Scotia raising target to $18Event
■ Element Financial (EFN) reported Q3/14 after tax Op. EPS of $0.16,
above consensus of $0.15 and our estimate of $0.14.
Implications
■ Overall, a solid quarter with better than expected profitability and
strong originations coming in line with expectations. Q3/14 is the first
full quarter's contribution from the recently acquired PHH Arval, and
we believe investors will like what they see.
■ The significance of the quarter is that it provided investors with a clear
demonstration of the earnings power gained through the PHH
acquisition while also providing further evidence of continued strong
organic growth trends. Q3/14 Operating ROE was just under 10%.
■ Element reported record originations of $1.2B, an increase of 186%
YOY and 48% QOQ, in line with our expectations. Element saw its
originations increase YOY across all its business units.
■ Management noted that it had secured more than half its initial targeted
synergies and have identified further annualized savings of $5M (est.
$0.01/sh).
Recommendation
■ Maintain SO rating and raising target to $18.00 (was $17.00). We
continue to believe Element is a unique investment prospect and one of
few true growth stories left in the Canadian financials space