WEQ Holdings Inc T.WEQ

Ccord ups target

[Tobuyornot]

WesternOne Inc. (WEQ : TSX : C$8.18) - Buy - Target:C$9.00 Growth, yield and now visibility; reiterating BUY rating; raising target price to C$9.00 (from C$8.00) Investment recommendation We reiterate our BUY rating on WesternOne (WEQ) shares and increase our target price to C$9.00 from C$8.00 as we become incrementally more positive on WEQ's growth prospects and margin recovery at Britco. Recent (and ongoing) equipment fleet additions into the robust Western Canadian non-res. construction market are paying off handsomely with WIS delivering 48% organic growth in Q1/14. Meanwhile, Britco is well positioned in Western Canada's workforce accommodation market with significant potential awards on tap in 2015 and margins on the upswing. Add a 7% dividend yield and a strong balance sheet and we see an attractive growth and yield story. Investment highlights Britco -- We have identified four multi-billion projects set for possible award in 2015 that provide excellent revenue visibility. Assuming Britco wins its share, divisional revenue and margin could increase in 2015. Meanwhile, management appears to have Australia on track to break even by Q4/14. All in, we see 27% EBITDA growth in 2015. WIS -- Management seemingly can't deploy equipment into the market quickly enough. We are impressed with the 30% return on capital and strong organic growth. EBITDA should grow double-digits through 2015. Valuation Given what we feel is excellent revenue visibility and improved execution, we are increasing our target multiple to the group average. Specifically, our target price is based on 8x 2015E EBITDA (up from 7x). WEQ trades at 7x 2015E vs. the group at 7x.