WIN 20180402 18 53 48 Pro The use of agriculture to develop small towns

AGF Finance is shaping up

     AGF Finance is one of the three new finance companies that I looked at in a blog on August15,2017.It has made some improvements as has the other two,namely,Guardian Capital and Fiera Capital.Both the price of Fiera Capital and AGF are down since August ;Fiera is down about 15% and AGF about 20% and Guardian Capital is flat.Fiera is the larger company with $128 billion of assets under management (AUM) while AGF has AUM of $37 billion.Guardian is the smallest.But AGF just had a good first quarter as adjusted EBITDA,net income and e.p.s. grew at an above average rate.And all 3 have been helped by the interest rate increases.But what will happen for AGF for the rest of the year?Well AGF has made some improvements worth describing.          

Annual Highlights

61% of their AUM performed above the median rate for the last 3 years.Adjusted e.p.s. increased 27% compared to 2016 .Also AGF is expecting a $16 million cash refund arising from a transfer pricing case.This should raise adjusted EBITDA to about $40 million for Q2 or about $.45 per share.AGF also started two new ETFs on the NEO exchange.And lastly AGF announced fee reductions across several of their funds. Consequently AGF recorded $20 million of sales(net of redemptions) and $58 million expected for March sales.                        

Who will Outperform in 2018?

Guardian Capital is smaller and has smaller price movements.However it might move up to the $26 -$27 price range as it has a good steady cash flow.Fiera has the best yield at 6.9% compared to AGF at 4.9% and Guardian at 2.1%.And Fiera is adding to AUM faster but it's income trails.So it is Fiera that has the highest P/E ratio at 12.This blog looks for  annual e.p.s. of $1.05 to $1.30 for AGF(especially with the $16 million cash refund) and at a multiple of 8.5 this gives it an expected price of $8.50 to $9.00.This makes it the likely winner with a gain of almost 50% and would likely beat Fiera which may not hit $15 in 2018.

use Workathon for financial analysis ;use Workathon to help in business rankings

Tecsys shows flat third quarter results

    On March1, Tecsys reported it's third quarter results and earnings were good but revenues were flat.Third quarter revenues were $17.2 million compared to $17.4 million for 2016.On the other hand, third quarter adjusted EBITDA was $1.3 million compared to $1.9 million in 2016 but there was a $.4 million foreign exchange loss.But for 9 months adjusted EBITDA was up 10% and e.p.s up 70% from 2016.While adjusted EBITDA for 2017 was up 40% and e.p.s was up 40% from 2016.
              A Transition for Tecsys                     

           Tecsys provides supply chain and warehouse management but it also operates three or four junior construction companies.Two of them are in western Canada.This blog believes that it has a small position in one or two junior construction companies around north Toronto.Revenues in the oil patch might  have been volatile for the last two or three years.So the supply chain management business has acted to stabilize revenues.This blog has recommended in the pst to focus on the construction business and sell off parts of the supply chain management business.
           Financially Speaking
           Tecsys is a small company with 13 million shares and a  market capitalization of about $210 million.Long term debt is down about 40% from 2017 while share capital is up about 7 to 8%.It now has 13 million shares.There has been a reduction in retained earnings of about $500,000 over 2016 and chiefly a gain in equity to the owners of $11 million.The reason debt has fallen is principally because they issued 767,000 shares and raised $11 million;some  of it has been used to repay debt. However this blog finds their capital structure restrictive and it limits their growth.
                              

Future Prospects

Tecsys has come a long way in the last 5 years.Revenues and net income and adjusted EBITDA have steadily moved up;it is a growth stock.And this growth has commanded a fairly good P/E ratio.The price/earnings ratio for 2017 will be above 30 as e.p.s will be about $.45 to $.50.This is with their present 13 million shares.And this blog has called for an increase in equity which will increase revenues and earnings but will it increase e.p.s?On the other hand it's debt has fallen considerably.Tecsys must find a way to increase it's equity along with a small increase in debt.It has small but not controlling positions in several construction companies and a substantial interest in a supply chain management business.The increase in capital must be used  to increase one or both businesses.  

.                                                                     

Aimia sells non-core assets to bolster balance sheet

             This is another of those slightly unusual situatuons that are best covered in Workathon instead of Blogdaleupsome.Aimia is in a bit of a credit crunch and so did what most other companies would do.They sold off (and may still be selling off) some non-core assets.In this case they sold their Nectar business with joint owner Sainsbury's.Sainsbury's sells grocery, financial,energy, clothing and general merchandise.And Nectar is their largest issuance and redemption partner.Nectar and their research business plus 50% of their stake in Sainsbury's was sold for $105 million. There was no mention of the net proceeds from the transaction.    

               Other non-core Assets
        Aimia is not completely cornered yet as it has a few cards in it's hand to play.It's financial statements show $100 million of investments in unconsolidated assets and a further $400 million of other investments(including government bonds).Down the road these may be disposed of for working capital or repayment of debt.Their latest press release shows $208 million of debt remaining on their balance sheet.If push comes to shove some of these assets may be sold off but the profit recorded will vary with the strength of Aimia's hand.
             A Weird Press Release
           This press release talks about a$174 million transfer of cash and a working capital settlement.If their Nectar loyalty business was sold there would be no cash involved they would merely be maintaining a reserve fund for redemptions.If there was a  cash transfer then maybe Aimia has a small position in Sainsbury's which is a  $5.5 billion company.But this is unlikely in Aimia's present position.More than likely this is the kind of press release that one puts out on April1.Selling off non-core assets is just what Aimia should be doing in order to bolster it's position before June 2020.As Aimia still does not have an amended agreement with Air Canada as this blog has suggested.However if there is any substance to this  press release it will all be detailed in their upcoming first quarter report.
                                                          use Workathon for business solutions;use Workathon for business solutions

Tucows needs a New Strategy or a New Management Style

                     Tucows has been  a stockmarket darling for the last 2 to 2/12 years.It was trading at about $12 per share two and a half years ago and moved up to the $48 to $50 area.And in the last year or so has moved from $48 to $50 area to $90.But in the last month it has fallen to $68.This blog and other investors find it's approach too eclectic.It's business is selling internet services, domaine names and mobile services.And it has one software  subsidiary called ENOM.But it also has a position in several small internet and ecommerce software companies .And it gets much of it's revenues and earnings from here.
     This blog thought recently that it was heading for $100 a share and that it's eclectic management style was being successful.But in the last 1 to 2 months it has dropped about 20%.Part of this is due to a couple of lawsuits that have been made against TC. But this blog believes another factor is that perhaps too much of it's revenue comes from government contracts.This can be remedied easily.It needs to have it's revenue more concentrated and take majority or control positions in 3 or 4 of it's more successful subsidiaries.Then it can focus on one or two internet areas instead of  being in 8 to 10 companies.This can be easily done by raising more equity.Presently it only has 10 million outstanding shares and this blog believes that situation has added to the instability of the stock.Very few technology companies with a billion dollar market capitalization have such a small number of shares outstanding.So one of our recommendations is to raise more equity and use the funds to solidify their postion in three or maybe four of their internet software companies.They need to streamline like the rapid transit train below.    

Areas of Improvement

What got Tucows from $12 to $50 a share did not get it from $50 to $90 a share. This management style is described in posts on Workathon dated December19,2016 and February 20,2017.And now it needs to change it's management style.This blog believes that most of it's subsidiaries are in e-commerce software and it needs a larger position in both 3 or 4 of these companies and in their resources.This can be done by raising more equity which will broaden it's equity base.It has fourth quarter results coming up soon and investors will be looking for some of these changes to be implemented as well as satisfactory EBITDA. This blog is looking for adjusted EBITDA of $30 to $34 million and e.p.s. of more than $3.00 per share.         use Workathon for analysis of technology  companies;use Workathon for news on technology companies

Street Capital Bank my worst forecast of 2017 and worst performing bank

   
     

    If Kirkland Lake Gold was my best forecast for 2017 then Street Capital Bank was the worst.As in the caption above the train is only pulling away from the station.It was trading around $2.00 per share in December 2016 when I bought shares and forecasted a large price improvement after February when it got it's Schedule 1 bank licence.Now it trades at $.98 per share.However parts of my forecast were correct.It is taking on deposits and it has increased it's customer loans by 50%.But revenues and operating income have fallen by about 50% over 2015.Although net income has remained almost constant.It still has a long way to go but it will have a credit card availability this year and interest margins will increase in 2018.
       A Banker's  Dip in 2017
      Often a junior company after a major revenue-creating event will slow down or even move backwards for a period of time.This often happens when a new banking licence is obtained or a patent or even a new major oil field.The reason being that the new company shows more established companies that it is open for business.And this gives them more attention and causes more competitive pressures.Once the new company adjusts to this increased competition it will return to it's natural growth path.And SCB is still adjusting.For example,both revenues and operating income must grow for Street Capital Bank to reach 2015 levels.
  Revenues and operating income are expected to be flat with 2016 levels in 2017.While net income may be a little less than 2016.However loans and deposits and the interest rate margin will be better than 2016.The interest rate margin has improved in the second half of 2017 and again in 2018.      

                Improvements
         As shown in my blog on Linkedin entitled If They Only Knew  SCB had about 130,000 customers at the time of getting their licence.Now I an guessing they have about 150,000 customers and their loans have increased by about 50%.This blog expects only average results for 2017.But they will introduce credit cards in 2018 and have higher interest rate margins.So look for Street Capital Bank to move closer to it's natural growth path.It is mereley an adjustment process.
                                            use workathon-blogger for business consulting

Kirkland Lake Gold -- stock of the year(2017)

Yes,Kirkland Lake Gold has had a very successful year.But it all started with Crocodile Gold.Crocodile Gold bought for  small compensation two (supposedly almost depleted) Australian mines,

namely Stawell and Fosterville to accompany their existing Cosmo mine.And then Crocodile Gold bought Newmarket Gold and  the new company became Newmarket Gold.Kirkland Lake bought Newmarket and that was when Kirkland Lake discovered that the Fosterville mine was much bigger and had a richer grade of ore than originally thought.
                Financial Results for Q4 and 2017 
   KL acquired St. Andrew's Gold and Newmarket Gold in 2016 and the stock increased in value by174% in 2017.Total consolidated production in 2017 increased from 543,000 ounces to 597,000 ounces.As well  KL beat their own production guidance but revenue figures are not yet available.And Q4 production also increased by 10% over 2016 production.This enabled KL to pay down convertible debentures in June and December of 2017.The debentures were converted into 4.5 million common shares at a lower share price.In addition, they doubled the size of their dividend to $.02 per share.
                 The Fosterville mine
     It is highly unusual that the stock price moved up 174% simply because of a 10% increase in total production.So this blog believes that most investors realize the gold reserves at Fosterville are larger than recorded.Their annual production statement shows the Fosterville reserves at 1.03 million ounces but an earlier statement in 2017 by KL stated the Australian reserves at about 3.7 million ounces.With .7 million ounces at Cosmo and almost no reserves at the Stawell mine that means that they estimated in 2017 there were 3 million ounces at Fosterville.This blog believes that this is a low estimate. As Crocodile Gold way back in 2013 said that the Fosterville ore deposit was bigger than 2.5 million ounces.My blog in Workathon dated October21,2016 shows that,Newmarket Gold,  before selling the company discovered 2 new faults called the Lower Phoenix fault system and the Eagle fault system.And the ore grade is richer than in the existing Phoenix fault.This blog calculated that  the total reserves at Fosterville were now about 4 to 5 million ounces.But Fosterville has extensions at each of their major faults.So it is possible that the size of the ore body (with extensions) can be as big as 5 to 6 million ounces.This cannot be said with certainty but it is certain that it is not 1.03 million ounces.
                             The best Estimate             

         Kirkland Lake Gold's share price had a good year in 2017 but it will likely do well in 2018 also.It has ,for example, moved up $2 in the last month.But it is not moving on the increase in production alone.This blog believes that most investors understand that the ore body at the Fosterville mine is much  bigger than reported.In their annual production report KL claims that Fosterville has a reserve of 1.03 million ounces and earlier they estimated the mine size to be 3 million ounces.This blog believes that 6 million ounces may be high but 4 to 5 million ounces is a reasonable estimate and at current prices of gold that is worth about $6-$7 billion.My earlier blog in Econothon II dated  December2,2017 states "the fair market value of the Fosterville mine has not yet been realized".And this is still true, so 2018 should be a good year for Kirkland Lake Gold.
                               use Workathon.blogger.com for analysis of resources