Closing in on the title-services market; upside potential over the long term

Canadian and U.S. morning comments

June 22, 2017

We have initiated coverage on the common shares of Real Matters Inc. with a Sector Perform rating and a one-year target of C$14.00 per share. Our valuation of Real Matters is based on a discounted cash flow (DCF) analysis that implies an EV to net revenue multiple of 6.0x on our F2019 estimates (for the year ending September 30, 2019).

Premium valuation reflects a large market opportunity and significant growth. In our view, Real Matters is a unique stock in the large cap Canadian technology universe that is pricing in substantial growth beyond our forecast horizon, based on its growing share of the $16 billion U.S. appraisal and title-services markets. We consider Real Matters to be a high-quality company in our coverage universe given the impressive market presence it has developed over the past 10 years, having secured relationships with a number of leading financial institutions in both Canada and the United States.

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ScotiaMcLeod Wealth Advisors Mailey Rogers Group recognized as ambassadors for the arts in West Vancouver

June 20, 2017



“We are delighted to share this important public announcement with you from Kay Meek Centre. To describe Mailey Rogers Group as ambassadors of the arts in West Vancouver is a true honour. As Wealth Advisors in this fast paced world, our patronage of the arts is both a genuine gift to our community, and a true tonic for our souls.” Victoria Rogers and Kim Mailey

The Kay Meek Centre for the Performing Arts is pleased to announce that the Mailey Rogers Group Scotia Wealth Management have renewed their support as season sponsors of the KAY MEEK ARTS SEASON for 2017/18. Kim Mailey and Victoria Rogers take an active role in supporting the arts in West Vancouver as both patrons and ambassadors. This will be their eighth year as season sponsors and this continued support provides a foundation for the programming of the dynamic season of music, theatre and dance hosted each year at Kay Meek Centre.

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Economic fundamentals remain constructive

Here's what we're thinking

June 20, 2017

Global markets have recorded mixed results thus far through the first half of June with U.S. and Asian equity bourses posting gains while Canadian and European stock markets have slipped modestly. Meanwhile bonds have rallied and major currencies have universally gained against the US dollar. Overall, global economic fundamentals continue to evolve constructively with global growth firming in 2017 while also broadening out into all major regions. This has laid the groundwork for improving consumer and business spending, employment trends, and profit growth over the coming 12 to 18 months. Given the lack of inflationary pressures and tight monetary policies, we see recession risks over the coming year as low which should help extend the current market cycle through this year and likely much of next.

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Ramping deal activity and capacity

Canadian & U.S. morning comments

June 13, 2017

ITP announced an agreement to acquire substantially all of the assets of Canadian Technical Tape Ltd. (Cantech) for a purchase price of $63 million. While we estimate an initial transaction multiple of ~9x EV/EBITDA (on an LTM basis), we believe a combination of potential capital investments and integration efforts should result in a post-synergy transaction multiple below 7.0x EV/EBITDA; we estimate the transaction will be 6% accretive to EBITDA and 5% accretive to EPS on our 2018 estimates.

The deal is expected to close in Q3 – at which point we also expect the raw material headwind to largely subside and revenue growth to ramp materially. We see continued upside to the name as ITP attractively combines strengthening margins, accelerating (organic and strategic) growth, and an unwarranted (near-record) discount valuation. Meanwhile, ITP remains catalyst-rich, with debt capacity for strategic and organic growth opportunities expanding following the close of the transaction and concurrent increase to ITP’s borrowing facility. We increased our target price to $29/share.

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