Crescent Point Energy Corp CPG-T +2.37%increase said on Tuesday it would acquire Spartan Delta Corp’s SDE-T -0.07%decrease oil and gas assets in Alberta, for $1.7-billion to expand in the Monteny region, one of North America’s top shale plays.
The deal would immediately add to its excess cash flow per share by 20 per cent, the company said.
The Canadian energy sector has seen a rise in deal-related activity over the past year as companies benefited from higher oil prices amid a supply crunch.
The company said the newly acquired assets are adjacent to its Kaybob Duvernay assets that it bought last December.
Crescent added that the acquisition adds 600 Montney locations in Alberta, or over 20 years of premium drilling inventory.
Calgary-headquartered Crescent said the assets add production capacity worth 38,000 barrels of oil equivalent per day to its portfolio.
The deal is expected to close during the second quarter of 2023.
The Canadian market ended on a firm note on Monday, led by gains in energy, consumer staples and utilities sectors.
The mood remained positive right through the day’s session amid easing concerns about global banking crisis following the latest developments in the sector.
U.S. Federal Deposit Insurance Corporation (FDIC) said First Citizens BancShares has entered into a loss-share transaction for all deposits and loans of Silicon Valley Bank (SVB).
Remarks by U.S. Fed officials that there is no indication that financial stress is worsening also contributed to the positive sentiment in the market.
The benchmark S&P/TSX Composite Index ended with a gain of 123.25 points or 0.63% at 19,624.74.
The Energy Capped Index surged 2.16%. Athabasca Oil Corp (ATH.TO) and Baytex Energy Corp (BTE.TO) climbed 7.2% and 6.3%, respectively. Cenovus Energy (CVE.TO) advanced 4.2% and MEG Energy Corp (MEG.TO) gained nearly 4%. Vermilion Energy (VET.TO), Crescent Point Energy (CPG.TO), Whitecap Resources (WCP.TO), Suncor Energy (SU.TO) and Imperial Oil (IMO.TO) also rallied sharply.
Consumer staples shares Maple Leaf Foods (MFI.TO), The North West Company Inc (NWC.TO), Weston George (WN.TO) and Loblaw (L.TO) gained 2 to 3.1%.
In the Utilities section, Hydro One (H.TO) gained 2.3% and Brookfield Renewable Partners (BEP.UN.TO) surged nearly 2%, while Altagas (ALA.TO), Canadian Utilties (CU.TO) and Superior Plus Corp (SPB.TO) climbed 1.5 to 1.6%.
Among financials shares, Toronto-Dominion Bank (TD.TO) gained nearly 2%, Laurentian Bank (LB.TO) surged 1.65%, National Bank of Canada (NA.TO) advanced 1.33%, and Sun Life Financial (SLF.TO) gained 1.1% and Bank of Nova Scotia (BNS.TO) moved up nearly 1%.
Nutrien Ltd. (TSX and NYSE:NTR) today announced the pricing of US$750 million aggregate principal amount of 4.900percent senior notes due March 27, 2028 and US$750 million aggregate principal amount of 5.800 percent senior notes due March 27, 2053 (together, the “senior notes”). The offering is expected to close on or about March 27, 2023, subject to customary closing conditions. The senior notes, registered under the multi-jurisdictional disclosure system in Canada and the United States, will not be offered in Canada or to any resident of Canada.
Nutrien intends to use the net proceeds from this offering to repay its US$500 million aggregate principal amount of 1.900% senior notes upon their maturity on May 13, 2023, to reduce outstanding indebtedness under its short-term credit facilities, to finance working capital and for general corporate purposes. The senior notes will be unsecured and rank equally with Nutrien’s existing senior unsecured debt. The joint book-running managers for the offering are BMO Capital Markets, Citigroup, Morgan Stanley and Scotiabank.
The offering will be made by way of a prospectus supplement dated March 23, 2023, to Nutrien’s short form base shelf prospectus dated March 11, 2022, filed with the securities regulatory authorities in each of the provinces of Canada, which forms a part of and is included in Nutrien’s registration statement on Form F-10, filed in the United States with the Securities and Exchange Commission (the “SEC”) under the multijurisdictional disclosure system. A final prospectus supplement in respect of the offering of the senior notes will be filed with the same regulatory authorities in Canada and the SEC.
About Nutrien
Nutrien is the world’s largest provider of crop inputs and services, helping to safely and sustainably feed a growing world. We operate a world-class network of production, distribution and retail facilities that positions us to efficiently serve the needs of growers. We focus on creating long-term value for all stakeholders by advancing our key environmental, social and governance priorities.
Advisory
The senior notes are being offered in the United States pursuant to an effective registration statement (including a base shelf prospectus) filed with the SEC. Nutrien has filed a preliminary prospectus supplement related to the offering of the senior notes. Before you invest, you should read the preliminary prospectus supplement, the accompanying base shelf prospectus and other documents that are incorporated by reference therein for more complete information about Nutrien and this offering.
The preliminary prospectus supplement and the accompanying base shelf prospectus are available for free on the SEC website at www.sec.gov. Alternatively, the documents may be obtained by contacting BMO Capital Markets Corp. toll-free at 1-866-864-7760, Citigroup Global Markets Inc. toll-free at 1-800-831-9146, Morgan Stanley & Co. LLC at 1-866-718-1649 and Scotia Capital (USA) Inc at 1-800-372-3930.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the senior notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
(8:30 a.m. ET) U.S. goods trade deficit for February.
(8:30 a.m. ET) U.S. wholesale and retail inventories for February.
(9 a.m. ET) U.S. CoreLogic Case-Shiller Home Price Index (20 city) for January. The Street expects a decline of 0.5 per cent from December but up 2.5 per cent year-over-year.
(9 a.m. ET) U.S. FHFA House Price Index for January. Consensus is a drop of 3.0 per cent month-over-month but a rise of 4.9 per cent year-over-year.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for March.
(10 a.m. ET) U.S. Fed Vice Chair for Supervision Michael Barr testifies before the Senate Banking Committee.
Apple CEO Tim Cook on Saturday used his first public remarks on his visit to China to praise the country for its rapid innovation and its long ties with the U.S. iPhone maker, according to local media reports.
Cook is in Beijing to attend the China Development Forum, a government-organized event being held again in full force after the country ended its Covid controls late last year.
Besides Cook, the event is being attended by senior government officials as well as CEOs of firms such as Pfizer and BHP.
“Innovation is developing rapidly in China and I believe it will further accelerate,” Cook was quoted by The Paper news outlet as saying.
His visit comes at a time of rising tensions between Beijing and Washington and as Apple has been looking to reduce its supply chain reliance on China and moving production to new up and coming centres such as India.
Last year, production at the world’s largest iPhone factory run by Apple supplier Foxconn was heavily disrupted after China’s zero-Covid policies fueled worker unrest.
Cook also visited an Apple Store in Beijing on Friday, pictures of which went viral on Chinese social media.
During his speech, Cook also discussed education and the need for young people to learn programming critical thinking skills, announcing that Apple plans to increase spending on its rural education programme to 100 million yuan, the local media reports said.
PUBLISHED FRI, MAR 24 20236:53 AM EDTUPDATED FRI, MAR 24 20233:07 PM EDT
Gold prices ended a volatile week higher on Friday as bank contagion fears bolstered both safe-haven demand and bets on a pause in Federal Reserve rate hikes, adding to the appeal of zero-yield bullion.
U.S. gold futures lost 0.6% to settle at $1,983.80 per ounce. Futures also gained 0.5% for the week, having climbed to its highest level in a year above $2,000 on Monday.
Banking shares were trounced again on Friday, with European giants Deutsche Bank and UBS knocked by worries that regulators and central banks have yet to contain the worst shock to the sector since the 2008 financial crisis.
PUBLISHED THU, MAR 23 202311:17 PM EDTUPDATED FRI, MAR 24 20232:53 PM EDT
Oil prices fell Friday amid declining European banking shares and after U.S. Energy Secretary Jennifer Granholm said refilling the country’s Strategic Petroleum Reserve (SPR) may take several years, dampening demand prospects.
Brent crude fell 95 cents, or 1.3%, to $74.96 a barrel, while West Texas Intermediate U.S. crude futures fell 74 cents, or 1.1%, to $69.22 a barrel.
Both benchmarks, which fell over 4% earlier in the session, were on track to end the week higher, after posting their biggest weekly declines in months last week due to banking sector turmoil and worries about a possible recession.
Tuesday’s TSX breakouts: This dividend stock has staged a sharp recovery, forming a bullish ‘golden cross’
Discussed today is a stock that is on the positive breakouts list – Open Text Corp. (OTEX-T -0.53%decrease). Last year, the stock price was in a downtrend. However, in 2023, the share price has rebounded. Year-to-date, the share price has rallied 28 per cent, making it the seventh best performing stock in the S&P/TSX composite index.
This growth stock has an attractive business model with high recurring revenues, high margins, and strong cash flow generation. On a valuation basis, the stock is trading at a discount to its historical average multiple. Management is committed to returning capital to its shareholders, boosting its dividend every calendar year since 2014. The current dividend yield is 2.6 per cent.
A brief outline on Open Text is provided below that may serve as a springboard for further fundamental research when conducting your own due diligence.
Barchart
The company
Waterloo, Ont.-based Open Text is a leading software and services provider of information management solutions. The company’s software helps its customers automate processes and manage supply chains.
Open Text has strong earnings visibility given its high recurring revenue business model. In the second quarter of fiscal 2023 (the company’s fiscal year-end is June 30), total annual recurring revenue (cloud services and subscriptions and customer support) represented 81 per cent of total revenue. Cloud services and subscription revenue alone represented over 45 per cent of total revenue.
In terms of geographic revenue breakdown, in fiscal 2022, 62.6 per cent of its revenue was from the Americas, 29.4 per cent from the Europe, Middle East and Africa (EMEA) and 8 per cent from the Asia Pacific region.
In January, the company completed a sizable acquisition, purchasing Micro Focus International plc for approximately $5.8-billion, funded with cash, debt, and drawing on its revolving credit facility. As a result, the company’s net leverage ratio increased to 3.8 times. Management anticipates this ratio will decline to less than 3 times within the next eight full quarters.
There is seasonality in the company’s business with the first-quarter historically the weakest quarter.
The company is dual-listed, trading on the Toronto Stock Exchange as well as the Nasdaq under the ticker, OTEX.
Investment thesis
Strong leadership
Attractive revenue composition (high recurring revenue) and high margins
Robust earnings growth driven by the acquisition of Micro Focus
Diversified customer base
Reasonable valuation – room for multiple expansion
Strong free cash flow generation
Reliable dividend
Dividend policy
The company pays shareholders a quarterly dividend of 24.299 US cents per share, equating to a current annualized yield of 2.6 per cent.
Management remains committed to returning capital to its shareholders and targets returning 20 per cent of its trailing 12-months of free cash flow.
Quarterly earnings and outlook
After the market closed on Feb. 2, the company reported better-than-expected second quarter fiscal 2023 financial results. Revenue came in at US$897-million, up 2.4 per cent year-over-year (or 7.8 per cent year-over-year on a constant currency basis), and ahead of the consensus estimate of US$868-million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was US$340.9-million, ahead of the Street’s forecast of US$314-million. Adjusted earnings per share came in at 89 US cents, above the consensus earnings per share estimate of 78 US cents.
For the third quarter of fiscal 2023, management guided to revenue of between US$1.18-billion and US$1.22-billion, of which between US$310-million and US$325-million is from Micro Focus.
For fiscal 2023, management is targeting total revenue growth of between 28 per cent and 30 per cent (organic growth of between 1 per cent and 2 per cent), an adjusted EBITDA margin between 32.5 per cent and 33.5 per cent, and free cash flow of between US$500-million and US$600-million. For fiscal 2024, management is targeting total revenue growth of between 33 per cent and 35 per cent (organic growth of between 1 per cent and 2 per cent), an adjusted EBITDA margin of between 36 per cent and 38 per cent, and free cash flow between US$800-million and US$900-million. For fiscal 2026, management is targeting total revenue growth of between 2 per cent and 4 per cent (organic growth of between 2 per cent and 4 per cent), an adjusted EBITDA margin of between 38 per cent and 40 per cent, and free cash flow of over US$1.5-billion.
Analysts’ recommendations
This technology stock is covered by 10 analysts, of which eight analysts have buy recommendations and two analysts (Citi’s Steven Enders and CIBC’s Stephanie Price) have ‘neutral’ recommendations.
The firms providing research coverage on the company are as follows in alphabetical order: ARC Independent Research, Barclays, BMO Nesbitt Burns, CIBC World Markets, Eight Capital, National Bank Financial, Scotiabank, Raymond James, RBC Dominion Securities and TD Securities.
Revised recommendations
Last month, six analysts revised their target prices.
ARC’s Kadambari Daptardar to $50 from $45.
BMO’s Thanos Moschopoulos to US$39 from US$34.
CIBC’s Stephanie Price to US$40 from US$35.
Citi’s Steven Enders to US$35 (the low on the Street) from US$33.
Raymond James’ Steven Li to US$42 from US$48.
TD’s Daniel Chan to US$50 from US$40.
Financial forecasts
The Street is forecasting EBITDA of US$1.435-billion in fiscal 2023 and US$2.14-billion in fiscal 2024. The consensus earnings per share estimates are US$3.06 in fiscal 2023, rising to US$4.43 in fiscal 2024.
Given the recent acquisition of Micro Focus International plc that was completed in January, earnings forecasts have increased materially for fiscal 2024. Three months ago, the consensus EBITDA and EPS estimates were US$1.325-billion and US$3.29, respectively.
Valuation
Analysts commonly value the stock on an enterprise value-to-EBITDA multiple basis.
According to Bloomberg, the stock is trading at an EV/EBITDA multiple of 8.8 times the fiscal 2024 consensus estimate, which is well below the five-year historical average multiple of 11 times.
The average one-year target price is US$44.13, implying the share price may appreciate nearly 17 per cent over the next 12 months.
Insider transaction activity
On Feb. 7, executive vice-president of IT and chief information officer Renee McKenzie sold 2,061 shares at an average price per share of approximately US$34.599 with 4,961 shares remaining in this particular account. Proceeds totaled over US$71,000, not including trading fees.
Chart watch
At the beginning of the month, the stock formed a bullish “golden cross” with the 50-day moving average crossing above the 200-day moving average.
Year-to-date, the share price has rallied 28 per cent, making it the seventh best performing stock out of 235 stocks in the S&P/TSX composite index. Should the positive price momentum continue, the stock faces an initial ceiling of resistance around $55. After that, there is overhead resistance between $62.50 and $63. Looking at the downside, there is strong technical support around $44, near its 200-day moving average (at $44.03).
After coming under pressure early in the session, Canadian stocks showed a significant turnaround over the course of the trading day on Friday.
The benchmark S&P/TSX Composite Index climbed well off its worst levels of the day, eventually closing up 41.57 points or 0.2 percent at 19,501.49.
The early weakness came amid renewed concerns about the health of the banking sector, with U.S.-listed shares of Deutsche Bank (DB) moving sharply lower in early trading amid a spike by the German lender’s credit default swaps.
Credit Suisse (CS) and UBS Group (UBS) also came under pressure after a report from Bloomberg said they are among banks under scrutiny in a Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions.
UBS’ state-backed acquisition of troubled rival Credit Suisse for 3 billion Swiss francs, or $3.2 billion, helped ease concerns about recent banking industry turmoil earlier in the week.
Selling pressure waned over the course of the session, however, as traders felt the banking concerns may have been overdone amid optimism the Federal Reserve is nearing the end of its tightening cycle
Interest rate-sensitive utilities stocks turned in a strong performance, resulting in a 1.8 percent jump by the S&P/TSX Capped Utilities Index.
Gold stocks also moved notably higher on the day despite a decrease by the price of the precious metal, driving the S&P/TSX Global Gold Index up by 1.5 percent.
On the economic front, a report from Statistics Canada said Canadian retail sales surged 1.4 percent to C$66.4 billion in January.
The increase was led by higher sales at motor vehicle and parts dealers and gasoline stations and fuel vendors
