Time for the Second Stage of Kirkland Lake Gold offer

     

        On November 25 Kirkland Lake Gold made an offer to buy all
of Detour Gold's shares.As a Kirkland Lake Gold shareholder I would like to know how this offer is progressing.The offer was for a 29% premium to the 20 day weighted average price of Detour Gold shares closing on November22, 2019.This premium is in line with other takeover offers in the gold patch.Every DGC shareholder will own .4343 shares of the new Kirkland Lake Gold shares.The exchange ratio implies a price of $27.50 for every Detour Gold share.So now the price of DGC shares should be at least $26 a share.

        Detour Gold Shareholders

              

Kirkland Lake Gold has recently had a number of press releases telling shareholders about new high-grade mineralization at their Fosterville,Macassa and Northern Territory Australia mines.But there has been no news on how their Detour Gold offer is progressing.My last blog on KL on my Blogdaleupsome blog dated December10,2019 suggested that KL acquire up to 10% on the open market and then make a specific proposal to the Detour board.

          On the other hand,if Kirkland Lake still intends to buy a major stake or all shares of Detour there should be some news on a large secondary issue of KL shares.In the extreme case if KL bought Detour Gold with all new shares about 90 million shares would need to be issued.This blog suggests that a better remedy would be a cash and share acquisition,especially as Kirkland Lake has large and growing cash balances.But the behaviour of the DGC share price suggests that they don't believe the acquisition will succeed.If they did then the price would be closer to the acquisition price of $27.50.The present price allows KL to acquire DGC shares cheaper and means that KL should own a substantial number of DGC shares.

No Secondary Issue;no Majority Stake 

At this time the train is just leaving the proverbial station.However this blog believes that Kirkland Lake Gold has  already purchased a substantial percentage of DGC shares.But this blog does not believe that Kirkland Lake will buy all DGC shares.That would mean issuing 89 million shares.Although a half cash and half share issuance is possible but not likely.It is true that Kirkland Lake has announced mailing a notice of a special meeting on January28 to vote on their proposal.But until their financial advisor BMO announces a healthy secondary issuance this blog sees only a minority position in Detour Gold.However if they have already acquired 10-20% of Detour outstanding shares by January 28 then the possibility of a substantial majority stake becomes more likely.Even with all the new mineralization discovered (including the Fosterville mine) this blog does not see all Detour Gold shares acquired.

Husky Energy is loading up;A Good Time to buy

    This is the first time any of my blogs have covered Husky Energy.But I have seen it at $20 a share 18 months ago and in September at a low of $8.48 per share.In between it has made quite a few changes.However it just had a very average third quarter.But it has made a number of changes that show it should be ready for a better performance in Q4 and even better in 2020.For example, the Royal Bank has a short term price target of $12 per share.This blog sees that HSE may not be at $12 until the summer of 2020 but it will be there.
        Third Quarter Results
   Revenue was down about 8% over Q3 in 2018.And more importantly net earnings were down by almost 50%.While funds from operations was down 30% to $1 billion from $1.3 billion in Q3 2018.Capital spending was $878 million for the quarter and guidance remains unchanged at $3-3.5 billion for the year. So the quarter as a whole was not remarkable but the important point here is that Husky Energy is building for 2020.
    Husky tells us that their Dee Valley thermal bitumen project came in ahead of schedule and under budget,And they began the final tie-in for their Lima Refinery crude oil project.They also recived permits to commence the Superior Refinery rebuild and lastly they sold their Prince George refinery.The Sea Rose floating production vehicle is up to full rates,the Liuhua 29-1 project in China is 65% complete and the White Rose project is 55% complete.
       Summary
    Husky tells investors that they will meet their guidance for capital expenditures for 2019; they will invest a total of $3-$3.5billion.And the third quarter had capital expenditures of $868 million.It is true that operational performance was down in the third quarter and may be down slightly in Q4 also.But Husky is definitely loading up for 2020 they are working on or have completed 6 major projects and sold the Prince George Refinery.Both overall upstream production and downstream throughput increased slightly over Q3 in 2018 and are expected to increase further in Q4.With new output coming onstream in 2020 from Dee Valley,White Rose and from China.These increases should be enough to send HSE to $12 in early 2020 and stay in this range into the summer.           https://huskyenergy.com/http://www.cppib.com/en/

Oceanagold shows a Drop in Production but Constant Earnings

    On October15 Oceanagold released it's third quarter results.There were some small surprises but not big ones.First it has temporarily suspended operations at it's Didipio mine in the Phillipines since mid-July.It is awaiting a Court of Appeals injunction decision which should reverse a lower court decision.Secondly as reported in another blog on Wordpress   (Blogdaleup dated October 5,2019) their Waihi (New Zealand) mine has found a much larger ore body at the Martha underground project near the old mine.Production will not change in Q4 but is expected to in Q2 of 2020.In their other mine in New Zealand production was flat year over year.But it will increase in Q4.
         Changes in the Structure of OGC Mines
   Investors may have to look past this quarter and even Q4.But Oceanagold has some very positive results coming in quite soon.This blog foresees that operations will be running again by yearend at Didipio.While their Macraes mine found new higher grades of ore at their Golden Point project.They are working on an economic study to examine opening a new underground operation.Furthermore their Waihi project found a new 2.5 to 3 million ounce deposit close to the existing mine. It also has a sizeable silver deposit (in several veins) available for silver streaming.Oceanagold tells shareholders that it recently bought another 178 hectares near the Waihi operation.These changes, along with the silver operation could change OGC from a small to a large mid-tier gold stock  by 2021.             

         Year-end Results
  The temporary suspension at the Didipio mine will not have a big impact on OGC's annual earnings.The Didipio mine would have represented the growth in 2018.But the CEO  says that production for the year will be 470,000 to 480,000 ounces of gold and 10,000-11,000 tons of copper.Using a copper price of $US $2.85 /pound and costs at 50% of the price this blog sees  2019 net income as almost flat with 2018.This ,of course, is partly explained by the increase in the price of gold and more efficient operations by Oceanagold.But in Q1 2020 investors should see some increased production from their Waihi  mine and hopefully the Didipio        mine.This blog done in January of 2020 will be much more hopeful.                  https://www.vaneck.com/row/ https://www.sprott.com/

Kirkland Lake Gold shows Tremenduous Growth in Production and Earnings

    Kirkland Lake Gold is a company covered in my Workathon blog many times.Kirkland Lake Gold bought Newmarket Gold in 2016 for about $1 billion and shares.At that time Kirkland Lake Gold was trading at about $12 per share. In 2018 it was trading in the $40 range and had a market cap of $10 billion.At the beginning of 2019 it was trading at about $48- $50 per share.It has steadily moved up  in 2019 to today's price at $60 per share And now it has a market capitalization of about $13 billion.My blog in Workathon of March 19 stated that the main reason  for this price movement is that investors have gradually seen that the Fosterville mine formerly owned by Newmarket and before that Crocodile Gold is much bigger than stated by the former owners.And this is because one partially explored fault (the Phoenix fault) and two unexplored faults (Lower Phoenix and Eagle fault) were larger and had a much higher grade of ore than in the original mine.Grades of ore  in the southern faults were 7 to 10 times richer than  in the main Fosterville mine.
           History of the Fosterville Mine
   Newmarket Gold gave an estimate of the size of the ore deposit in 2015.At that time it was stated that all their Australian gold reserves amounted to 2.5 million ounces.There was only thought to be .5 million ounces in their northern Cosmo mine and almost no deposit left in the Stawell mine.So that means that the Fosterville mine was estimated to contain 2 million ounces.At that time little was known of the 3 large faults to the south;they were thought to be small extensions of the main mine.Later it was discovered that there were 3 major faults.And then exploration revealed that the grade of ore at the new faults was considerably higher than in the main mine.A few samples showed ore with 100 grams per tonne as opposed to more normally 4 to 5 grams per tonne.For example, one gold company in northern Ontario survived and made a profit for years on 2 grams per tonne.                                                             The detailed information given by the former owner and by Newmarket Gold lead this blog in an earlier Workathon blog dated 20/01/2018 to give an estimate of 8 million ounces at the Fosterville mine alone.Kirkland Lake Gold now estimates,in their blog, that this ore body contains 6 million ounces.The difference  between these estimates depends on the size of  extensions from the last fault-- the Eagle fault and the average grade of ore.The fault north of this one called the Lower Phoenix has largely been explored and measured.
    KL does not tell shareholders in their quarterly report what production from Fosterville was but does say that total Kirkland Lake production was up 30% from Q2 2018.It also adds that it has made a number of improvements to the mine including a new ventilation system, and a water treatment plant.Much of these expenses have been caused because the mine body  and mine entrance come from the old,original mine.This blog has stated before that costs could probably be reduced by making a new mine entrance.
     Second Quarter Highlights
 KL tells shareholders that Q1 revenues at $281 million were up by 31% from Q2 in 2018.And gold sales at 212,000 ounces compared to 164,000 ounces in 2018.Of course the price of gold rose from $1300 an ounce in 2018 to $1525 an ounce presently.As a result EBITDA grew from $124 million to $185 million.However quarterly free cash flow fell to $53 million from $61 million in 2018.At the same time "all in sustaining costs" dropped 16% to $638 an ounce.While quarterly capital expenditures were $48.5 million with $14 million of this on the Fosterville mine.And $30 million  will be spent on advanced exploration in the Northern Territory of Australia.This exploration work is intended to progress underground development and support the resumption of operations at the Cosmo mine - the original Australian mine.
      Annual Results
   E.p.s. for the 3 months were $.49 compared to $.29 for 2018 and for 6 months $1.01 compared to $.52 for 2018 or almost double the previous year.No information is given on production from the Fosterville mine but this blog estimates that there will be greater production  in the second half. And there is room for much greater production with a second mine entrance.With this deposit and continued KL improvements, e.p.s for 2019 could grow by another 50%.This will happen even if the price of gold is constant.
     Future Exploration 
       KL tells shareholders that $14 million will be spent at the Fosterville mine in Q2.They also tell shareholders that $29 million will be spent on the Cosmo mine.Originally the Cosmo mine was estimated to have .5 million ounces but Newmarket Gold (the former owner) did some more exploration and found there were two faults not one.So Kirkland Lake will undoubtedly find one million ounces in their Cosmo mine.
        Conclusion
         Only a little more exploration needs to be done to finalize the total estimate on the Fosterville mine.But the final estimate is going to be beteween 6 and 8 million ounces. The final estimate for the Cosmo mine is going to be close to 1 million ounces.The problem with both mines is that KL needs greater production from both.But KL is gradually increasing production for each quarter.And in the Fosterville mine there is a lot of room to grow.With this in mind look for the price of KL to hit a new record high in 2019.   

https://www.credit-suisse.com/ch/en.html ;https://www.brookfield.com/

Street Capital Bank becomes a Subsidiary of RFA Capital

  On May1,2017 Street Capital Bank became Canada's newest  chartered bank;  

;this blog described it in a Workathon blog dated 23/01/2018.For the first year as a chartered bank revenues and earnings were gradually rising.And now they were allowed to take deposits (a cheap source of funds) and make mortgages.But ,even with their new features, in late 2018 things started to turn sour.And so RFA Capital, a virtual white knight,emerged in 2019 and made an "acquisition of all of the issued and outstanding shares" of Street Capital Bank. 
       Second Quarter Results
 Separately from the buy-out SCB had a pretty good quarter.Revenues were up by 6% to $18 million.Diluted e.p.s were $.03 consistent with Q2 2018.Mortgages under administration were $27.92 million in line with $27.90 originated in 2018.However the book value per share fell from $1.15 to $.80 per share.As total SCB originations fell from $108 million to $43 million.
    RFA Capital             

   It is true that Street Capital Bank was starting to bleed equity although it had a good quarter.RFA agreed to increase equity capital by a minimum of $50 million.To that end, it has added $25 million of readily available stand by capital.Furthermore " it is RFA's intention  to cause the investors to inject up to an additional $100 million of further equity capital into the bank over the next 5 years".According to RFA Capital "approximately 20% of the outstanding common shares have agreed with RFA to vote in favour of the arrangement".
    On the Upswing

       The first year of business was not a good one for SCB.And 2018 continued this trend.But 2019 was starting to look better as they had a pretty good second quarter.But it would be hard to take back those seven or eight quarters.So Street Capital Bank was acquired by RFA Capital.It will take strong backing for awhile yet because there is stiff competition in the Canadian banking scene.But RFA Capital is seen as a good partner that will provide more than equity capital.And with a little luck Canada will have a new chartered bank.However it has a way to go as their total assets are only $1 billion and the next smallest bank is Canadian Western Bank at $30 billion of assets.          http://www.goeasy.com/  https://www.zacks.com/

Chorus'Regional Aircraft Leasing shows Increases but Air Canada Business shows small decrease

     Chorus Aviation started it's regional leasing business about 18 months ago with a $200 million loan from Fairfax Capital.Chorus repaid it with a $200 million convertible debenture.Many thought they might not be able to pay it back nor redeem the debentures.But this has not been a problem since their regional aircraft leasing has been so successful.Since it's inception Chorus has leased 56 aircraft to smaller airlines.Most of it has been turboprops which Chorus has extensive experience with including a crack maintenance team and strong ties to Bombardier.Although Chorus has also leased some regional jets as well.It's strong relationship with Bombarier helps here also.                        

   
     Second Quarter Results
   Historically speaking Chorus had an average quarter.Adjusted EBITDA increased by $1.6 million to $86 million.Partly because     adjusted EBITDA from   their leasing segment  increased by $10.4 million.  Revenue earned from Air Canada had  a small decrease.Importantly they added 11 additional aircraft for a total of 56 aircraft in their leasing program. This has been accomplished in less than 2 years.However adjusted net income deceased by $5 million to $25 million.One new item here was a $4.5 million charge for interest costs related to their leasing program. That aside, net income increased from $16 million to $39 million for Q2.
     Turboprops or Regional Jets                

  Chorus uses both turboprops and regional jets in delivering passengers for Air Canada.But it's leasing program is more popular  with customers leasing turboprops than regional jets.For short distances turboprops are more efficient but the narrow body jets are more economical for longer distances.This blog believes that in order to increase it's visibility for excellence in regional jets a stronger bond with Bombardier should be forged.As it was Bombardier that created the CRJ series.In fact, just as Air Canada invested in Chorus so should chorus invest in Bombardier.And even with great fanfare hire some Bombardier staff.Its customers will know and hopefully lease more regional jets.Their new visibility aside, this blog sees a total of 65-69 aircraft leased by yearend.          https://www.desjardins.com/ca/index.jsp https://www.omers.com/    

Northland Power's Second Quarter Results -- Waiting for Q4

 On August 7 Northland Power released it's second quarter results and there was little growth over Q2 2018.That is because Northland's two big projects are not yet completed but there is some good news.There is a rainbow with a pot of  gold behind this story. Firstly all Northland Power's financial and performance 

indicators are ahead of Q2 in 2018.But more importantly NPI is nearing completion on it's North Sea wind farm called Deutsche Bucht.And it has started construction on it's first  solar project in Mexico called La Lucha;Northland says there will be others  to follow in Mexico.Lastly it is developing sub projects for it's offshore Taiwan wind farms and will be ready to execute power purchase agreements in late 2019. These matters were discussed in an earlier Workathon blog dated February,14,2019 

Second Quarter Highlights

Most financial indicators were up in Q2 but only slightly so.Revenues were ahead by 2% over Q2 in 2018.While adjusted EBITDA was up by 6%.Lastly free cash flow per share decreased by 5% -- from $.21 to $.20 per share.And net income increased by 10% to $76 million.NPI also adds that La Lucha has started construction and will be finished in the second half of 2020.In addition, 25 of 33 turbines have been installed in the North Sea and DeBu has generated it's first KWH of pre-completion revenue already.Perhaps there will be  a substantial amount of pre- completion North Sea off shore revenue by September 30.

                     Totals for the 6 months were a little better as revenues were up to  $842 million.While net income moved to $280 million from $245 million in 2018.And adjusted EBITDA was ahead by 3% over 2018 to $488 million.Northland says that this is on track to hit

 EBITDA of $1200-$1300 million for 2019. 

Good Growth for last 4 years 

Northland showed only modest growth this quarter.And will have only little increase in Q3.Investors will have to wait until Q4 for their reward.But investors have been rewarded well over the last four years.Revenues have doubled from $728 million to$1555 million in 2018.Operating income almost tripled as it went from $383 million to $1134 million.In addition, net income showed tremenduous gains as it went from $27 million to $405 million in 2018.True, the dividend only increased slightly over the four year period.But Northland Power has made some large and very profitable investments in the North Sea.   

Comparison to Emera 

 This blog considers Emera one of,if not the best run,and most stable Canadian utilities.At first glance these two utilities seem like David and Goliath.Emera has certainly been around for longer and has grown it's dividend quite well but Northland Power has made tremenduous gains recently.In 2018 NPI's revenues were only about 25% of Emera revenues  but at the same time they made up almost 55% of Emera net income.This with two big projects schedule to finish by Q2 of 2020 and one of these in Q4 2019.Northland constructs quite large projects (Deutsche Bucht is a $1.4 billion project).So this blog sees that Northland's net income may be 60% of Emera net income by Q2 of 2020.Emera is trading at $56 to $58 per share so why shouldn't Northland trade at 60%  of this value or at least $30 per share.    https://www.brookfield.com/https://www.omers.com/      

Blackline Safety is in a Breakout Pattern

    Blackline Safety is a junior technology leader and it released it's second quarter results on June 27.Blackline (BLN) paints a fairly rosy picture.Quarterly revenues have doubled from Q2 in 2018;they were $8.2 million in 2019 for a whopping118% increase over 2018.Cash and short term investments stood at $34 million.Although they still incurred a $4.8 million loss versus a $4.5 million loss in 2018.But importantly adjusted EBITDA was $253,000 for Q2  versus a $104,000 loss in 2018 and for 6 months it was $286,000 versus a $239,000 loss in 2018.A 343% gain for the quarter and a 220% increase for the first half.
       New Products and New Revenues
   Like in the picture above BLN has room to grow with it's present stable of products;some of which are newly acquired.This blog has given several good leads to BLN on my Site123.com website.Details are available  for several dates on Site123.com.It is clear that Blackline has substantial cash on hand and a strong capital structure that has allowed accretive investments.Further revenue increases are expected throughout 2019 from these solid investments.                       

      Blackline Safety has a Special Niche
    BLN is a very well managed company and is seen by this blog as poised for new acquisitions.It's recent growth spurt has been caused by products from it's recent acquisitions.But BLN has a special niche and special products.This niche has less competition than does many junior technology companies.And this blog ( see the picture above) has another small acquisition lined up;this will be in the business of wireless transmissions to employees and wireless security similar to BLN's present business and should fit in well.If this new acquisition gets tucked in and is accretive to  EBITDA then look for Blackline Safety to be in the high $6 range by yearend.         https://www.zacks.com/  https://www.omers.com/       

GoEasy has Safety and More Products

      GoEasy Financial is working on remaking itself.It is keeping it's delinquency rate down and secured lending up.At the same time this blog has recommended that it make some combination or even an outright acquisition of Street Capital Bank-a small fairly new Tier1 bank.There has been an acquisition of Street Capital Bank by an unknown company called RFA.It is not known whether GoEasy is connected directly or indirectly with RFA.But if it is then GoEasy will have a number of new products to offer it's customers.If handled correctly and slowly this could increase revenues dramatically.But of course some of their new banking products will meet with competition in the small Canadian market.
    First Quarter Highlights
   GoEasy is a consumer loan specialist and so their loan portfoloio increased by 46% over 2018 to $602 million.At the same time revenue increased by 22% to $140 million.More importantly e.p.s. increased by 53% or from $.77 to $1.18 per share.
      Safety First
    They also enhanced their plan to lend in Quebec which will give them further growth.GoEasy also tells it's shareholders that secured lending increased from 4% in 2018 to 12% in Q1 2019.This strategy and others has kept their delinquency rate down to 4.4% which is consistent with 2018.In fact, the CEO says that "1 in 3 Easy Financial customers graduated to prime credit and 60% increased their credit score within 12 months of borrowing from us."GSY also takes care of shareholders by repurchasing 283,500 shares at an average price of $41.75 per share.
      Larger Market                    

   GoEasy has a quite successful market niche and as can be  seen from above they have improved this market over time.This alone should allow earnings to grow by 40 to 60% for a number of years.But GoEasy has decided to gradually increase it's banking products.If this is done slowly and carefully it should strengthen the company even further.A Go Easy credit card and line of credit (over $15,000) may not be too far away.But Go Easy mortgages may likely never appear.Look for annual e.p.s. of $.50 to $5.00 for 2019 and this should allow the price to gradually move towards $58-$60.                https://www.otpp.com/homehttps://www.info.com/serp?q=cpp%20canada%20pension%20plan&segment=info.0419&s1aid=8515556047&s1cid=1628428016&s1agid=57491951010&s1kid=kwd-300114431469&utm_source=adwords&gclid=Cj0KCQjwyLDpBRCxARIsAEENsrL8xz00HWInfPMwKPQKt5Srbq4VGKkznQGq8KUkTn1zTbIX-T3s4T8aAmZ1EALw_wcB

Domaine names are still Tucows' main domaine

    On May8 Tucows released it's first quarter results and they were as this blog expected.And that is chiefly because Tucows is either still making revenues from domaine names or at least telling investors that they are.This has caused the stock price to be on a roller coaster.It was trading around $120 a share in January and February and this blog believed that investors thought that they owned a  number of hardware and online advertising companies.As they gradually learned that Tucows was only in domaine names the stock price fell to $83 at the release of the quarterly report.After results had been absorbed the price fell further  to it's $80 price level.Now it does not  appear so stylish and modern but it is still buoyed by it's ample profit.
    First Quarter Highlights 
  Tucows tells shareholders that it's mobile internet service company called Ting is operating in it's eighth American town-Fullerton, California.However total Ting revenues plus revenues from domaine names has fallen since Q1 2018 by18% while net income dropped by 25%.Basic e.p.s. dropped by 26% and adjusted EBITDA by 9%.So their financial indicators all show to varying degrees that financial performance is starting to falter. 
      It is not clear how revenues are earned.For example, how much revenue is recurring and how much is one time only.It is also not clear if Ting makes any income at all it seems to have very heavy investment and little revenues coming in.But it is starting to be more clear that the growth in revenues is faltering.It is also clear that Tucows has a small capital structure with only 10.5 million shares outstanding.     

     A New CEO
   This blog has warned the CEO,Elliott Noss, to diversify out of domaine names.And that a discussion of Ting does not belong as a highlight;it is only a footnote.Tucows lost a good opportunity to buy Yellow Pages and get into the Quebec market and into online advertising.Domaine names is too specialized to count on as your only revenue source.In addition, Tucows has a very tight capital structure at 10.5 million shares.It should have raised more equity when the stock was trading at $120/share,     http://www.caissepopulaire.ca/https://www.laurelhill.com/
   

Northland Power gets new sun and wind Power Projects

     It took a long time for Northland Power to get completed power purchase agreements (PPA) on it's three wind farms in the North Sea.The projects were built but little revenues were coming in as the PPAs were not signed.Although there was a small delay the first two are now fully commissioned.NPI tells investors not to expect revenues until 20202.But this blog expects pre-completion revenues in Q4 of this year.  Now NPI has released it's first quarter report and it tells shareholders that they have a PPA for the 300MW Hai Long 1 and close to having them for the 232MW Hai Long 2 and 512 MW  Hai Long 3.This is partly due to the fact that they are only 60% owner of these 2 new wind projects;the remaining 40% is owned by Yushan Energy of Taiwan.This makes it easier to get PPAs signed.But Northland has also announced a new solar project in Mexico;this 130MW project has obtained all permits required for construction and is expected to be generating revenues in Q2of 2020.
      First Quarter Highlights
    The first quarter only showed slight growth over Q1 in 2018.
     On May 8 Northland released it's first quarter results and they were largely as most investors expected.They are showing slow, steady growth.Revenues increased 3% from 2018 while adjusted EBITDA increased by 1% to $294 million.Net income increased by 15% to $204 million.                                                                                         This blog expects generally that this trend will continue into Q2.There will be no major changes in Q2 and only small changes in Q3.Investors will have to wait until Q4 to see the initial impact from Deutsche Bucht.But the changes will potentially be quite significant.Adjusted EBITDA may hit $1200-$1300 million and net income may jump to $940 million- $1 billion in 2019. 
        

 2019 is Another Building Year
   Once again Northland is working on not one but two major investment projects.Investors have to see beyond the second and third quarter to get the fruit of their endeavours.But NPI offers a substantial dividend for investors to wait.The fourth quarter should  start to show some pre-completion revenues while Q1 in 2020 will have sizeable gains in revenues and earnings.
    Northland says in their guidance that adjusted EBITDA will be $920 -$1010 million for 2019 and earnings per share of $1.65-$1.95.This blog sees adjusted EBITDA of $1050-$1200 million and e.p.s. of $1.80-$2.00.Investors need to know that  NPI is growing in leaps and bounds.So much so that their net income is almost 65% of Emera Utilities which trades at $55 a share.Consequently this blog sees Northland Power trading at close to $30 by year-end.In other words about 60% of the Emera price.https://www.brookfield.com/

Go Easy earnings shoot up but needs a New third Division

         On May7 Go Easy reported it's financial results.Revenues were up by 22% but e.p.s was up by 53% and net income by a whopping 65%.Go Easy calls these  record  results.For example, Scotiabank shows 2018 e.p.s at $3.97 and the P/E ratio at 12.84.But now based on Q1, e.p.s are on track to hit $5.00 per share.At present P/E levels this will move the stock price to about $63 per share.Even with a slight reduction in the P/E ratio as growth dampens this should bring the stock up to the $60 level.It's present price of $51 shows it as  considerably undervalued.

     

And Now for the Rest of the Story

This blog was not too surprised by these favorable results.Go Easy has a very successful consumer loan division.Most readers have seen their advertisement on television showing people paying bills (not Goeasy consumer products).This helps to explain how their consumer loan portfolio increased from $600 million to $879 million in Q1 2018.But one of my blogs on Website123.com suggested that Goeasy make some kind of combination with the faltering Street Capital Bank as well as with Pinetree Capital.Both are represented in the picture above.It is true that SCB has been losing money lately and will need some GSY  investment to shore up SCB finances.But Goeasy must pick and choose the functions that it will push on consumers.For example, mortgages may be considered too competetive to invest heavily in.Nevertheless Goeasy will be a successful operation with more tools to use now. 

https://www.omers.com/  https://www.otpp.com/

Is Atlantic Power poised for a Recovery?

        Atlantic Power is an utility that has been covered in several of my Workathon blogs.The financial literature (both online and offline) is full of blogs that say that ATP is ready for a comeback.It was $13/share in 2013 and has traded as low as $1.45/share.but their new CEO has done a lot of things to improve Atlantic Power and so some pundits are suggesting there may be a comeback.This blogs' answer is no-not yet.                

              Changes since 2013
    It was starting to look like ATP would rebound in 2019.The stock had moved up to the $3.50 level.Debt had been cut almost in half although the dividend was gone now.It had a power generating capacity of 2138 MW of which it owns 1500 MW.But back in 2013 it owned 28 power plants and now it owns 23 (2 are in Canada).ATP just released it's Q1 results and almost all financial indicators were down from Q1 2018.It appears that Atlantic Power is suffering from the closing of four plants in northern Ontario. Although there has been some compensation from the province as a result of their Go Green platform.So the price has fallen off from their January and February highs.Recently Atlantic Power has made arrangements to sell it's 300 MW Manchief natural gas power plant.But in return it bought from Altagas their share of two biomass plants which generate about 85MW of power.
        Slow Growth
     Atlantic Power had 28 generating plants in 2013.Now it has 23 and selling one more in 2022 ( 300MW).It is not totally replacing the generating power that has been lost.But it is buying 50% interests in 2 biomass plants with 85 MW of power this year.On the positive side it has reduced total debt by about 50%.There is credit capacity to buy or to build more generating capacity.However there is another option!ATP  would make an excellent fit for one or two Canadian utilities with significant foreign (especially American utilities).One is Emera and another is Algonquin Power.This blog has suggested an acquisition with Algonquin but it is possible that Algonquin sees too many problems.Also they just made an investment in Bermuda.There would be connection or combination problems as well as internal ATP problems.But Emera could also be a good fit and has a very substantial cash flow (about$700 million).       http://algonquinpower.com/ http://www.emera.com/en/home/default.aspx

AGF Management increases sales while Keeping Earnings Steady

         

 AGF Management

 released it's first quarter results and it was steady as she goes.Investors must have been pleased to see an almost 3 % increase in sales while the industry is growing so slowly.Income was $105 million compared to $110 million for Q1 2018.E.P.S. was $.14 compared to $.14 in 2018.AGF reported improved results for it's U.K. subsidiary and an increased   investment in it's InstarAGF Asset Mangement - one of it's new North American funds.Largely AGF is diversifying with new funds in new locations.
                 The Same Trend for 2019
 AGF had a quite good year in 2018.E.p.s. were $.92 per share while income was $450 million and adjusted EBITDA was $110 million.Part of this success was due to a tax provision release of $24 million.Additionally they bought back almost 1 million shares.Income in the first quarter of 2019 at $105 million was only down slightly from Q1 in 2018 at $111 million.Adjusted earnings were $.14 per share compared to $.17 in Q4 and $.14 in Q1 for 2018.Still free cash flow improved to $17 million from $10.5 million in 2018.
         There were some successful highlights that point to an encouraging 2019.Assets under management (AUM) were almost 5% higher and mutual fund sales showed good increases.Net redemptions were in line with 2018 figures.       
         The Share Price for 2019
       This blog sees 2019 as a building year for AGF Management.Sales will continue to be healthy and AUM on an annual basis should grow to $40 billion.Income will be around $450-$460 million just slightly ahead of 2018.But because of the tax provision release in 2018 of $24 million e.p.s. will be down somewhat.So a forecast of $.70 to $.80 per share seems probable.AGF did not give a breakdown on foreign subsidiary income in Q1 but an increase here might put earnings at the top end of the range.Without a small acquisition or a capital gain from a sale of a subsidiary this will likely put AGF Management only in the $6.00 to $6.50 price range.    https://www.omers.com/  https://www.otpp.com/  

Northland Power continues to build Offshore

       Workathon has covered every step of Northland Power's expansion.It took a huge step in 2015 by planning to and then building it's first offshore wind farm called Gemini,a 600MW behemoth.Then came the smaller Nordsee One at 332 MW.Both were built in the North Sea which reportedly has the strongest winds in the world.This went well and now they are completing the third one called Deutsche Bucht.But the focus now is on the China Sea and 3 new wind farms,each 300 MW.
                  The Fourth Quarter
  Most financial indicators were lower than Q4 in 2017.Revenues and adjusted EBITDA were lower than 2017 which was a quite good quarter. While free cash flow was greater by about 22%.                Net income and free cash flow were tight while NPI was building Geminin and Nordsee One, each costing about $2.5 billion.In 2015,2016 and 2017 financing costs were high and revenues were not yet reported.Now,in effect, Northland is over the financial hump.
                   2018 Financial Highlights
   Sales increased from $1.4 billion to $1.6 billion in 2017.This was primarily because of a full year of production from the 332MW Nordsee One.And adjusted EBITDA increased from $765 million to $891 million (the top end of guidance).Net income had a huge increase(47%) over 2017.While free cash flow increased 30% over 2017 to $1.90 per share.And management expects that e.p.s will be in a range of $1.75 to $1.95 again in 2019.Adjusted EBITDA should increase from $890 to the range of $920 to $1010 million.Their new offshore projects will make up the difference.
                  Construction Updates
      Most Northland Power shareholders are not terribly interested nor surprised by the Q4 results. They are more interested in the development of the new offshore wind farms.Their last wind farm constructed in the North Sea called Deutsche Bucht is now contributing pre-completion revenues and will be finished on time in 2019.It is about 270MW and will cause a significant jump in revenues and earnings in late 2019.They also have 3 new offshore projects in the China Sea off Taiwan.And they have all permits and approvals for the first called Hai Long 2A;permits and approvals and their PPA is expected for the other 2 in 2019.This overcomes the main slowdown that NPI had in the North Sea.Where it completed all it's construction but had to wait for approvals and it's PPA.This blog expects that pre-completion revenues will be coming in from Hai Long 2A in Q4 and for Hai Long 2B and 3 by mid-2020.
                Huge Increases in EBITDA
   Northland Power has a reputation of building big ($2-3billion) offshore wind farms on budget and on time.And each wind farm ,when completed,produces very large increases in EBITDA.Their Deutsche Bucht project will be finished in 2019 and is even adding pre-completion revenues now.The blog 4-C  Offshore says that there is no construction started on Hai Long 2A yet.But this blog believes that there may be pre-completion revenues by Q4 of 2019.So consequently adjusted EBITDA will be at the upper end of the range of $950 to $1025 million.While free cash flow is expected to be $1.65 to $1.95 per share.Look for NPI to be around $26 to $28 per share where it was in 2014.   https://bam.brookfield.com/  https://www.otpp.com/

Elliot needs to clean up his Act

        Here Elliott refers to Elliott Noss,the CEO of Tucows. As most people know Tucows ia a Canadian technology company that I have spent a lot of time on.And it has just reported it's  fourth quarter and annual results.The annual results were quite good as Elliott has done a good job here but the report itself is quite amateurish.Tucows is now a billion dollar company and an annual report that says earnings come from domaine names and Ting a small mobile telco is ludicrous.This could actually hurt the stock price if investors

  were not able to see that the company is a bonafied software company that is actually doing  very well.It is true that   2019 e.p.s came down from e.p.s of 2018 but it's results are ahead of almost all Canadian technology companies.It seems to be very well managed.For example, it's adjusted EBITDA exceeds both Kinaxis and Shopify.

          The Quarterly Report
            This quarterly report also has annual results but all the Tucows' quarterly reports have little useful information in them.And they talk about making revenues and profits from domaine names and a small mobile company called Ting.They apparently made a small acquisition in another company that sells domaine names called Enom.If this was true then they would likely be as profitable as Go Daddy and have the same market capitalization.The quarterly reports cover the real software business that has been so successful.
     However the figures in the report as well as it's performance is quite impressive.Elliott must work hard to earn his impressive salary.Yet most of the Q3 figures are down from the third quarter of 2017 except for adjusted EBITDA.Revenues are down 6%,net income is down 60% and cash flow is down 24%.This is not a good trend and means that some of that abundant cash flow should be spent on new initiatives.That aside, the annual figures show better.
         Conclusion 
      My last blog on Workathon on Tucows dated (20/02/2017) stated that although Tucows was performing well it did need to show that it was more sophisticated than selling domaine names.The quarterly reports cover up the real business;it manages  a number of software companies and makes revenues from online advertising(as with Yellow Pages).It is the belief of this blog that it's P/E ratio and the stock price would come down if this was not true.Furthermore mentioning Ting as a major activity is also not conducive to a high P/E ratio.So in conclusion, their earnings are good but their description of activities performed must be improved or Elliott must go.This is good for the long term valuation of Tucows.This blog feels that this should be mentioned at the next A.G.M.(Annual General Meeting) and be the basis of a challenge against  Elliott as chairman.        
                                    https://www.fidelity.com/

The Emergence of A New Health-Care Star- Medical Facilities (DR)

  Medical Facilities (DR) is a health-care company with an  unique approach that has grown rapidly over the last 2 years.It was $10 per share a year ago and has grown to it's present price of $17.50 per share.It has a market capitalization of about $550 million.And it has a very interesting and unique business model that should allow easily for future growth.To that end, Medical Facilities just had a good third quarter. All DR facilities are located in U.S.A.
       Third Quarter Results
 Total revenues were up 17% over 2017 to $104 million with organic growth of 7.5% Adjusted EBITDA kept pace with a 17% increase.While income from operations was $17 million ahead by 33% over Q3 2017.Medical Facilities has an unique niche as it does surgical work for hospitals, health-care facilities,doctors and insurance companies.Bigger organizations out-source some of their work to Medical FacilitiesBecause on the one hand it does surgical operations faster than many larger hospitals.On the other hand,it does surgical operations more cheaply and in some cases more complex than what  smaller hospitals can do.In order to do this Medical Facilities has to and does have a very lean and competent operation.
     Nine Month Results
   Revenues increased by 13% to $308 million.Income from operations increased 16% to $49 million.But the big change was the increase in e.p.s. from a loss of $.11 to a gain of $.07 for an increase of 164% for 3 months.And for 9 months e.p.s grew from $.33 to $.39 per share.                          

      Capital Structure
  Medical Facilities has  a market capitalization of $537 million but  has only 31 million shares outstanding.It is a very tightly held stock; approximately 30% -50% of it's share are held by insiders.Consequently in 2017 net income before minority interests were $60 million but $30 million was paid out to minority interests.Net income declared was only $30 million.It is not clear what effect this has on the stock price;it does lower the P/E ratio but it looks like investors buy on the P/E before minority interests are paid.For Qtrade shows the P/E at 18 and Scotiatrade shows it at 25 but if net income is taken before the minority interests the P/E ratio should only be about 8 times earnings.However minority interests certainly do reduce the free cash flow as their net income is taken off the top.This blog believes that it is incumbent on management to lower the minority interest percentage to 33% over time.
             Outlook for 2019
  Medical Facilities will probably have steady growth in revenues and earnings in 2019 as it has a special niche that will only get bigger.However DR needs more investment to put in new facilities.This will require a new secondary equity issue.And the stock price will move ahead slowly as a good chunk of earnings will continue to go to the minority interests.Management needs to ensure that enough new shares in any new secondary issue go to  non-insiders so that the minority interests get a reduced share of their controlling interest.If the return on equity on the new investment matches the existing return or exceeds it then the stock price will rise and insider's share will gradually drop.Look for gradual changes in the capital structure and the share price to move up to $20 with increased earnings.             https://www.zacks.com/    https://www.fool.com/