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A look at North American equities that moved in both directions

On the rise

Enbridge Inc. (ENB-T) was up on Friday after it sanctioned an expansion of the southern segment of its British Columbia pipeline system, a project that would cost up to $3.6-billion, after strong demand from crude oil producers.

The company, which posted higher third-quarter earnings on Friday, separately launched an ‘open season’ for capacity on the northern segment of the B.C. line. Interest in the open season would determine if Enbridge launches a potential $1.9-billion expansion of that line.

Open season gives oil and gas producers the chance to bid for long-term contracts giving them priority access on a pipeline.

Enbridge said the T-South expansion of its B.C. pipeline system, which runs from near Chetwynd and extends south to the Canada-U.S. border at Huntingdon-Sumas, will add 300 million cubic feet per day (cfpd) of capacity.

If sanctioned, the expansion of T-North segment would add about 500 million cfpd of capacity. T-North connects the Fort Nelson area to the T-South segment and to interconnecting pipelines at the B.C.-Alberta border on the east.

Enbridge said it earned $1.28-billion in its latest quarter, up from $682-million in the same quarter last year.

The pipeline operator says the profit amounted to 63 cents per share for the quarter ended Sept. 30, up from 34 cents per share a year ago.

On an adjusted basis, Enbridge says it earned 67 cents per share in its latest quarter, up from an adjusted profit of 59 cents per share in the same quarter last year.

Analysts on average had expected an adjusted profit of 64 cents per share, according to financial markets data firm Refinitiv.

Yamana Gold Inc. (YRI-T) soared after it said on Friday it has received a takeover offer that would see Agnico Eagle Mines Ltd (AEM-T) acquire its biggest gold mine, and Pan American Silver Corp. (PAAS-T) buy the rest of the company.

Yamana says the offer is superior to the US$6.7-billion offer that is already on the table from South African gold miner Gold Fields Ltd.

The Gold Fields offer for Yamana, which was tabled in May, was poorly received in the market, with Gold Fields shares down almost 40 per cent, and Yamana’s shares trading at a roughly 7-per-cent discount to the offer. Two of Gold Field’s biggest shareholders denounced its 42-per-cent premium offer for Yamana as a mistake.

Under the new proposal, Yamana shareholders would receive $1.0406 a share in cash, 0.0376 of an Agnico shares and 0.1598 of a Pan American Share for each Yamana share.

- Niall McGee

See also: Gold Fields dissident shareholder calls on miner to walk away from Yamana deal, buy back shares instead

Telus Corp. (T-T) increased after it raised its dividend as it reported a profit of $551-million in its latest quarter, up from $358-million in the same quarter last year.

The telecommunications company says it will now pay a quarterly dividend of 35.11 cents per share, up from 32.74 cents per share.

Telus says its profit amounted to 37 cents per share for the quarter ended Sept. 30, up from 25 cents per share a year ago.

Operating revenue and other income rose to $4.67-billion compared with $4.25-billion in the same quarter last year.

On an adjusted basis, Telus says it earned 34 cents per share in its latest quarter, up from 29 cents per share last year.

Analysts on average had expected an adjusted profit of 32 cents per share, according to estimates compiled by financial markets data firm Refinitiv.

“Our robust performance reflects the chemistry of our globally leading broadband networks and customer-centric culture, which enabled our strongest quarter on record, with total customer net additions of 347,000, up more than 8 per cent, year-over-year,” Darren Entwistle, Telus president and CEO, said in a statement.

RioCan Real Estate Investment Trust (REI.UN-T) was higher in the wake of reporting net income in the third quarter of $3.2-million, down from $137.6-million the year before, attributing the drop to a net fair value loss on investment properties.

The Toronto-based company says same property net operating income grew by 5.1 per cent, driven by increases in occupancy, rent growth and increases, and a lower pandemic-related provision.

Revenue totalled $305.3-million for the quarter ended Sept. 30, up from $264.1-million a year earlier.

Fair value loss on investment properties was $118.8-million, down from a gain of $20-million a year earlier.

Funds from operations totalled $134.8-million, or 44 cents per diluted unit, up from $126.9-million or 40 cents per unit the year before.

RioCan says its committed occupancy rate for the quarter was 97.3 per cent, up from 96.4 per cent last year.

Fairfax Financial Holdings Ltd. (FFH-T) gained after reporting better-than-anticipated quarterly results after the bell on Thursday

The Toronto-based holding company announced an earnings per share loss of US$3.65 per diluted share, beating the Street’s expectation of a US$13.94 loss.

Fairfax says it saw net losses on investments total $519.1-million on bonds as interest rates rose, as well as stocks and currency exchange.

Gross premiums written were up 16.3 per cent to $6.92 billion, while net premiums written rose by 18.6 per cent to $5.61 billion, both of which the company attributed primarily to new business and continued incremental rate increases.

Revenues for the three months ended Sept. 30 were $6.84-billion, up from $6.71-billion last year.

Calling it a “nice EPS beat,” BMO analyst Tom MacKinnon said: “Reported EPS loss of US$3.65, versus our US$12.53 loss, helped by better earnings from associates/non-insurance operations, partially offset by weaker underwriting results. Despite better EPS, all-important BVPS was 1% lower than expected, at US$570, largely due to larger AOCI hit than expected. We’re increasing [our] 2023 EPS estimate by 6 per cent, reflecting increased interest income, improving earnings visibility in non-insurance segment, partially offset by increased CAT load. ... Good quarter but still a ‘show me’ story. A more consistent track record is needed before becoming more constructive.”

Auto parts maker Magna International Inc. (MG-T) closed higher after cutting its annual sales forecast on Friday, as supply chain snags and higher utility costs keep vehicle production under pressure.

Europe’s energy crisis has exacerbated power and logistics costs for auto firms, while coronavirus-related restrictions in China have disrupted production.

Automakers have flagged that inflation is beginning to take a toll on their balance sheets as they struggle with parts shortage, escalating raw material and energy costs, and soaring inflation.

Magna now sees its annual sales in the range of $37.4-billion and $38.4-billion, compared with its prior forecast of $37.6-billion and $39.2-billion.

The Aurora, Ont.,-based manufacturer posted a net income of $289-million, or $1 per share, in the third quarter ended Sept. 30, compared with $11 million, or 4 cents per share, a year earlier.

On the decline

OpenText Corp. (OTEX-T) dropped after it reported a net loss of US$116.9-million in its latest financial quarter, compared with net income of US$131.9-million in the same quarter last year.

The Waterloo, Ont.-based tech company says its earnings for the period ended Sept. 30 amount to negative 43 US cents per diluted share due to a one-time US$181-million loss related to the planned acquisition of British software and technology company Micro Focus.

Revenue for the quarter was US$852-million, up 2.4 per cent year over year, while cloud revenues were up 13.5 per cent and amounted to almost half of total revenues.

OpenText chief executive Mark J. Barrenechea says the company delivered record revenue for the quarter, which is the first of its fiscal 2023, as well as enterprise cloud bookings, which were up 37 per cent.

Mr. Barrenechea says Micro Focus shareholders approved the acquisition on Oct. 18.

He says OpenText is on track to close the deal in the first calendar quarter of 2023.

In a research note, RBC’s Paul Treiber said: “Q1 revenue exceeded RBC/consensus on better than expected organic growth (1.5 per cent vs. RBC at 0.3 per cent). Cloud upside (37-per-cent year-over-year bookings, 4-per-cent organic) reflects the fruits of OpenText’s multiyear product and organizational investments. Q1 continues OpenText’s recent trend of incrementally better organic growth and validates OpenText’s ability to fundamentally improve acquired businesses – crucial in light of the pending Micro Focus acquisition.”

Shares of SNC-Lavalin Group Inc. (SNC-T) declined after the premarket release of third-quarter results that disappointed the Street.

Desjardins Securities’ Benoit Poirier called them “weaker-than-expected,” pointing to adjusted Professional Services & Project Management (PS&PM) core EBITDA of $127-million which fell short of both his $158-million estimate and the consensus forecast of $136-million. PS&PM core adjusted earnings per share of 30 cents was 5 cents below the analyst’s prediction and 2 cents below the Street’s projection.

Elsewhere, National Bank’s Maxim Sytchev called the release a “negative,” pointing to losses in its lump sum turnkey (LSTK) projects.

“Consolidated EBITDA sat at $145-million, lower than Street at $151-million and our estimate at $157-million due to more pronounced (than expected) losses in the LSTK vertical,” he said. Consolidated adjusted EPS came in $0.38 vs. Street at $0.33 (we were at $0.34); there is so much noise here though that we prefer to look at EBITDA. Net Cash from operations in the quarter amounted to a loss of $159-million vs. a loss of $65-million in Q3/21 (we were modeling a loss of $96-million), the outflow was mainly due to LSTK project completions and working capital. Management previously suggested that OCF generation was timing-related.”

With files from staff and wires

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