Power Corporation of Canada T.POW

Alternate Symbol(s): PWCDF | T.POW.PR.A | PWCCF | T.POW.PR.B | T.POW.PR.C | T.POW.PR.D | T.POW.PR.E | T.POW.PR.G

Financial Services Insurance - Diversified

Power Corporation of Canada is a Canada-based international management and holding company. The Company is focused on providing financial services in North America, Europe, and Asia. Its core holdings include insurance, retirement, wealth management and investment businesses, including a portfolio of alternative asset investment platforms. It operates through three segments: Lifeco, IGM Financial and GBL. Lifeco is a financial service holding company with interests in life insurance, health insurance, retirement and investment management services, asset management and reinsurance businesses primarily in Canada, the United States and Europe. IGM Financial is a wealth and asset management company supporting financial advisors and the clients they serve in Canada, and institutional investors through North America, Europe, and Asia. GBL is a Belgian holding company, which is focused on long-term value creation with a diversified quality portfolio of listed and private investments.

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Power Corporation of Canada

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Post by lb1temporaryon May 17, 2021 7:32am

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Post# 33212662

TD: Value Creation Momentum Intact

Impact: POSITIVE

We are hosting Power Corp management on May 25, at 11:30 a.m. ET for a virtual panel focused on PowerCos broad asset management/wealth management assets across Great-West, IGM, and PowerCo. If interested, please register here.

We have updated our estimates to reflect the Q1/21 earnings beat and modest changes elsewhere. Our $42.00 target price and BUY rating are unchanged. Q1/21 conference call takeaways:

PowCos's NAV/share continues to expand. As of May 14, 2021, it is $51.22/ share, up 11% vs. $45.94 as of Q1/21, and up 24% vs. $41.27/share as of Q4/20. This reflects growth in the value of PowerCo's public assets, and value-creating transactions for Lion Electric (merged with Northern Genesis SPAC on May 6, 2021; increased NAV by $0.52/share), and Wealthsimple (third-party financing round in May 2021; increased NAV by $0.94/share).

Management's vision for value creation at PowerCo has four legs. Support higher EPS growth (within operating cos and at the PowerCo level); operating co multiple expansion; drive higher NAV/share; and a tighter discount to NAV for PowerCo. We continue to see the discount as too wide, given the positive steps management has taken around simplification, transparency, lower expenses, and surfacing value (currently 26.7% vs. a L5Y/L10Y average of 22.2%/21.3%).

We see further value-creation potential. Earnings growth at operating cos; accretive M&A; and continuing to move capital away from standalone investments towards supporting the alternative investment platform.

The alternative investment platform continues to show progress. AUM of $11.3bln (funded and unfunded) is up 102% y/y (33% q/q). Third-party capital now represents 63% of total AUM, up from 58% q/q and 56% y/y.

TD Investment Conclusion

Efforts to simplify the organization and increase disclosure are well-received and the share price and valuation have responded positively. We view management's execution on value-surfacing transactions such as Lion Electric and Wealthsimple positively. Current valuation remains attractive, in our view.