A roundup of some of the North American equities that made moves in both directions
On the rise
Toronto-Dominion Bank (TD-T) gained 1.4 per cent on Friday after revealing it will set aside $1.1-billion to cover loans that could go sour in its U.S. retail banking division in the second fiscal quarter – a 345-per-cent increase from the previous three months.
The Toronto-based bank pre-announced the provisions for credit losses for its U.S. retail arm for the quarter that ended April 30. TD will report full results for the fiscal second quarter on May 28.
The early announcement provides a narrow glimpse of how large an expected surge could be in Canadian banks’ provisions – the money they must set aside to cover loans that could go bad – because of the damage done by a broad economic shutdown to curb the spread of the novel coronavirus.
In the second quarter a year ago, TD reported $226-million in provisions for credit losses for the U.S. retail division. That figure will increase 487 per cent, year over year. In the first fiscal quarter of 2020, U.S. retail provisions were $319-million.
- James Bradshaw
Canadian miner TMAC Resources Inc. (TMR-T) sat 0.6 per cent higher after Shandong Gold Mining , one of China’s biggest gold producers, said on Friday it had entered into an agreement to acquire the Toronto-based company for around $230-million.
TMAC operates the Hope Bay gold project in Canada’s far-north territory of Nunavut, which started commercial production in 2017 and had proven and probable mineral reserves totalling around 3.54 million ounces of gold at the end of 2019, according to the company’s website.
Shandong Gold will pay roughly US$149-million in cash to acquire all of TMAC’s shares at a price of $1.75 per share, TMAC said in a separate statement, and will also purchase another 12 million shares at the same price in a private placement for around $15-million.
Hydro One Ltd. (H-T) was higher by 0.5 per cent after it reported a first-quarter profit of $225 million, up from a profit of $171-million a year ago.
The power utility says the profit amounted to 38 cents per diluted share for the quarter ended March 31 compared with a profit of 29 cents per diluted share a year ago.
Revenue totalled $1.85 billion, up from nearly $1.76 billion in the same quarter last year.
On an adjusted basis, Hydro One says it earned 38 cents per diluted share for the quarter compared with an adjusted profit of 52 cents per diluted share in the first quarter of 2019.
The company says the drop in adjusted earnings per share was driven by a retroactive 2018 rate increase recorded in 2019 following an Ontario Energy Board decision.
Hydro One says to help customers affected by COVID-19 it has created a pandemic relief fund, extended its winter relief program, suspended late fees for all customers, and returned approximately $5 million in security deposits to eligible business customers.
The Denver-based exploration and production (E&P) company reported earnings per share of US$2.06, falling 10 per cent below the consensus expectation on the Street.
Canaccord Genuity analyst Dennis Fong said: "Ovintiv reported Q1/20 results which were in line with our expectations but below consensus on cash flow. Variances to our estimates stem primarily from lower than expected realized pricing partially offset by lower than expected G&A and transportation costs. The company has shut-in 65 MBoe/d (54-per-cent liquids) of net production spread across its plays for May, and we believe this could increase going into June/July depending on oil price and crude inventory levels.
“Looking forward, Ovintiv expects it could exit this year with 200 MBbl/d of crude oil and condensate production on spending of $1.8 to $1.9 billion which is below consensus expectations on similar spending levels. Notwithstanding the strong 2020 hedge book which supports corporate cash flows this year, we continue to view this as an execution story with respect to the capital efficiencies, corporate decline rate, cost controls and leverage. We estimate the company has built up 80 to 100 DUCs currently and would look to complete these in a recovering price environment but is focused on operational flexibility given the price volatility.”
Tesla Inc. (TSLA-Q) was up 5 per cent on news it is aiming to restart production in its U.S. car plant in Fremont, California on Friday afternoon, according to an email sent by Chief Executive Officer Elon Musk to staff.
The move comes a day after California Governor allowed manufacturers in the state to reopen operations closed due to coronavirus-led lockdowns, even though Alameda, the county where Tesla’s Fremont factory is located, is scheduled to remain shut until the end of May.
Manufacturing operations in the county, including Tesla’s only U.S. vehicle factory, are not allowed to operate regularly, according to the county order.
Mr. Musk has been criticizing the lockdown and stay-at-home orders calling them a “serious risk” to U.S. business, even tagging them “unconstitutional” and saying they would not hold up before the U.S. Supreme Court if challenged.
Starting Friday, limited operation will resume at the Fremont factory with 30 per cent of normal headcount per shift, according to an internal company mail seen by Reuters.
U.S. automaker Ford Motor Co. (F-N) rose 6.7 per cent after it said late Thursday it is planning to restart production and operations in North America in a phased manner, starting May 18.
Ford said from that date it will also start bringing back some employees whose work cannot be done remotely such as vehicle testing and design. This includes about 12,000 workers in North America, the company said.
Uber Technologies Inc. (UBER-N) jumped 5.8 per cent in the wake of Chief Executive Dara Khosrowshahi saying its ride service bookings slowly recovered in recent weeks as the company expects a coronavirus-related slowdown will delay the goal of becoming profitable by a matter of quarters, not years.
He spoke after Uber reported it had seen encouraging signs in markets hit by the pandemic and posted a 14-per-cent rise in revenue for the first quarter, supported by a jump in food-delivery orders at its Uber Eats business.
Mr. Khosrowshahi said stringent cost cutting, to the tune of more than US$1-billion in 2020, would ensure the company stayed on track. Uber on Wednesday said it would lay off 3,700 full-time employees, or roughly 17 per cent of its head count.
Uber recorded US$3.54-billion in total revenue for the first three months of the year, roughly in line with analyst estimates, but still posted a US$2.9-billion loss in the period. That included a US$2.1-billion pretax writedown of the value of some of Uber’s minority investments.
The Calgary-based company reported EBITDA of $830-million for the first quarter, exceeding the consensus on the Street of $820-million.
Industrial Alliance Securities analyst Elias Foscolos said: “The Company reiterated that it expects 2020 EBITDA of $3.4-billion ± $150-million but believes that it is trending towards the lower end of guidance. There was no change announced to its 2020 capital program or any update on the reactivation of deferred projects which were announced in the Company’s March 18 press release. PPL has identified a further $100-million of operation and administrative cost savings. We have a neutral outlook on yesterday’s financial results.”
Shares of China’s Kingsoft Cloud Holdings Ltd . (KC-Q) jumped over 17 per cent on debut, indicating strong investor interest at a time when capital markets globally have been whipsawed by an economic crisis brought on by the COVID-19 pandemic.
Beijing-based Kingsoft opened at US$20.37 per share and rose to as much as US$22.02 in early trade.
Kingsoft is the first Chinese company to list in the United States since the coronavirus pandemic outbreak sent markets tumbling.
Earlier, the company raised US$510-million after pricing its IPO at $17 per share in the middle of its marketed range, valuing it at roughly US$3.7-billion.
On the decline
The Ottawa-based e-commerce company plans to sells 1.85 million shares at US$700 with the proceeds set to strengthen its balance sheet and fund growth strategies.
Algonquin Power and Utilities Corp. (AQN-T) was down 0.6 per cent after announcing after the bell on Thursday a 10-per-cent increase to its annual dividend of 5.64 US cents to 62.04 US cents, paid quarterly at a rate of 15.51 US cents per common shares.
The announcement was made alongside the release of its quarterly results.
Industrial Alliance Securites Naji Baydoun said: “AQN’s Q1/20 results were below expectations, primarily due to unfavourable weather. Despite a more conservative guidance for both capital expenditures and EPS in 2020, AQN announced a 10-per-cent dividend increase, consistent with the Company’s 10 per cent per year dividend growth target through 2021. Notwithstanding the weaker Q1/20 results, in our view, AQN remains the most well-balanced growth and income investment option in the utility sector, with potential upside from (1) its organic growth pipeline, and (2) accretive M&A.”
The country’s largest movie theatre chain outlined plans to utilize temporary blanket relief provided by the Canadian Securities Administrators that gives the company an extension of up to 45 days for its filings.
Cineplex says it now plans to report its quarterly results for the period the ended March 31 by no later than June 29, which is a day before its $2.8-billion acquisition by U.K.-based Cineworld PLC expires.
The purchase of Cineplex is still subject to various conditions, including Investment Canada Act approval before the deadline.
Cineplex, like nearly all movie exhibitors, has faced a virtual shutdown since mid-March.
The company says it expects the COVID-19 pandemic will have a materially negative impact on its business for “at least” the first half of 2020. But the company noted that uncertainty around the extent of the viral spread, duration of severity and government restrictions make it impossible to quantify the financial hit.
With files from staff and wires