CIBC comments on JEafter the latest earning report:
Just Energy Group Inc.
A Defensive Play In An Uncertain Economic Environment
? Given the uncertainty facing the economy, JE offers investors a more
defensive play. Even in the face of a challenging gas price environment, JE
has proven to be adaptable, diversifying its product offering to increase
renewal rates, reduce attrition rates and grow its customer base.
? We also view JE's annual dividend of $1.24 as safe and represents a ~10%
yield. We are forecasting a payout ratio of 86% and 80% for F2012 and
F2013 respectively. JE remains committed to its payout.
? During the last recession, the decline in the US housing market resulted in
an uptick in attrition rates. While the US housing market remains
challenged, it appears to have found a bottom and we do not expect a
significant deterioration in US attrition rates from current levels.
? We have tweaked our 2011 estimate as we lower our gas/electricity margin
assumption, partially offset by increased earnings contributions from NHS.
Our EBITDA estimate declines to $243 million. Our F2013 EBITDA estimate
is essentially unchanged at $277 million. We maintain SP rating and $15 PT.
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Regards,
Nawar