Kew Media Group Inc (Variable Voting) T.KEW.UN

TD Securities Reported on November 18th that this scenerio

[mulliganforlife]

TD Investment Conclusion Perhaps more important in this report is a review of both the balance-sheet risk and the upside/downside scenarios for the stock based on various strategic scenarios. As a going concern with an uncertain organic growth outlook, we see a fully-loaded debt scenario that could consume 100% of the enterprise value (in other words, an EV/EBITDA multiple low-enough to leave almost no equity value). However, if management can both pay down debt and restore organic EBITDA growth (getting up to $35 million pre-IFRS 16 by 2021), then a higher EV/EBITDA multiple and a $9.50 target value is possible, in our view. The third scenario, which we believe shareholders will view as the most prudent approach at this point, is a sale of the whole company in the near term. The M&A market in this space has been vibrant in recent months (Entertainment One and Endemol Shine takeovers, most notably), and we believe that KEW could fetch 10x EBITDA from the right strategic buyer, or about $7.00 per share within 3-6 months. The blend of these three scenarios gives us an official target price of $5.50, and we see an attractive risk/reward scenario with the stock below $4.00. However, the risks are elevated and uncertainty is well above average; therefore, we are changing our rating to SPECULATIVE BUY (risk rating: SPECULATIVE) from Action List Buy (risk rating: High).