Post by
lb1temporary on Aug 09, 2021 7:43am
TD: Target at 46$ VS 43$
Solid beat and NAV groth.
Event
Q2/21 Results
Impact: POSITIVE
Q2/21 results were comfortably head of our estimates and consensus, driven by solid contributions across the board (notably from GBL and the investment platforms). Valuation remains attractive, in our view, on both a discount to NAV and P/E basis. We have raised our target price to $46.00 (from $43.00) on the back of a higher projected NAV (recent GWO and IGM target price increases) and estimates. We reiterate our BUY rating.
Adjusted EPS of $1.51 was comfortably ahead of our $0.98 estimate (consensus was $0.94). Contributions from Great-West and IGM exceeded expectations. GBL and the investment platforms were materially ahead of our forecasts (gains on disposal of various investments and a gain on the de-SPAC of Lion Electric). Expenses were also lower due to an income tax recovery. The company noted that it has achieved 89% of its targeted $50mm in annualized expense savings (excluding taxes and financing charges).
Power Corp's NAV/share continues to expand. As of August 6, 2021, it is $52.95/share, up 3% vs. $51.60 as of Q2/21 and up a solid 15% vs. $45.94 as of Q1/21. This reflects growth in the value of Power Corp's public assets, and valuecreating transactions for Lion Electric and Wealthsimple. We are encouraged with the divestment of GP Strategies (within standalone businesses) after Q2/21.
We have increased our 2021/2022 estimates by 2%/8%, excluding the Q2/21 beat. This reflects higher estimates for Great-West, IGM, and the investment platforms.
Conference call at 8.30 a.m. today. 1-833-979-2697 (passcode: 9199980#) or here. TD
Investment Conclusion
Management's efforts over the last 12-18 months 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.