclosures for the subject companies,
clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/DisclosureLookup.aspx?entityId=1 or send a request to
RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.
Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in, this report.
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including
total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated
by investment banking activities of the member companies of RBC Capital Markets and its affiliates.
Distribution of ratings
For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories
- Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick(TP)/
Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively,
the meanings are not the same because our ratings are determined on a relative basis (as described below).
Distribution of ratings
RBC Capital Markets, Equity Research
As of 30-Sep-2014
Rating
BUY [Top Pick & Outperform]
HOLD [Sector Perform]
SELL [Underperform]
Count
858
683
98
Percent
52.35
41.67
5.98
Investment Banking
Serv./Past 12 Mos.
Count
Percent
308
35.90
151
22.11
8
8.16
Conflicts policy
RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request.
To access our current policy, clients should refer to
https://www.rbccm.com/global/file-414164.pdf
or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South
Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.
Dissemination of research and short-term trade ideas
RBC Capital Markets endeavours to make all reasonable efforts to provide research simultaneously to all eligible clients, having
regard to local time zones in overseas jurisdictions. Subject to any applicable regulatory considerations, "eligible clients" may
include RBC Capital Markets institutional clients globally, the retail divisions of RBC Dominion Securities Inc. and RBC Capital
Markets LLC, and affiliates. RBC Capital Markets' equity research is posted to our proprietary websites to ensure eligible clients
receive coverage initiations and changes in rating, targets and opinions in a timely manner. Additional distribution may be done
by the sales personnel via email, fax or regular mail. Clients may also receive our research via third party vendors. Please contact
your investment advisor or institutional salesperson for more information regarding RBC Capital Markets research. RBC Capital
12
Markets also provides eligible clients with access to SPARC on its proprietary INSIGHT website. SPARC contains market color and
commentary, and may also contain Short-Term Trade Ideas regarding the securities of subject companies discussed in this or
other research reports. SPARC may be accessed via the following hyperlink: https://www.rbcinsight.com. A Short-Term Trade Idea
reflects the research analyst's directional view regarding the price of the security of a subject company in the coming days or weeks,
based on market and trading events. A Short-Term Trade Idea may differ from the price targets and/or recommendations in our
published research reports reflecting the research analyst's views of the longer-term (one year) prospects of the subject company,
as a result of the differing time horizons, methodologies and/or other factors. Thus, it is possible that the security of a subject
company that is considered a long-term 'Sector Perform' or even an 'Underperform' might be a short-term buying opportunity
as a result of temporary selling pressure in the market; conversely, the security of a subject company that is rated a long-term
'Outperform' could be considered susceptible to a short-term downward price correction. Short-Term Trade Ideas are not ratings,
nor are they part of any ratings system, and RBC Capital Markets generally does not intend, nor undertakes any obligation, to
maintain or update Short-Term Trade Ideas. Short-Term Trade Ideas discussed in SPARC may not be suitable for all investors and
have not been tailored to individual investor circumstances and objectives, and investors should make their own independent
decisions regarding any Short-Term Trade Ideas discussed therein.
Analyst certification
All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of
the subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly or
indirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.
Disclaimer
RBC Capital Markets is the business name used by certain branches and subsidiaries of the Royal Bank of Canada, including RBC Dominion Securities Inc., RBC
Capital Markets, LLC, RBC Europe Limited, RBC Capital Markets (Hong Kong) Limited, Royal Bank of Canada, Hong Kong Branch and Royal Bank of Canada, Sydney
Branch. The information contained in this report has been compiled by RBC Capital Markets from sources believed to be reliable, but no representation or warranty,
express or implied, is made by Royal Bank of Canada, RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness. All
opinions and estimates contained in this report constitute RBC Capital Markets' judgement as of the date of this report, are subject to change without notice and
are provided in good faith but without legal responsibility. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment
advice. This material is prepared for general circulation to clients and has been prepared without regard to the individual financial circumstances and objectives of
persons who receive it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent
investment advisor if you are in doubt about the suitability of such investments or services. This report is not an offer to sell or a solicitation of an offer to buy
any securities. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. RBC Capital
Markets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, which includes profits attributable to investment banking
revenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own laws regulating the types of securities and other
investment products which may be offered to their residents, as well as the process for doing so. As a result, the securities discussed in this report may not be
eligible for sale in some jurisdictions. RBC Capital Markets may be restricted from publishing research reports, from time to time, due to regulatory restrictions and/
or internal compliance policies. If this is the case, the latest published research reports available to clients may not reflect recent material changes in the applicable
industry and/or applicable subject companies. RBC Capital Markets research reports are current only as of the date set forth on the research reports. This report is
not, and under no circumstances should be construed as, a solicitation to act as securities broker or dealer in any jurisdiction by any person or company that is not
legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. To the full extent permitted by law neither RBC Capital Markets nor
any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information
contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of RBC Capital Markets.
Additional information is available on request.
To U.S. Residents:
This publication has been approved by RBC Capital Markets, LLC (member FINRA, NYSE, SIPC), which is a U.S. registered broker-dealer and which accepts
responsibility for this report and its dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting in
a broker or dealer capacity and that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report, should
contact and place orders with RBC Capital Markets, LLC.
To Canadian Residents:
This publication has been approved by RBC Dominion Securities Inc.(member IIROC). Any Canadian recipient of this report that is not a Designated Institution in
Ontario, an Accredited Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) and
that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBC
Dominion Securities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.
To U.K. Residents:
This publication has been approved by RBC Europe Limited ('RBCEL') which is authorized by the Prudential Regulation Authority and regulated by the Financial
Conduct Authority ('FCA') and the Prudential Regulation Authority, in connection with its distribution in the United Kingdom. This material is not for general
distribution in the United Kingdom to retail clients, as defined under the rules of the FCA. However, targeted distribution may be made to selected retail clients of
RBC and its affiliates. RBCEL accepts responsibility for this report and its dissemination in the United Kingdom.
To Persons Receiving This Advice in Australia:
This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been prepared
for general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting on
13
this material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisition
or possible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product
and consider that document before making any decision about whether to acquire the product. This research report is not for retail investors as defined in section
761G of the Corporations Act.
To Hong Kong Residents:
This publication is distributed in Hong Kong by RBC Capital Markets (Hong Kong) Limited and Royal Bank of Canada, Hong Kong Branch (both entities which are
regulated by the Hong Kong Monetary Authority (‘HKMA’) and the Securities and Futures Commission ('SFC')). Financial Services provided to Australia: Financial
services may be provided in Australia in accordance with applicable law. Financial services provided by the Royal Bank of Canada, Hong Kong Branch are provided
pursuant to the Royal Bank of Canada's Australian Financial Services Licence ('AFSL') (No. 246521). RBC Capital Markets (Hong Kong) Limited is exempt from the
requirement to hold an AFSL under the Corporations Act 2001 in respect of the provision of such financial services. RBC Capital Markets (Hong Kong) Limited is
regulated by the HKMA and the SFC under the laws of Hong Kong, which differ from Australian laws.
To Singapore Residents:
This publication is distributed in Singapore by the Royal Bank of Canada, Singapore Branch, a registered entity granted offshore bank licence by the Monetary
Authority of Singapore. This material has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of any
recipient. You are advised to seek independent advice from a financial adviser before purchasing any product. If you do not obtain independent advice, you should
consider whether the product is suitable for you. Past performance is not indicative of future performance. If you have any questions related to this publication,
please contact the Royal Bank of Canada, Singapore Branch. Royal Bank of Canada, Singapore Branch accepts responsibility for this report and its dissemination
in Singapore.
To Japanese Residents:
Unless otherwise exempted by Japanese law, this publication is distributed in Japan by or through RBC Capital Markets (Japan) Ltd., a registered type one financial
instruments firm and/or Royal Bank of Canada, Tokyo Branch, a licensed foreign bank.
.® Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.
Copyright © RBC Capital Markets, LLC 2014 - Member SIPC
Copyright © RBC Dominion Securities Inc. 2014 - Member CIPF
Copyright © RBC Europe Limited 2014
Copyright © Royal Bank of Canada 2014
All rights reserved
14

Canadian Research at a Glance

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