CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

New Comments from TD Securities

[hawk35]

Recommendation:  Buy
Target Price: 6.50

TD hosted meeting with Richard Ott and Richard Mclellan.

TD feels confident unit trains will go into service on schedule within revised budget.  No more bad news expected.

Management confirmed the dividend strategy remains intact but TD argues that share price already has priced in a divi cut.

Company is in the final stages of signing a contract for 2 unit trains per week with one customer.  Commercial terms have already been finalized and contract structure will be take or pay model.  Customer will be touring the site shortly and expect to sign the contract by May.  This brings contracted capacity to 80 to 90 percent.  CUS expects existing customers to use up all the remaining capacity.

For the remaining work to be completed this year, company has buit in a contingency factor of 25% and company can proportion the remaining work into smaller work orders dramatically reducing any possible cost overruns or surprises.

CEO search underway and expect announcement mid year.  No new strategic moves will be started until the new CEO is on board.

There is more about the other side of their business but too much to post here.

 

[philip3]

[Nawaralsaadi]

Once NATO is 80% to 90% contracted and the market is comforted that NATO’s construction is on track, CUS shares will re-price materially higher. A dividend cut (which in my opinion is unwarranted) may create some short term headwinds, but for investors this doesn’t change the substantial upside ahead once NATO’s starts contributing cash flow. A valuation at $7+ is very likely in early 2015. This

[Sukhi19]

Nawar, It is always a treat to read your comments. Keep it up. Thanks for providing valueable information.

[Nawaralsaadi]

Thank you Sukhi. We might as well keep it interesting until the golden goose lays its eggs :) Nawar

[easymoola2003]

Love it. Thanks for sharing. In @ 4.69...but (honestly) don't believe the stock price has discounted a divi cut. It simply goes against human nature. Will recoverquickly  though when it does swoon.

[JustforFun7]

yes it is hard to say a divy cut is already baked in when  people believe there is less than 50% chance of a divy cut. I actually think the chances of a divy cut are only about 15%. It would only occur if NATO were to go over budget again or schedule by 3-6 months or if it was not successful as a business unit. Bringing in professional capital project managers with a 25% contingency fator