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Home Capital Group Inc HMCBF


Primary Symbol: T.HCG

Home Capital Group Inc. is a Canada-based holding company that operates through its principal subsidiary, Home Trust Company (Home Trust). Home Trust is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of residential mortgage products, consumer lending and credit card services. In addition, Home Trust and its wholly owned subsidiary, Home Bank offer deposits through brokers and financial planners, and through a direct-to-consumer brand, Oaken Financial. Its mortgage lending includes classic single-family residential lending, insured residential lending, residential commercial lending, and non-residential commercial lending. Its consumer lending loan portfolio comprises credit cards, lines of credit and other consumer retail loans. In addition, the Company manages a treasury portfolio to support liquidity requirements and invest excess capital.


TSX:HCG - Post by User

Post by retiredcfon Jul 23, 2021 9:09am
152 Views
Post# 33595300

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Ahead of second-quarter earnings season for Canadian diversified financial firms, RBC Dominion Securities analyst Geoffrey Kwan named Element Fleet Management Corp. as his top investment idea, believing it “should be a core holding in any portfolio.”

“EFN remains our most topical stock with investors, with investor focus on the origination outlook and new customer win progress,” he said.

In a research report released Friday, he touted the Toronto-based company’s “attractive blend of: (1) growth; (2) defensive attributes; (3) high FCF funding growth and significant returns of capital; and (4) attractive valuation (13.5 times P/E, 9.5-per-cent FCF yield on 2022). We think EFN is a rare mid- to large-cap growth story within Canadian Financials (we forecast a more than 15-per-cent EPS CAGR through 2025) that remains attractively valued.”

He maintained an “outperform” rating and $19 target for Element Fleet shares. The average is currently $16.93.

Mr. Kwan did raise his target price for his No. 2 idea Onex Corp. (ONEX-T, “outperform”) to $118 from $112, topping the average of $103.52.

“We think the shares are mispriced at a 12-per-cent discount to NAV (we think it should trade at or a slight premium to NAV), yet is delivering historical high Hard NAV growth and we think monetizations are likely in the near-term and should surface value,” he said.

He named Brookfield Business Partners LP (BBU-NBBU.UN-T, “outperform” rating and a US$61 target, rising from US$60) and Home Capital Group Inc.  “outperform” and a target of $47, up from $45) his third best ideas.

“BBU trades at an 11-per-cent discount to NAV despite having positive fundamentals and we think monetizations are likely in the near-term and should surface value,” said Mr. Kwan. “HCG could return a substantial amount of excess capital (approximately $10 per share) when OSFI lifts its ban on share buybacks/dividend increases for banks/insurers. Furthermore, fundamentals are positive, yet HCG trades at 1.1 times P/BV despite a 13-per-cent ROE, which capital optimization could increase by 400-500 basis points.”

 
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