VIEWPOINT Weekly Update of Our Equity Ratings

November 23, 2015

VIEWPOINT Weekly update of our Equity Ratings

OCTOBER 26 TO NOVEMBER 20, 2015

DOWNGRADES ATCO LTD. (ACO.X) - SELL IAMGOLD CORP. (IAG) - SELL

UPGRADES TRANSCANADA CORP. (TRP) - BUY

COVERAGE DROPPED EXCHANGE INCOME CORP. (EIF)

SUMMARY PAGES 3-10 V-LIST 11

WATCHLIST 12

RATING PAGES 13-98

Viewpoint November 23, 2015

C OMPANY R ATING P AGES Click on company name below for a link to the rating page Shading indicates an updated rating page Agnico-Eagle Mines Ltd. 13 Crescent Point Energy Corp. 43 Newmont Mining Corp. 72 Aimia Inc. 14 CT Real Estate Investment Trust 44 Northland Power Inc. 73 ARC Resources Ltd. 15 DirectCash Payments Inc. 45 Open Text Corp. 74 ATCO Ltd. 16 Dollarama Inc. 46 Pengrowth Energy Corp. 75 AutoCanada Inc. 17 Eldorado Gold Corp. 47 Penn West Petroleum Ltd. 76 Avigilon Corp. 18 Emera Inc. 48 Peyto Exploration & Development Corp. 77 Bank of Montreal 19 Empire Company Ltd. 49 PrairieSky Royalty Ltd. 78 Bank of Nova Scotia 20 Enbridge Inc. 50 Progressive Waste Solutions Ltd. 79 Barrick Gold Corp. 21 Encana Corp. 51 Quebecor Inc. 80 Baytex Energy Corp. 22 Enerplus Corp. 52 Republic Services Inc. 81 BCE Inc. 23 Fortis Inc. 53 Rogers Communications Inc. 82 BlackBerry Ltd. 24 George Weston Ltd. 54 Royal Bank of Canada 83 Bombardier Inc. 25 Goldcorp Inc. 55 Silver Wheaton Corp. 84 Bonavista Energy Corp. 26 Hudson’s Bay Company 56 Shaw Communications Inc. 85 Brookfield Renewable Energy Partners, LP27 Husky Energy Inc. 57 Sun Life Financial Inc. 86 CAE Inc. 28 Hydro One, Ltd. Suncor Energy Inc. 87 Callidus Capital Corp. 29 IAMGOLD Corp. 58 Telus Corp. 88 Cameco Corp. 30 IMAX Corp. 59 The Jean Coutu Group Inc. 89 Canadian Imperial Bank of Commerce 31 Imperial Oil Ltd. 60 Toronto Dominion Bank 90 Canadian Natural Resources Ltd. 32 Kinross Gold Corp. 61 TransAlta Corp. 91 Canadian Oil Sands Ltd. 33 Linamar Corp. 62 TransAlta Renewables Inc. 92 Canadian Tire Corp. 34 Loblaw Companies Ltd. 63 TransCanada Corp. 93 Canadian Utilities Ltd. 35 MacDonald Dettwiler & Associates Ltd. 64 Valeant Pharmaceuticals Intl. Inc. 94 Canadian Western Bank 36 Magna International Inc. 65 Vermilion Energy Inc. 95 Capital Power Corp. 37 Manitoba Telecom Services 66 Waste Connections Inc. 96 Capstone Infrastructure Corp. 38 Manulife Financial Corp. 67 Waste Management Inc. 97 Cenovus Energy Inc. 39 Maple Leaf Foods Inc. 68 Yamana Gold Inc. 98 CGI Group Inc. 40 Martinrea International Inc. 69 Choice Properties REIT 41 Metro Inc. 70 Cogeco Cable Inc. 42 National Bank of Canada 71

Viewpoint November 23, 2015

R ECENT P UBLICATIONS RATING COMPANY TICKER RATING DATE CHANGE ACCOUNTING ALERTS PUBLISHED CGI Group Inc. GIB.a- - - Nov.12.2015 Genworth MI Canada Inc. MIC - - Nov.3.2015 Valeant Pharmaceuticals International Inc. VRX Sell - Oct.27.2015 Valeant Pharmaceuticals International Inc. VRX Sell - Oct.30.2015 FLASHES PUBLISHED Barrick Gold Corp. & Kinross Gold Corp. - Even Trades ABX/KGC Buy/Sell - Nov.12.2015 CNQ and PSK Flash: Pooling Better Than Selling at the Bottom Nov.12.2015 Suncor Energy Inc. - Capex Guidance Pushing Uphill The Great Canadian Housing Conference - Lessons Learned About Canadian Housing Nov.16.2015 REPORTS PUBLISHED Canadian Housing Market Update - Condo Prices Divorced from Economic Reality Nov.9.2015 Oil & Gas Sector Update - - - Nov.12.2015 ARC Resources Ltd. ARX Buy - Baytex Energy Corp. BTE Sell - Bonavista Energy Corp. BNP Buy - Crescent Point Energy Corp. CPG Buy - Enerplus Corp. ERF Buy - Pengrowth Energy Corp. PGF Sell - Penn West Petroleum Ltd. PWT Sell - PrairieSKy Royalty Ltd. PSK Sell - Vermilion Energy Inc. VET Buy - Toronto Dominion Bank TD Buy - Nov.4.2015 RATING RATING COMPANY TICKER RATING DATE COMPANY TICKER RATING DATE CHANGE CHANGE NEED-TO-KNOWS PUBLISHED Aimia Inc. AIM Sell - Nov.16.2015 Husky Energy Inc. HSE Sell - Nov.5.2015 Agnico-Eagle Mines Ltd. AEM Sell - Oct.30.2015 Hydro One Ltd. H Buy - Nov.13.2015 ATCO Ltd. ACO.x Sell Downgrade Oct.26.2015 IAMGOLD Corp. IAG Sell Downgrade Nov.5.2015 AutoCanada Inc. ACQ Sell - Nov.9.2015 IMAX Corp. IMAX Sell - Oct.30.2015 Barrick Gold Corp. ABX Buy - Oct.30.2015 Kinross Gold Corp. KGC Sell - Nov.12.2015 BCE Inc. BCE Sell - Nov.6.2015 Linamar Corp, LNR Buy - Nov.5.2015 Bombardier Inc. BBD.b Sell - Oct.30.2015 Loblaw Companies Ltd. L Buy - Nov.19.2015 Brookfield Renewables BEP Sell - Nov.5.2015 Magna International Inc. MGA Buy - Nov.6.2015 CAE Inc. CAE Sell - Nov.12.2015 Manitoba Telecom Services MBT Sell - Nov.5.2015 Cameco Corp. CCO - - Nov.5.2015 Manulife Financial Corp. MFC Buy - Nov.13.2015 Canadian Natural Resource CNQ Sell - Nov.6.2015 Maple Leaf Foods Inc. MFI Buy - Nov.2.2015 Canadian Oil Sands Ltd. COS Sell - Nov.3.2015 Martinrea International Inc. MRE - - Nov.10.2015 Canadian Tire Corp. CTC.a Buy - Nov.13.2015 Metro Inc. MRU Buy - Nov.19.2015 Canadian Utilities Ltd. CU Buy - Oct.26.2015 Newmont Mining Corp. NEM Sell - Nov.9.2015 Capital Power Corp. CPX Buy - Oct.27.2015 Pengrowth Energy Corp. PGF Sell - Nov.5.2015 Cenovus Energy Inc. CVE Sell - Nov.3.2015 Peyto Exploration PEY Sell - Nov.18.2015 Choice Properties REIT CHP.un Buy - Nov.12.2015 Progressive Waste Solutions BIN Buy - Nov.2.2015 Cogeco Cable Inc. CCA Buy - Oct.30.2015 Quebecor Inc. QBR.b Buy - Nov.9.2015 CT REIT CRT.un Buy - Nov.11.2015 Silver Wheaton Corp. SLW - - Nov.5.2015 DirectCash Payments Inc. DCI Sell - Nov.16.2015 Suncor Energy Inc. SU Sell - Nov.3.2015 Eldorado Gold Corp. EGO Buy - Nov.2.2015 Sun Life Financial Inc. SLF Sell - Nov.5.2015 Emera Inc. EMA Sell - Nov.18.2015 Telus Corp. T Buy - Nov.6.2015 Encana Corp. ECA Sell - Nov.13.2015 TransAlta Corp. TA Sell - Nov.3.2015 Coverage Exchange Income Corp. EIF Nov.13.2015 TransCanada Corp. TRP Buy Upgrade Nov.9.2015 Dropped Fortis Inc. FTS Buy - Nov.11.2015 Yamana Gold Corp. AUY Sell - Nov.3.2015 Goldcorp Inc. GG Sell - Nov.2.2015

Telecommunications & Technology

Desmond Lau [email protected]

Recommen- Most Recent Closing Price Quality Balance Business Corporate Name Ticker Analyst Ranking Intrinsic Value Accounting Cash Flow Total dation Date Ratings Review (Nov 20/15) Rating Sheet Operations Governance

Cogeco Cable Inc. CCA Lau Buy 7/11/2014 10/30/2015 66.63 72.00 Better 4.0 4.0 3.0 3.0 3.0 17.0

Quebecor Inc. QBR.b Lau Buy 5/9/2014 11/9/2015 33.02 40.00 Better 3.0 4.0 2.5 4.0 3.0 16.5

Rogers Communications Inc. RCI.b Lau Buy 1/13/2015 10/23/2015 52.49 53.00 Better 4.0 3.0 4.0 3.0 4.0 18.0

Telus Corp. T Lau Buy 2/13/2015 11/6/2015 41.77 45.00 Better 4.0 4.0 4.0 3.0 4.0 19.0

BCE Inc. BCE Lau Sell 10/6/2015 11/6/2015 58.52 54.00 Better 3.5 4.0 4.0 3.0 4.0 18.5

BlackBerry Ltd. BBRY Lau Sell 6/24/2015 9/28/2015 USD 7.77 USD 6.00 Neutral 4.0 2.0 3.0 2.0 3.0 14.0

Manitoba Telecom Services MBT Lau Sell 1/23/2015 11/5/2015 28.59 26.00 Better 3.0 3.0 3.0 3.0 3.0 15.0

Shaw Communications Inc. SJR.b Lau Sell 1/13/2015 10/23/2015 27.82 26.00 Better 3.0 3.0 3.0 3.0 3.0 15.0

Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

Viewpoint November 23, 2015

Page 1 Financial Services

Mike Rizvanovic [email protected]

Recommend Most Recent Closing Price Quality Balance Business Corporate Name Ticker Analyst Ranking Intrinsic Value Accounting Cash Flow Total ation Date Ratings Review (Nov 20/15) Rating Sheet Operations Governance

Canadian Imperial Bank of CM Rizvanovic Buy 8/28/2015 8/28/2015 99.99 101.00 Better 3.0 4.5 4.0 3.5 4.0 19.0 Commerce

Manulife Financial Corp. MFC Rizvanovic Buy 8/10/2012 11/13/2015 21.87 24.50 Neutral 3.0 3.0 2.5 3.0 3.0 14.5

Royal Bank of Canada RY Rizvanovic Buy 4/13/2011 8/27/2015 76.07 77.00 Best 3.5 4.0 4.0 4.0 4.5 20.0

Toronto Dominion Bank TD Rizvanovic Buy 4/18/2012 11/4/2015 54.75 55.50 Better 3.5 4.0 3.0 4.0 4.0 18.5

Bank of Montreal BMO Rizvanovic Sell 12/6/2013 9/11/2015 76.78 70.50 Better 2.0 4.0 4.0 3.0 3.5 16.5

Bank of Nova Scotia BNS Rizvanovic Sell 7/30/2015 8/31/2015 60.63 56.00 Better 3.0 4.0 3.0 3.0 4.0 17.0

Canadian Western Bank CWB Rizvanovic Sell 3/7/2013 9/4/2015 25.90 21.00 Better 2.5 4.0 3.0 3.0 4.0 16.5

DirectCash Payments Inc. DCI Dusseldorp Sell 9/18/2013 11/16/2015 12.11 11.00 Risky 2.0 1.5 2.0 1.5 1.0 8.0

National Bank of Canada NA Rizvanovic Sell 4/18/2012 10/2/2015 43.23 43.00 Better 3.0 3.0 4.0 2.5 4.0 16.5

Sun Life Financial Inc. SLF Rizvanovic Sell 2/12/2015 11/5/2015 44.55 41.00 Better 3.0 4.0 3.0 2.5 3.0 15.5

Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

Viewpoint November 23, 2015

Page 2 Consumer Staples & Consumer Discretionary

Kathleend Wong [email protected]

Recommend Most Recent Closing Price Quality Balance Business Corporate Name Ticker Analyst Ranking ation Intrinsic Value Accounting Cash Flow Total Ratings Review (Nov 20/15) Rating Sheet Operations Governance Date

Canadian Tire Corp. CTC.a Wong Buy 9/21/2011 11/13/2015 124.85 156.00 Neutral 3.0 3.0 3.0 3.0 2.0 14.0

Choice Properties REIT CHP.un Wong Buy 8/29/2013 11/12/2015 11.50 12.20 Better 3.0 3.0 3.0 3.0 3.0 15.0

CT Real Estate Investment Trust CRT.un Wong Buy 10/29/2013 11/11/2015 13.00 14.10 Better 3.0 3.0 3.0 4.0 3.0 16.0

Empire Company Ltd. EMP.a Wong Buy 6/20/2013 9/11/2015 26.84 29.00 Neutral 3.0 3.0 2.0 3.0 3.0 14.0

George Weston Ltd. WN Wong Buy 3/8/2011 8/4/2015 108.42 117.00 Better 2.0 3.0 5.0 3.0 3.0 16.0

Loblaw Companies Ltd. L Wong Buy 9/30/2009 11/19/2015 68.45 75.00 Better 4.0 3.0 3.0 3.0 3.0 16.0

Maple Leaf Foods Inc. MFI La Bell Buy 3/18/2005 10/30/2015 20.78 22.70 Better 2.5 3.0 5.0 3.0 3.0 16.5

Metro Inc. MRU Wong Buy 9/30/2009 11/19/2015 38.15 42.00 Better 3.0 4.0 4.0 4.0 4.0 19.0

The Jean Coutu Group Inc. PJC.a Wong Buy 10/14/2008 10/8/2015 20.96 26.00 Better 3.0 3.0 4.0 4.0 2.0 16.0

Aimia AIM Wong Sell 3/1/2013 11/16/2015 8.91 9.50 Neutral 2.0 2.0 3.0 3.0 3.0 13.0

AutoCanada Inc. ACQ Mehrotra Sell 12/16/2014 11/9/2015 28.19 29.00 Risky 3.0 1.0 2.0 2.0 1.0 9.0

Dollarama Inc. DOL Wong Sell 6/13/2013 9/11/2015 90.64 79.00 Better 3.0 4.0 4.0 3.0 3.0 17.0

Hudson's Bay Company HBC Wong Sell 11/26/2012 10/21/2015 20.76 Under Review Neutral 2.0 2.0 2.0 1.0 3.0 10.0

IMAX Corp. IMAX Dusseldorp Sell 1/22/2015 11/2/2015 USD 38.12 USD 20.00 Better 3.0 3.0 5.0 3.0 3.0 17.0

Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

Viewpoint November 23, 2015

Page 3 Industrials

Varun Mehrotra [email protected]

Linimar Corp. LNR Mehrotra Buy 6/23/2015 11/5/2015 72.20 97.00 Better 2.0 4.0 4.0 4.0 2.0 16.0

Magna International Inc. MGA Mehrotra Buy 1/15/2015 11/6/2015 USD 44.94 USD 60.00 Better 2.0 3.0 4.0 3.0 3.0 15.0

Progressive Waste Solutions Ltd. BIN McCoubrey Buy 4/2/2011 11/2/2015 USD 22.82 USD 30.00 Better 3.0 5.0 3.0 4.0 3.0 18.0

Republic Services Inc. RSG McCoubrey Buy 2/11/2015 7/23/2015 USD 44.44 USD 48.25 Better 4.0 3.0 2.0 4.0 3.0 16.0

Waste Management Inc. WM McCoubrey Buy 2/11/2015 7/24/2015 USD 54.12 USD 53.00 Better 3.5 3.0 3.0 3.0 3.0 15.5

Bombardier Inc. BBD.b Mehrotra Sell 2/13/2015 10/30/2015 1.26 1.20 Risky 3.0 0.0 0.0 1.0 1.0 5.0

CAE Inc. CAE Mehrotra Sell 2/9/2015 11/12/2015 15.01 14.00 Neutral 2.0 2.0 3.0 3.0 2.0 12.0

Martinrea International Inc. MRE Mehrotra Sell 10/1/2015 11/10/2015 10.75 9.10 Neutral 2.0 2.0 2.0 2.0 2.0 10.0

Waste Connections Inc. WCN McCoubrey Sell 2/11/2015 7/27/2015 USD 55.22 USD 43.65 Better 5.0 2.0 5.0 2.0 3.0 17.0

Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

Viewpoint November 23, 2015

Page 4 Precious Metals

Sid Subramani [email protected]

Barrick Gold Corp. ABX Subramani Buy 2/15/2013 10/30/2015 USD 7.19 USD 8.50 Better 3.0 3.0 2.0 4.0 3.0 15.0

Eldorado Gold Corp. EGO Subramani Buy 5/7/2015 11/2/2015 USD 3.05 USD 4.10 Better 1.0 3.0 5.0 4.0 3.0 16.0

Agnico-Eagle Mines Ltd. AEM Subramani Sell 1/10/2012 10/30/2015 USD 26.24 USD 18.50 Better 4.0 3.0 3.0 4.0 2.0 16.0

Goldcorp Inc. GG Subramani Sell 8/5/2014 11/2/2015 USD 11.81 USD 10.50 Better 4.0 3.0 4.0 3.0 3.0 17.0

IAMGOLD Corp. IAG Subramani Sell 11/5/2015 11/5/2015 USD 1.44 Under Review Neutral 2.0 1.0 3.0 1.0 4.0 11.0

Kinross Gold Corp. KGC Subramani Sell 6/11/2013 11/12/2015 USD 1.75 USD 1.30 Neutral 3.0 2.0 3.0 3.0 1.0 12.0

Newmont Mining Corp. NEM Subramani Sell 10/31/2011 11/9/2015 USD 17.68 USD 15.00 Better 3.0 3.0 3.0 3.0 3.0 15.0

Yamana Gold Inc. AUY Subramani Sell 10/30/2012 11/3/2015 USD 1.82 Under Review Neutral 2.0 3.0 3.0 3.0 3.0 14.0

Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

Viewpoint November 23, 2015

Page 5 Industrials & Utilities

Darryl McCoubrey [email protected]

Canadian Utilities Ltd. CU McCoubrey Buy 11/2/2012 10/26/2015 34.39 37.50 Neutral 3.5 2.0 2.0 2.0 3.5 13.0

Capital Power Corp. CPX McCoubrey Buy 9/4/2013 10/27/2015 18.76 24.00 Neutral 3.0 4.0 2.0 3.0 2.5 14.5

Capstone Infrastructure Corp. CSE McCoubrey Buy 8/21/2015 11/19/2015 3.05 5.00 Better 4.0 2.5 2.5 3.5 2.5 15.0

Fortis Inc. FTS McCoubrey Buy 8/4/2015 11/11/2015 38.00 44.50 Better 3.0 3.5 4.0 3.5 2.5 16.5

Northland Power Inc. NPI McCoubrey Buy 2/25/2013 11/19/2015 18.40 18.00 Better 3.0 3.5 3.0 3.0 3.0 15.5

TransCanada Corp. TRP McCoubrey Buy 11/9/2015 11/9/2015 43.52 49.25 Better 4.0 4.0 3.0 3.0 2.5 16.5

ATCO Ltd. ACO.x McCoubrey Sell 10/26/2015 10/26/2015 37.70 Under Review Neutral 3.5 2.0 2.0 2.0 3.5 13.0

Brookfield Renewable Energy Partners BEP McCoubrey Sell 5/6/2014 10/5/2015 USD 25.76 Under Review Neutral 2.0 2.0 2.0 4.0 3.0 13.0

Emera Inc. EMA McCoubrey Sell 5/14/2012 11/18/2015 42.84 40.50 Neutral 2.5 2.5 2.5 3.0 2.5 13.0

Enbridge Inc. ENB McCoubrey Sell 7/22/2010 11/18/2015 48.52 47.50 Better 3.0 3.0 4.0 3.0 4.0 17.0

TransAlta Corp. TA McCoubrey Sell 2/28/2013 11/3/2015 5.45 6.00 Neutral 3.0 2.0 1.0 2.0 2.0 10.0

TransAlta Renewables Inc. RNW McCoubrey Sell 5/4/2015 11/19/2015 10.33 Under Review Better 2.0 4.0 4.0 3.0 2.0 15.0

Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

Viewpoint November 23, 2015

Page 6 Healthcare & Pharmaceuticals

Dimitry Khmelnitsky [email protected]

Valeant Pharmaceuticals Intl. Inc. VRX Khmelnitksy Sell 7/23/2014 11/13/2015 USD 91.00 Under Review Torpedo 0.0 3.0 0.0 1.0 0.0 4.0

Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

Viewpoint November 23, 2015 Page 7 Energy

Nima Billou [email protected]

Closing Intrinsic Recommendation Most Recent Price US $75.00 US $85.00 Quality Cash Balance Business Corporate Name Ticker Analyst Ranking Value: Accounting Total Date Ratings Review (Nov Case Case Rating Flow Sheet Operations Governance Base Case 20/15)

ARC Resources Ltd. ARX Billou Buy 8/27/2015 11/12/2015 18.07 22.50 26.50 29.50 Neutral 2.5 2.5 3.0 3.0 3.0 14.0

Bonavista Energy Corp. BNP Billou Buy 3/1/2013 11/12/2015 2.32 7.50 10.00 11.50 Neutral 2.0 3.0 2.5 2.5 2.5 12.5

Crescent Point Energy Corp. CPG Billou Buy 5/11/2012 11/12/2015 16.87 19.00 26.00 32.50 Neutral 2.5 2.5 2.5 3.0 3.0 13.5

Enerplus Corp. ERF Billou Buy 5/18/2011 11/12/2015 6.70 10.50 15.00 19.00 Neutral 2.0 1.5 2.5 3.0 3.0 12.0

Vermilion Energy Inc. VET Billou Buy 8/27/2015 11/12/2015 38.72 44.00 53.00 61.50 Better 3.5 3.0 3.0 3.0 2.5 15.0

Baytex Energy Corp. BTE Billou Sell 5/6/2015 11/12/2015 5.42 4.50 11.50 18.00 Risky 1.5 2.0 2.0 2.0 2.0 9.5

Canadian Natural Resources Ltd. CNQ Billou Sell 8/27/2015 11/6/2015 32.95 29.00 39.00 41.00 Neutral 3.0 2.0 2.0 3.0 3.0 13.0

Canadian Oil Sands Ltd. COS Billou Sell 4/29/2015 11/3/2015 8.70 6.25 10.50 14.50 Neutral 3.5 1.0 1.5 2.0 2.0 10.0

Cenovus Energy Inc. CVE Billou Sell 12/22/2014 11/3/2015 19.61 17.50 29.00 45.00 Neutral 2.0 2.0 4.0 2.5 3.0 13.5

Encana Corp. ECA Billou Sell 8/27/2015 11/13/2015 USD 7.74 USD 6.50 USD 10.50 USD 14.00 Neutral 2.5 1.5 1.5 2.0 3.5 11.0

Husky Energy Inc. HSE Billou Sell 12/22/2014 11/5/2015 18.09 17.00 28.50 41.50 Neutral 2.5 2.0 3.0 2.5 2.0 12.0

Imperial Oil Ltd. IMO Billou Sell 1/31/2014 11/20/2015 41.84 30.00 46.50 61.50 Neutral 3.0 2.5 2.0 2.5 2.5 12.5

Pengrowth Energy Corp. PGF Billou Sell 12/22/2014 11/12/2015 1.09 0.40 1.05 1.85 Risky 1.5 1.5 1.5 2.5 2.0 9.0

Penn West Petroleum Ltd. PWT Billou Sell 12/22/2014 11/12/2015 1.31 0.00 1.00 2.25 Risky 2.5 0.5 0.0 0.5 1.5 5.0 Peyto Exploration & PEY Billou Sell 12/22/2014 11/18/2015 26.86 26.00 33.00 36.50 Neutral 2.0 2.5 3.0 3.0 2.0 12.5 Development Corp. PrairieSky Royalty Ltd. PSK Billou Sell 8/27/2015 11/12/2015 25.68 24.50 30.00 35.50 Neutral 2.0 3.0 5.0 2.0 2.5 14.5

Suncor Energy Inc. SU Billou Sell 12/22/2014 11/20/2015 36.60 26.50 41.50 55.00 Neutral 2.0 2.5 3.5 3.0 3.0 14.0

v Veritas Sector Rankings

Buy: Security has upside potential, with minimal downside.

Sell: Security is expected to decline in value under certain scenarios believed to be likely.

Intrinsic Value: The underlying long-term value of the enterprise using a discounted cash flow or equivalent model.

WTI Oil Price HH Gas Price USD/CAD Exchange Rate Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.75 / 0.85 $75 Oil Case 44 / 75 2.95 / 4.00 0.76 / 0.88 $85 Oil Case 55 / 85 3.25 / 4.25 0.80 / 0.92

Viewpoint November 23, 2015 Page 8 THE LIST V e r i t a s ' Model Portfolio November 20, 2015

Portfolio Yield: 3.0% T INTRINSIC QUALITY O PRICE (C$) CURRENT COMPANY TICKER DATE ADDED VALUE RATING TARGET WEIGHTING T 20-Nov-2015 YIELD ESTIMATE (out of 25) A Capital Power Corp. CPX 9-Apr-15 $18.76 $24.00 7.8% 14.5 7.50%

Choice Properties REIT CHP-U 25-Nov-14 $11.50 $12.20 5.7% 15.0 3.25%

Empire Company Ltd. EMP/A 27-Jun-13 $26.84 $29.00 1.5% 14.0 3.00%

Fortis Inc. FTS 2-Sep-15 $38.00 $44.50 3.9% 16.5 5.00%

Linamar Corp. LNR 24-Jun-15 $72.20 $97.00 0.6% 16.0 6.50%

Loblaw Companies Ltd. L 9-Apr-15 $68.45 $75.00 1.5% 16.0 7.25%

Magna International Inc. MGA 4-May-15 $44.94 USD $60.00 2.0% 15.0 3.00%

Manulife Financial Corp. MFC 27-May-13 $16.41 $24.50 3.1% 14.5 3.00%

Maple Leaf Foods Inc. MFI 29-Oct-04 $20.78 $22.70 16.5% 16.5 3.00%

Metro Inc. MRU 25-Nov-14 $38.15 $42.00 1.2% 19.0 7.50%

Northland Power Inc. NPI 13-Mar-13 $18.40 $18.00 6.5% 15.5 3.50%

Progressive Waste Solutions Ltd. BIN 14-Feb-14 $30.47 $30.00 2.2% 18.0 7.50%

Quebecor Inc. QBR/B 9-May-14 $33.02 $40.00 0.4% 16.5 7.50%

Rogers Communications Inc. RCI/B 19-Jan-15 $52.49 $53.00 3.7% 18.0 5.00%

Telus Corp. T 6-Oct-15 $41.77 $45.00 4.2% 19.0 7.50%

The Jean Coutu Group Inc. PJC/A 24-Jun-15 $20.96 $26.00 2.1% 16.0 5.00%

Toronto Dominion Bank TD 8-Oct-14 $54.75 $55.50 3.7% 18.5 3.00%

Cash 12.00%

Veritas Investment Research Corporation owns the copyright in this report. This report may not be reproduced in whole or in part without Veritas’ express prior written consent. Any such breach of this copyright is contrary to ss. 27(1), 34, 35 and 42 of the Copyright Act, R.S.C. 1985, c. C-42 and will be liable for damages.

Veritas Investment Research, 100 Wellington Street West, TD West Tower, Suite 3110, P.O. Box 80, Toronto, Ontario , M5K 1E7, 416-866-8783, www.veritascorp.com

Page 9

ACCOUNTING WATCHLIST Companies with accounting and disclosure-related risks

NOVEMBER 13, 2015 RISK AREAS

Non-GAAP Liquidity / Mgmt. Comp. Metrics Date Organic Earnings Cash Flow Leverage / Structure Company Ticker Analyst Cloud Disclosure Tax Added Growth Quality Sustainability Off-B/S & Corp. Financial Concerns Governance Performance

Aimia Inc. TSX-AIM Wong 3-Sept-14     

Avigilon Corp. TSX-AVO Dusseldorp 31-Jul-14  

Callidus Capital Corp. TSX-CBL Georgopoulos 16-Apr-15  

TSX-CCO Cameco Corp. Khmelnitsky 30-Apr-14 NYSE-CCJ    

TSX-GIB.A CGI Group Inc. Dusseldorp 3-Nov-11 NYSE-GIB  

DirectCash Payments Inc. TSX-DCI Dusseldorp 18-Sep-13       

MacDonald Dettwiler & Assoc. Ltd. TSX-MDA Khmelnitsky 3-Nov-11   

TSX-OTC Open Text Corp. Khmelnitsky 16-Nov-10 NASDAQ-OTEX   

TSX-SLW Silver Wheaton Corp. Khmelnitsky 13-Oct-15 NYSE-SLW   

TSX-VRX Valeant Pharmaceuticals Intl. Inc. Khmelnitsky 5-Jan-12 NYSE-VRX       

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Veritas Investment Research, 100 Wellington Street West, TD West Tower, Suite 3110, P.O. Box 80, Toronto, Ontario , M5K 1E7, 416-866-8783, www.veritascorp.com Page 10 Updated October 30, 2015 SELL AGNICO EAGLE MINES LTD. Current Price C$37.00 / US$28.10 Intrinsic Value US$18.50 TSX-AEM; NYSE-AEM Current Yield 1.1%

TOO HIGH OF A PREMIUM

Agnico Eagle delivered a strong performance in Q3 with production rising by 25% y-o-y. Cash costs for Q3 also decreased 30% on the back of higher production and favorable exchange rates, a theme we have got to know quite well over the last few quarters. Despite the company’s operational achievements, however, we remain unable to stomach the premium on the stock. With no margin of safety, we continue to rate Agnico as Sell, and have revised our valuation to $18.50 assuming $1,100 gold and giving credit for the lower costs.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 Long-Term Gold Price Intrinsic Value Estimate Agnico switched from U.S. GAAP to IFRS in Q3F14. We US$1,100 per ounce US$18.50 per share estimate that the change helped capitalize $25/oz of stripping costs that would have previously been expensed, +/- US$100 per ounce +/- US$9 per share resulting in a CFO and EBITDA boost of approximately $30 million per year. Our valuation excludes Meliadine, as we estimate the project is uneconomic at current gold prices. Adjusted Cash Flows 3/5

Agnico tacitly admitted a cash flow problem is on the Fiscal year ends December 31 F15 F13 F14 horizon by cutting its dividend by two-thirds last year. But US$ millions, except as noted 9mos at current gold prices, few producers have held dividends steady. Closing price, end of period 26.38 24.89 25.32 The Balance Sheet 3/5 Shares outstanding, millions 174 214 217 Agnico’s $1.1 billion of net debt is about 24% our estimated EV. We worry additional growth spending could further stretch the balance sheet. Market cap 4,590 5,645 5,494

Business Operations 4/5 Gold production, 000s oz 1,099 1,429 1,249 Arctic mines turned Agnico into a high-cost producer. However, the company has excelled at maximizing Revenue 1,638 1,897 1,502 throughput across its portfolio and surprising the market with higher-than-expected grades at Meadowbank, while operating in relatively safe jurisdictions. CFPS 2.76 3.12 2.18

Corporate Governance 2/5 Cash flow per ounce 437 467 380 In our view, Agnico’s results in the Arctic highlight the company’s broken growth-by-acquisition strategy. Acquisitions Price to cash flow 9.6x 8.0x 11.6x should not need a higher gold price to be accretive, as investors can bet on the commodity themselves. Net debt to EV 15% 17% 15%

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SID SUBRAMANI [email protected] 416-866-8783

Page 11 Updated November 16, 2015 SELL AIMIA INC. Current Price C$9.65 Intrinsic Value C$9.50 TSX-AIM Current Yield 7.7%

Q3-2015 MISS; MANAGEMENT REDUCED 2015 FCF GUIDANCE BY 20% Aimia reported a 23%1 decline in free cash flow (“FCF”) to $59 million in Q3-2015. This marked the third consecutive quarter of regular mile issuance decline at Aeroplan. For the first nine months of 2015, Aeroplan suffered a 20% decline in margin spread (i.e. Gross Billings – Cost of Redemptions), prompting management to reduce its 2015E FCF target by about 20% to $180-$190 million.

We have reduced our 2016E FCF by $31 million to $163 million, taking into account the worse-than-expected regular Aeroplan miles issuance, higher-than-expected redemption cost per Aeroplan mile, $10 million HP transition costs and $10 million increase in capital expenditures, partly offset by $20 million in annual restructuring savings expected. We advise investors to continue to stay on the sidelines given the poor economic outlook, unproven success of the enhanced Aeroplan Canada program, upcoming devaluations of certain business class flight rewards and renewal risk associated with the Air Canada contract expiring in June 2020.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 We use a sum-of-the-parts / DCF model to derive a new $9.50 intrinsic value (down from $10.30) for Aimia. The $9.50 intrinsic Management provides disclosure on mile issuance, re- value consists of: demptions, selling prices/costs to value Aeroplan’s current business and future liabilities. Aimia provides little infor- 1) $10.10 from Aeroplan Canada; mation on its U.K., U.S./APAC operations, making it difficult 1) $2.40 from the EMEA operations; to value their free cash flow. 1) $2.40 from other investments; and

Adjusted Cash Flows 2/5 1) ($5.40) net debt, including our estimated redemption reserve of $705m (higher than company disclosure of $492m). We reduce our 2015E FCF at $143 million ($0.85 per share), which is below management’s lowered guidance of $180 million to $190 million. We expect the dividend payout ratio FY end December to increase from the historical average of 49% to 90%+ start- 2014 2015E 2016E ing in 2015. (C$ Millions, except as noted)

The Balance Sheet 3/5 Aeroplan Miles Issuance Growth Rate 5.7% (4.0%) 1.0% Aimia has a reserve of $492 million (held in cash and invest- Aeroplan Mile Redemption Growth ments), with $300 million designated for Aeroplan Canada 7.0% 2.7% 0.0% and the remaining $192 million for Nectar programs. Aimia’s Rate net debt-to-total capital ratio is 10% at the end of Q3-2015. Burn/Earn Ratio 85% 91% 90% Business Operations 3/5 Selling Price/Aeroplan Mile (cents) 1.36 1.36 1.35 Aimia reported a 65% decline in normalized FCF in 2014 due Redemption Cost/Aeroplan Mile to the launch of the enhanced Aeroplan program on Jan. 1.01 1.06 1.07 1, 2014, which led to a significant increase in redemption (cents) cost per Aeroplan mile. The enhanced Aeroplan Canada program has yet to drive sufficient miles issuance to offset Aeroplan Normalized Margin Spread 28.0% 22.1% 20.6% the significant increase in redemption costs. As a result, Aimia’s Normalized FCF (Aeroplan Aeroplan Canada experienced a $27 million decline in $94 $143 $163 Canada + Other Businesses) margin spread (gross billings less redemption costs) in Q3- 2015 compared to one year ago, the third quarter of mar- Aimia’s Normalized FCF per Share $0.52 $0.85 $0.97 gin spread decline.

Corporate Governance 3/5 Dividends per Common Share $0.71 $0.75 $0.76

Eight out of nine (89%) members on Aimia’s Board of Direc- tors are independent. Dividend Payout Ratio 152% 101% 89%

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KATHLEEN WONG [email protected] 416-866-8783

Page 12 Updated November 12, 2015 BUY ARC RESOURCES LTD. Current Price C$18.26 Intrinsic Value C$22.50 TSX-ARX Current Yield 6.6%

CARRY ON GROWING ARC is one of the few companies still investing sufficient capital to grow. Management is guiding to volume growth of ~5% in 2016, on a flat capital budget versus 2015, which reflects the startup in late 2015 of a new plant at Sunrise and an oil battery at Tower. The dividend may yet be trimmed, but with projected funds flow of $2.50 per share in 2017 at US$65 WTI and US$3.25 NYMEX, we currently see a good entry point on the stock. BUY.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value ARC recorded impairment charges of $326.6 million in Q3 $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 22.50 F15 primarily driven by reduced assumptions about future $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 26.50 commodity prices and concentrated among its higher cost $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 29.50 light oil and liquids heavy gas plays (Northern Alberta, Pem- bina, Redwater). Our conservative case values ARC at $22.50 per share, reflecting a return to US$65 oil and US$3.75 gas in 2019.

2015 Adjusted Cash Flows 2.5/5 Company Profile 2013 2014 9 mos We see a continued risk of a dividend cut next year as the Price 29.57 25.16 17.64 majority of ARC's dividend requires financing below US$50 Shares (millions incl. exch.) 314.1 319.4 344.2 oil in 2016. Market cap. ($ millions) 9,288 8,036 6,072 The Balance Sheet 3/5 Revenue ($ millions) 1,448 1,986 1,071 CFPS 2.55 3.61 1.49 ARC had $1.09B in debt at the end of 2015 Q3 drawn on its Price to YTD CFPS 11.6x 7.0x 8.9x $2.3B credit facility. The facility remains open through No- vember 2019. ROE (annualized) 7.1% 11.0% (10.9%) Dividends per share 1.20 1.20 0.90 Business Operations 3/5 Production (boe/d) 96,087 112,387 112,457 CFO* per boe 22.86 28.11 16.67 With the startup of ARC's new Sunrise plant and expanded Tower battery in Q4, production is expected to increase to Net debt to EV 9% 12% 13% 116,000 to 120,000 boe/d. The company should be able to Net debt to CFO* 1.12x 0.92x 1.29x maintain this production range in 2016 with spending of $550MM or $1.60 per share, matching with our funds flow 2015 Cash Flow and Dividends 2013 2014 forecast at the current strip. 9 mos Reported CFO* 801.7 1,153.0 513.2 Corporate Governance 3/5 Capital expenditures (874.2) (1,007.6) (394.0) Available cash (shortfall) (72.5) 145.4 119.2 ARC's chairman Mac Van Wielingen announced he will be Dividends declared stepping down as chair on December 31, 2015, after almost 374.0 380.2 284.5 20 years at ARC. The chairman role will be taken up by % of CFO* 47% 33% 55% current board member Hal Kvisle, most recently of Trans- % of available cash N/A 261% 239% Canada and Talisman. We do not expect any radical * CFO is cash from operations after working capital, cash interest and asset retirement change of strategy. expenditures a Financial statement data are based on IFRS.

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NIMA BILLOU [email protected] 416-866-8783

Page 13 Updated October 26, 2015 SELL ATCO LTD. Current Price C$40.24 Intrinsic Value C$40.00 TSX-ACO.X Current Yield 2.5%

A SAFER WAY TO BET ON AB POWER For investors interested in some exposure to potential long-term upside in Alberta spot power prices, ACO.X and CU are safer alternatives than the likes of Capital Power and TransAlta due to underlying portfolios of lower risk, regulated assets in Canada and Australia.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3.5/5 Our intrinsic value estimate is $40.00 per share, which assumes an 18% holding company discount is applied to its Better disclosure of financial results in its Energy seg- controlling equity stake in Canadian Utilities. ment and a more detailed look at expenditures enhances the relative transparency of ACO.X’s finan- Period Ending cial results compared to its Canadian peers. F13 F14 Q3-F15 (Amounts in C$)

Adjusted Cash Flows 2/5 Price (ACO.X) $46.66 $47.66 $39.20

Although lower pricing is impeding financial performance in ACO.X’s S&L and Energy segments, a still- Shares (millions) 115.1 115.1 115.1 robust rate base growth profile for the Utilities suggest ample EPS and FCF growth prospects in the longer- term. Market capitalization (millions) $5,372 $5,486 $4,514

The Balance Sheet 2/5 Net debt (millions) $6,040 $7,309 $7,793 ACO.X’s leverage continued to increase in Q3-F15, alongside deteriorating business conditions in S&L Enterprise value (millions) $11,412 $12,795 $12,307 and Energy.

Business Operations 2/5 Adjusted EBITDA (TTM, millions) $1,693 $1,690 $1,421

The market has already “priced-in” a glim outlook for Adjusted EPS (TTM) $3.38 $3.24 $2.75 the Energy and S&L segments and regulatory risk is muted by recent cost of capital decisions. EV/EBITDA (TTM) 6.7x 7.6x 8.7x Corporate Governance 3.5/5

The merits of a relatively low payout ratio are evi- P/E (TTM) 13.8x 14.7x 14.3x denced during challenging business conditions for a utility with a higher business risk profile. Net debt-to-EBITDA 3.6x 4.3x 5.5x

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DARRYL MCCOUBREY [email protected] 416-866-8783

Page 14 Updated November 9, 2015 SELL AUTOCANADA INC. Current Price C$29.34 Intrinsic Value C$29.00 TSX-ACQ Current Yield 3.2%

MAINTAIN DISTANCE

AutoCanada’s stock declined by roughly 6% on November 6, 2015 based on a disappointing quarter, largely resulting from its overexposure to Alberta. In our Q2-F15 commentary, we discussed that ACQ’s gross margin could be squeezed in Q3-F15 because of inventory pressures and the company might have to renegotiate its existing debt covenant. Now that both of these things have happened, we still expect that the revenue and earnings growth for ACQ to remain lackluster in the near-term .

We maintain our SELL rating and intrinsic value estimate of $29 per share as the Alberta crisis hasn’t bottomed out and auto sales are currently at cyclical peak.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Our intrinsic value estimate of $29 reflects, on average, three dealership acquisitions per year through 2021; a decline in The company has improved its disclosure on region wise gross margins in 2015 and 2016 because of ACQ exposure to sales, which helps in estimating the risk related to a po- Western provinces whose economies will be adversely im- tential slowdown in Alberta’s economy. pacted by the meltdown in oil prices; a higher equity risk premium to reflect the acquisitive nature of the business and Adjusted Cash Flows 1/5 its reliance on key executives/employees which present Although Q3-F15 FCF remains negative $2 million, ACQ’s flight risk. operating cash flow has improved significantly to $20 million compared to $9 million over the same quarter last We used a WACC of 10.4% and a terminal growth of 2.0% to year. We estimate that FCF will remain negative for F15 discount our future cash flows. and F16 because of significant investment in dealership relocations and renovations. $ Thousands Q3-F13 Q3-F14 Q3-F15 The Balance Sheet 2/5 Number of dealerships 29 45 50 ACQ successfully renegotiated its debt covenants, which were at the verge of a breach. We now believe that the company will have sufficient liquidity to fund its Revenues 403 733 781 future acquisitions. Gross margin 68 120 129 Business Operations 2/5

New vehicle gross margins in Q3-F15 were under pres- EBITDA 17 32 30 sure as ACQ pushed out its inventory. We expect the margins to stabilize for Q4-F15 as our review of days inventory outstanding for the past six years shows that Market capitalization 865 1,023 760 days inventory outstanding has stabilized at historical levels. Further, wholesale used vehicle margins for Q3- Net debt (1) 120 265 F15 showed some improvement at 0.7% compared to 0.2% in Q2-F15, but it is significantly below the 1.8% mar- EV/EBITDA (TTM) 16.0 13.8 10.9 gin achieved in Q3-F14.

Corporate Governance 1/5 ROE (TTM) 19.0% 11.4% 11.3% Corporate governance is deficient as key executives are permitted to build their own competing mini- Shares outstanding (in millions) 21.6 24.4 24.5 AutoCanadas funded by ACQ stock sales. The Board Chair personally owns at least seven dealerships. Torpedo Risky Neutral Better Best Quality Scale

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VARUN MEHROTRA [email protected] 416-866-8783

Page 15 Updated November 12, 2015

AVIGILON CORP. Current Price $11.89 TSX-AVO Market Capitalization (millions) $539

EARNINGS QUALITY RISKS REMAIN

Right before Q1-F14 results, Avigilon’s CFO, Bradley Bardua, abruptly left the company. Judging by the ~30% drop in Avigi- lon’s share price, there was serious concern among investors that something pervasive was amiss. Since then, high management turnover has continued. Most recently, Avigilon’s share price fell by ~12% on September 2, 2015, following the announcement that two executives would be leaving the Company in connection with a management reorganization. In addition to the high management turnover at the company, our accounting and disclosure review has identified risks related to earnings quality

Risk Areas  Corporate governance / other — High management turnover and deep relationships and collaboration between the company and channel intermediaries increase the risk of premature revenue recognition and channel stuffing.  Disclosure / earnings quality — Changes in revenue recognition disclosures during F12 indicate that accounting policies may have changed, which could have accelerated revenue recognition. A significant increase in the run rate of capitalized development costs which began in Q1-F15 is concerning given the highly subjective nature of the accounting treatment for these costs.

Updates Since Last Report  Avigilon’s share price fell by ~12% on November 4, 2015 after the Company reported Q3-F15 results, which included guidance for Q4 that was below investors’ expectations.

KEVIN DUSSELDORP [email protected] 416-866-8783

Page 16 Updated September 11, 2015 SELL BANK OF MONTREAL Current Price C$69.38 / US$52.44 Intrinsic Value C$70.50 TSX-BMO; NYSE-BMO Current Yield 4.7%

MODESTLY ACCRETIVE DEAL ADDS SCALE TO US BUSINESS BMO’s recently announced acquisition of General Electric Capital Corporation’s Transportation Finance business was a positive but, adding further scale to the bank’s existing US footprint where it is primarily a commercial lender. While we are encouraged by the bank’s ability to deploy some of its excess capital into an accretive purchase, we remain concerned about BMO’s unsustainably low loan losses reported in recent quarters, the bank’s continuing challenges in the Canadian P&C banking business, and its lower relative profitability with a group-low return on equity among the Big Six banks. As such, we maintain our SELL recommendation.

QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 2/5 Our intrinsic value estimate for BMO is $70.50, calculated by applying a multiple of 10.6x on our F2016 EPS estimate of $6.92 and Purchased performing items are no longer adjusted for by a multiple of 1.2x on our BV estimate of $56.13 at the end of F2016, the bank. The other adjusting item of note is purchased credit and taking the average of the two. impaired (PCI) recoveries. There has been a steady decline in PCI and other credit related items. Over the course of F12 FY end Oct. 31 and F13, the recoveries added an average of $210M C$ F13 F14 Q3-F15 quarterly to reported earnings. In Q3-F15, PCI recoveries are Common equity tier 1 ratio $19M while credit impact from purchased performing 9.9% 10.1% 10.4% portfolio is $26M. (BIII) Capital 4/5 Closing Share Price $72.62 $81.73 $72.98

BMO’s CET1 capital ratio ended Q3 at 10.4%, with $6.19 $6.44 $6.34 management reiterating a comfort level in and around the EPS (TTM) 10% mark. The announced acquisition of GE Transportation Finance business is expected to reduce BMO’s CET1 ratio by P/E (TTM) 11.8x 12.7x 11.5x 70 bps; management guided to CET1 ratio in the range of

9.9% at the end of Q1-F16 when the deal close. BV/share $43.22 $48.18 $55.36 Credit 4/5 P/BV 1.7x 1.7x 1.3x Credit was a strong tailwind in Q3-F15 with a consolidated loan loss ratio of 19 bps, well below 24 bps reported in Q2-F15 and the 26 bps reported in the prior year period. We do not Dividend yield 4.1% 3.8% 4.5% view this as a sustainable level given the weakness in the Canadian economy. Management guided to a loan loss 46,777 53,047 46,876 ratio of roughly 40 bps in a scenario where oil prices average Market capitalization (millions) $35/bbl for next 12 months and $50/bbl in the 12-month period afterwards. ROE 14.9% 14.0% 13.6% Business Operations 3/5 Net interest margin (AEA) 1.79% 1.60% 1.55% Canadian P&C earnings growth was 5% YoY in Q3-F15, largely due to lower loan losses which accounted for about # shares outstanding (millions) 644 649 642 60% of the YoY increase in pre-tax earnings. U.S. P&C delivered strong 15% YoY earnings growth, entirely driven by lower PCLs. On a positive note, we saw NIM stabilization in BUSINESS COMPOSITION both P&C businesses. The Wealth segment delivered 10% earnings growth YoY. BMO’s retail/wholesale earnings mix is approximately 79%/21%. Canadian P&C banking contributes approximately 43% of Corporate Governance 3.5/5 earnings, excluding the corporate segment, while U.S. P&C banking contributes approximately 18% of earnings. No items noted.

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MIKE RIZVANOVIC [email protected] 416-866-8783

Page 17 Updated August 31, 2015 SELL BANK OF NOVA SCOTIA Current Price C$59.60 / US$45.17 Intrinsic Value C$56.00 TSX-BNS; NYSE-BNS Current Yield 4.7% INTERNATIONAL WEAK WITHOUT CURRENCY TAILWIND Our thesis on the bank’s International Banking business remains intact as earnings in the segment have contracted by 3% year-to-date Q3-F15 when adjusted to exclude the favorable impact of currency changes. The Pacific Alliance countries, which represent management’s primary area of focus in the International business, are heavily dependent on various commodities, the recent sell-off of which has led to moderating economic activity. We expect that weaker GDP growth in the region will lead to a more competitive environment in the financial services sector that will favor banks with greater scale. We maintain our SELL recommendation. QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 3/5 We maintain intrinsic value of $56.00, calculated by applying a multiple of 10.4x to our F2016 EPS estimate of $5.73 and a multiple BNS has realigned its reporting segments. The Canadian and of 1.2x to our BV per share estimate of $44.17 at the end of F2016, International operations previously included within the Global and taking the average of the two. Wealth & Insurance segment are now included in the Canadian Banking and International Banking (IB) segments FY end Oct. 31 respectively. Since wealth management and insurance results F13 F14 Q3-F15 are now part of Canadian Banking and IB, there is reduced C$ transparency on the underlying P&C results. Additionally, the Asia operations which were previously reported in IB (except for Common equity tier 1 ratio (BIII) 9.1% 10.8% 10.4% Scotia’s associated corporations Thanachart Bank and Bank of Xi’an, which remain part of IB), have been moved into Global Banking & Markets. Comparatives have been provided back to Closing share price $63.39 $69.02 $64.19 Q1-F13. EPS (TTM) $5.15 $5.69 $5.35 Capital 4/5 P/E (TTM) 12.3x 12.1x 12.0x The CET1 ratio was 10.4% as of Q3-F15, a comfortable level in our view and in line with the large Canadian banks. BNS reported a leverage ratio of 4.1% in Q3-F15, flat sequentially. BV/share $33.23 $36.96 $40.30

Credit 3/5 P/BV 1.9x 1.9x 1.6x The PCL ratio was 42 bps in Q3-F15, up 5bps YoY and 1 bp higher QoQ. BNS did not get a boost from better credit as most Dividend yield 3.8% 3.7% 4.2% of its peers did in Q3, which is the result of the bank’s push into higher spread lending products in Canada. Market capitalization (millions) 76,612 83,969 77,529 Business Operations 3/5 ROE 16.6% 16.1% 14.7% Canadian Banking reported 10% earnings growth YoY as the bank continued pushing into higher margin products, such as Core Margin (AEA) 2.31% 2.39% 2.40% credit cards, auto loans and commercial lending. The International Banking segment reported 11% earnings growth YoY; however, after removing the favourable FX impacts in the # shares outstanding (millions) 1,209 1,217 1,208 quarter, growth was a much more modest 4%. Our thesis on the bank’s international business remains intact, as much of the CA&C countries are facing strong economic headwinds while BUSINESS COMPOSITION the Pacific Alliance countries are facing slowing economic activity resulting from declining commodity prices. Excluding the “Other” segment, BNS’ retail/wholesale earnings mix is approximately 78%/22%. The International Banking segment Corporate Governance 4/5 (new segment definition) accounts for 27% of earnings and has exposures to Caribbean and Central America, Mexico, Chile, Good. Peru, Colombia, and parts of Asia. Canadian Banking (new segment) contributes approximately 48% of earnings.

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MIKE RIZVANOVIC [email protected] 416-866-8783

Page 18 Updated October 30, 2015 BUY BARRICK GOLD CORP. Current Price C$10.31 / US$7.82 Intrinsic Value US$8.50 TSX-ABX; NYSE-ABX Current Yield 1.0%

DELIVERING THE GOODS Barrick delivered a strong third quarter with cash costs of $570/oz and AISC of $771/oz on production of 1.66 Moz. In our view, Newmont is a valid proxy for Barrick as both have many commonalities. Yet, based on our analysis, Barrick continues to trade at a undeserved material discount to its closest peer. Applying Newmont’s forward EBITDA multiple (based on its most recent closing price of $19.89) to Barrick, we arrive at a $9.85 per share valuation. However, as we think that Newmont is over-valued we value Barrick at $8.50. Correspondingly, we maintain our buy.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Long-Term Gold Price Intrinsic Value Estimate

US$1,100 per ounce US$8.50 per share Under IFRS, the company now capitalizes certain expenses which boosts operating cash flows, but makes it more +/- US$100 per ounce +/- US$2.50 per share comparable to peers. We value Barrick at $8, and see upside to the company’s new tone at the top. Asset sales, improvements in corporate govern- Adjusted Cash Flows 3/5 ance, and free cash flows are all catalysts that could push the share price towards our valuation. We estimate adjusted FCF for the quarter to be $110 million excluding the impact of the accretive $610 Pueblo Fiscal year ends December 31 F15 F13 F14 Viejo stream transaction. The suspension of Pascua-Lama US$ millions, except as noted 9 mos allows Barrick to generate free cash flows. The Balance Sheet 2/5 Closing price, end of period 17.22 10.63 6.36

Barrick should be able to comfortable meet its $3-billion Shares outstanding, millions 1,165 1,165 1,165 debt reduction plan for 2015 with the announced sales of Zaldivar, Cowal and Porgera and Nevada non-core assets in Q3, Barrick’s intention of reducing debt through asset Market cap 20,613 12,384 7,409 sales seems to be on track in a challenging environment and should be credited for getting favourable prices. Gold production, 000s oz 7,166 6,249 4,498

Business Operations 4/5 Revenue 12,527 10,239 6,791 Despite cost inflation, Barrick has below-average costs in its gold business. If only it had the same success with cop- CFPS 3.64 1.97 1.65 per.

Corporate Governance 3/5 Cash flow per ounce 592 367 428

John Thornton succeeded Peter Munk as Chairman. Re- Price to cash flow 4.8x 5.4x 3.9x cent changes to the management structure and de- centralization of operations is a positive move and seems to be having a positive impact on cost reduction. Net debt to EV 34% 46% 55%

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SID SUBRAMANI [email protected] 416-866-8783

Page 19 Updated November 12, 2015 SELL BAYTEX ENERGY CORP. Current Price C$5.50 / US$4.15 Intrinsic Value C$4.50 TSX-BTE; NYSE-BTE Current Yield 0%

PAINFUL ADJUSTMENTS Baytex is facing three dire realities in 2016: 1) it has limited control over the pace of spending on its Eagle Ford play, where its operating partner Marathon may be looking to scale back; 2) its other plays do not justify investment at current commodity prices; and 3) its debt remains too high, with leverage likely to worsen if volumes decline. We estimate the company needs $500 to $600 million in capital spending next year to maintain volumes. At US$44 WTI, we expect 2016 funds flows to be 30% to 40% lower than our sustaining capital estimate. With further pain likely in the near term we recommend staying on the sidelines.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 1.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value In 2015 Q3, Baytex recorded an impairment charge $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 4.50 of $493.2 million on its Eagle Ford assets. In many $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 11.50 ways, this write-down was inevitable given that Bay- $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 18.00 tex acquired these assets at fair values tied to US$100 WTI. Our conservative case values Baytex at $4.50 per share, reflecting a return to US$65 oil and US$3.75 gas by 2019.

2015 Adjusted Cash Flows 2/5 Company Profile 2013 2014 9 mos We estimate that Baytex needs $500 to $600 million Price 41.64 19.32 4.27 in capital spending next year to maintain current Shares (millions incl. exch.) 125.4 168.1 210.2 volumes. At US$44 WTI, we expect 2016 funds flows to be 30% to 40% lower than our sustaining capital esti- Market cap. ($ millions) 5,221 3,248 898 mate. Revenue ($ millions) 1,115 1,530 496 CFPS 4.75 5.34 2.59 The Balance Sheet 2/5 Price to YTD CFPS 8.8x 3.6x 1.2x

Baytex should remain onside its relaxed debt cove- ROE (annualized) 12.8% (7.0%) (47.8%) nants next year. The total Debt-to-EBITDA covenant reverts to 4.0x at the end of 2016 (the metric is at Dividends per share 2.64 2.64 0.73 2.29x currently). The Senior Debt covenant reverts to Production (boe/d) 57,196 78,321 85,840 4.5x on July 1, 2016 and 4.0x at the end of 2016 (at CFO* per boe 28.52 31.38 23.14 2.29x currently). Net debt to EV 11% 39% 66% Business Operations 2/5 Net debt to CFO* 1.1x 2.3x 2.4x

As an illustration of just how difficult Baytex' situation 2015 Cash Flow and Dividends 2013 2014 has become, the company continues to reduce 9 mos spending on its most productive, Eagle Ford assets. Reported CFO* 595.5 897.2 543.7 Capital expenditures Corporate Governance 2/5 (550.9) (766.1) (375.7) Available cash (shortfall) 44.6 131.1 168.0 Baytex's CEO James Bowzer was no doubt front and Dividends declared 327.0 395.6 154.0 center in the ill-timed decision to acquire Eagle Ford acreage in mid-2014. The assets are shared with % of CFO* 55% 44% 28% Marathon Oil, where Mr. Bowzer previously served as % of available cash >500% 302% 92%

VP of North American Operations. * CFO is cash from operations after working capital, cash interest and asset retirement expenditures.

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Page 20 Updated November 6, 2015 SELL BCE INC. Current Price C$56.96 / US$42.82 Intrinsic Value C$54.00 TSX-BCE; NYSE-BCE Current Yield 4.5%

WIRELESS BALANCE OF POWERS RESTORED For the last two years, BCE have preyed on Rogers’ customer service problems and taken more than fair share of net postpaid subscriber additions. However, we are seeing subscribers warm back up to Rogers following the launch of customer-friendly roaming programs and efforts to improve customer service. This quarter, Rogers finally bounced back, taking 35% of postpaid net adds, while holding churn flat YoY. Going forward, we believe that the re-balancing of powers means that there will be less easy prey for BCE to feast on. As a result, we see less reason for the stock to outperform, as the company also trades at a premium valuation multiple. We maintain our SELL recommendation for BCE and are increasing our intrinsic value estimate to $54 from $53.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3.5/5 We are maintaining our SELL recommendation and increasing our intrinsic value estimate to $54 per share.

Both the accounting policies and the supplementary disclosures are reasonable. YTD September 30, 2015 F13 F14 F15 C$ Millions Adjusted Cash Flows 4/5

Revenue (TTM) $20,179 $20,896 $21,439 BCE’s 2015 payout ratio of 70% gives the company more headroom for further dividend increases. However, 2015 free cash flow is buffeted by one-time items, such as lower EPS (TTM) $3.13 $2.98 $3.04 tax and incremental Aliant cash flows from the acquisition. EBITDA (TTM) $7,987 $8,279 $8,500 The Balance Sheet 4/5 Price (reporting date) $45.89 $50.94 $56.45 F15 net debt to EBITDA of 2.8x is above the company’s 1.75x-2.25x target and excess free cash flow will be dedi- EV/EBITDA (TTM) 2.76 2.78 2.85 cated to reducing debt.

P/E (TTM) 14.66 17.09 18.57 Business Operations 3/5

FCFE yield (TTM) 4.9% 6.1% 6.1% BCE’s wireless ARPU increased 6.1% YOY and is now at a premium to Rogers’ and Telus’. Wireline EBITDA grew 1% but residential RGUs only increased by 5,000, compared to Dividend yield 5.0% 4.7% 4.5% 31,000 a year ago. Market capitalization $35,606 $42,194 $47,949

Corporate Governance 4/5 Enterprise value $57,640 $65,206 $72,191

Good. Net debt: TTM EBITDA 2.7 2.7 2.8

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Page 21 Updated September 28, 2015 SELL BLACKBERRY LTD. Current Price C$8.64 / US$6.49 Intrinsic Value US$6.00 TSX-BB; NASDAQ-BBRY Current Yield 0.0%

BLACKBERRY COULD GET CHEAPER STILL BlackBerry shares have declined by 41% YTD and net cash represents close to 50% of the market capitalization. However, we do not see material upside, given the lack of pricing power in the EMM sector and an unlikely return to the lofty revenue multiples of the past. In our opinion, management’s expectation of sequential revenue growth in Q3-16 could turn out to be optimistic and we see the risk of another 10%+ decline. We do not expect the android-powered Priv device to gain much traction in the marketplace, given limited marketing resources and the very crowded mid-tier device market.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 We are maintaining our SELL recommendation and lower- ing our intrinsic value estimate to $6.00 per share. Accounting should be cleaner after all the write- downs and the end of restructuring. Management is also giving guidance regarding sustainability, includ- Quarter-ended August 31, 2015 F13 F14 F15 ing expected profitability and positive cash flows in US$ Millions F16.

Adjusted Cash Flows 2/5 Revenue $1,573 $916 $490

BlackBerry generated $100 million of positive cash flow this quarter. However, long-term visibility is poor Diluted EPS -$1.84 -$0.39 -$0.20 due to unclear revenue trajectories and EMM competitors that prioritize market share over profits. Share Price (reporting date) $8.03 $10.26 $6.49 The Balance Sheet 3/5

BlackBerry has $2.9B cash on hand and $1.25 billion P/BV 0.5x 1.6x 1.0x in debt post Good acquisition. Cash is not expected to fall below $2.5B during the turnaround period. Market Capitalization $4,216 $5,407 $3,400 Business Operations 2/5

Service revenue is expected to decline from $1.6B to Net cash $2,658 $1,848 $1,678 $800M in F16. The $500M F16 software revenue target looks optimistic and we think revenues could fall 10%+ sequentially next quarter. Enterprise Value $1,647 $3,559 $1,723

Corporate Governance 3/5 Shares O/S (M) 527 529 $524 New CEO John Chen is appears to be hiring the right people with the right experience to return BlackBerry to its enterprise roots. Net Income -$965 -$207 $51

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Page 22 October 30, 2015 SELL BOMBARDIER INC. Current Price C$1.33 / C$1.42 Intrinsic Value C$1.20 TSX-BBD.B / BBD.A Current Yield N/A

WHEN YOUR WHITE KNIGHT IS THE QUEBEC GOVERNMENT…SELL In its latest desperate attempt to fund the completion of the C Series program, Bombardier has agreed to transfer the plane venture into a new LP, in which the Quebec government will inject $1 billion for an equity stake of 49.5% while BBD takes a $3.2 billion impairment charge on the program’s development costs. In our view, BBD’s financial situation will continue to deteriorate, before we see any positive cash flows in the aerospace business. With this latest round of equity infusion, BBD’s existing shareholders are set to lose 50% of any upside from the C Series while retaining existing balance sheet risk, with debt now pushing 5.1x times 2015 EBITDA estimates. As a result, we continue to recommend investors sell the stock, with our revised intrinsic value now set at $1.20 per share. QUALITY RATING LIQUIDITY STRESS TEST

Accounting & Disclosure 3/5 We update our liquidity stress test based on BBD’s updated guidance for 2015 and the following assumptions: BBD’s new disclosures reveal that each of the businesses in  Regional jet operating margins of –9.7% (to account for the $200 its Aerospace division lags peers considerably. million EBIT loss) in 2015 and –4.4% for 2016.  Business jet operating margins at 6.2% for 2015 and 4.8% for 2016. Adjusted Cash Flows 0/5  Service business margins to remain at 6% for 2015 and 2016. The $1 billion capital infusion in the C Series by the Govern-  Aerospace capex to be $1.7 billion in 2015 and 2016. ment of Quebec and management’s renewed guidance  Transportation margins to remain flat at 5.1% in 2015 and 2016. that the program could burn additional $2 billion in cash over the next five to six years, will weigh on cash flows. We  Peak cash flow usage includes $1 billion investment in working capital for the first nine months of 2015. recommend investors to closely monitor the free cash flow as BBD remain free cash negative till F17.  Based on the foregoing, we expect BBD to end 2015 with $4.1 billion in liquidity and 2016 with $4.9 billion. The Balance Sheet 0/5

A review of BBD’s bond yield to maturity highlights that junk 2015E 2016E bond investors seem to be getting nervous. BBD’s overall debt has an average yield of 10.14% as of October 30, Beginning cash & available liquidity balance 3,800 4,054 2015, suggesting that the markets are heavily discounting Aerospace segment BBD’s revival prospects. Also despite recent equity infusion, impairments in the Learjet and C Series program have re- Operating cash flows 441 429 sulted in a negative equity book value of $ 3.6 billion. Capex (1,700) (1,700) Aerospace FCF (1,259) (1,271) Business Operations 1/5 Transportation segment While BBD sees its BA division as a great franchise, we see its Operating cash flows 488 710 value rapidly declining because of a lack of orders, production cuts and margin erosion. BBD is doing another Capex (100) (100) round of production cuts in the business jets as it claims it Transportation FCF 388 610 doesn't want to dilute the franchise. However, in our view, BBD overall FCF (872) (661) the production cuts could be because of lack of orders. Less: Interest cost net of tax (412) (450) Corporate Governance 1/5 Cash usage (1,284) (1,111) While Alain Bellemare is trying to instill confidence by reshuf- Working capital investment first nine months (1,000) fling the executive team, declining margins across business- Peak cash flow usage (2,284) (1,111) es and rising projects cost suggest that the current man- Additional financing/ (repayments) agement has to do a lot of work to restore investor confi- 2,538 2,000 dence. Peak cash and available liquidity balance 4,054 4,943

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Page 23 Updated November 12, 2015 BUY BONAVISTA ENERGY CORP. Current Price C$2.61 Intrinsic Value $7.50 TSX-BNP Current Yield 4.6%

EMPTYING THE CLOSET In its latest quarter, management cut Bonavista’s dividend by ~70% and F16 capital budget by ~20%. In our view, this aligns cash flows with projected revenues and will result in only modest volume declines next year. We believe, therefore, that the skeletons are now fully out of the closet, allowing for a reasonably low-risk entry point on the stock. Given extensive hedging, we see the company generating more than $1.10 per share in cash flow next year at US$44 WTI oil / US$2.95 NYMEX gas. This gives the company a bargain cash flow multiple of less than 2.4x at current prices. BUY. QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value In Q3-F15, Bonavista recorded impairments of $250MM re- $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 7.50 lated to its Central, South Central and Southern Alberta $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 10.00 CGUs driven by a decline in forward commodity price as- $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 11.50 sumptions. Even after these impairments, Bonavista's book value remains more than $9 per share. Bonavista continues Our conservative case values Bonavista at $7.50 per share, reflecting a to move interest paid out of operating cash flows into fi- return to US$65 oil and US$3.75 gas by 2019. nancing cash flows, which is allowed under IFRS, but mis- 2015 Company Profile 2013 2014 leading, in our view. 9 mos Price 13.92 7.30 3.07 Adjusted Cash Flows 3/5 Shares (millions incl. exch.) 199.9 215.9 217.7 With reduced dividends and capex in 2016, we now see Market cap. ($ millions) 2,782 1,576 668 spending as roughly balanced next year. Roughly 50% of Revenue ($ millions) 792 1,094 284 Bonavista's net revenues are hedged in 2016. CFPS 2.23 2.55 1.28 The Balance Sheet 1.5/5 Price to YTD CFPS 6.2x 2.9x 1.8x ROE (annualized) 2.2% 0.2% -18.1% A Debt-to-EBITDA covenant limits total debt to 3.5 times Dividends per share 0.84 0.84 0.32 EBITDA, excluding unrealized gains on financial instruments but including realized hedging. At strip pricing, our 2017 Production (boe/d) 73,406 77,211 79,094 EBITDA forecast of ~$380 MM limits debt to $1.3B. With CFO* per boe 16.65 19.53 12.91 Bonavista close to this level of debt already, it must tread carefully. Net debt to EV 27% 40% 65% Net debt to CFO* 2.3x 1.9x 3.3x Business Operations 2.5/5 2015 Cash Flow and Dividends 2013 2014 In the face of tighter cash flows, Bonavista has focused on 9 mos its highest productivity Glauconite and Deep Basin plays. In Reported CFO* 446.1 550.3 279.6 our view, low onstream costs provide more than enough Capital expenditures (443.8) (639.6) (257.8) stability to weather the current downturn. Available cash (shortfall) 2.2 (89.3) 21.7 Corporate Governance 2.5/5 Dividends declared 153.0 164.8 68.6

With insider ownership of 10%, management's interests re- % of CFO* 34% 30% 25% main well aligned with shareholders. % of available cash >500% N/A 316%

*CFO is cash from operations after working capital, cash interest and asset retirement expenditures

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Page 24 Updated October 5, 2015 BROOKFIELD RENEWABLE ENERGY UNDER REVIEW Current Price $26.40 PARTNERS L.P. Intrinsic Value $25.50 Current Yield 6.3% TSX-BEP.un; NYSE-BEP GROWING PAINS

Although BEP might appeal to patient investors willing to wait on higher power prices, we believe near-term headwinds undermine prospects for material upside in F16. In addition, although our BEP value estimate assumes output meets LTA, a history of underperformance dampens enthusiasm for value accretion via development and acquisitions.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 Pricing and FX headwinds reduce our BEP equity value estimate to $25.50 per unit, from $27.75 previously. BEP’s adjusted FFO per unit is a misleading metric for investors attempting to monitor levered FCF, since it excludes development costs, understates the sponsor’s equity claim and replaces actual sustaining capital expenditures with a smoothed amount. FY end Dec. 31 F13 F14 Q3-F15 US$ Millions Adjusted Cash Flows 2/5

BEP generated adjusted FFO per unit of $1.21 in 9M-F15, Capacity (MW) 5,849 6,707 7,284 which implies a 103% payout ratio at the $1.66 annual distribution per unit. If we adjusted for actual capital expenditures, taxes, development costs and the equity claim of Electrical output (TTM GWh) 22,222 22,548 23,054 NCI, BEP’s payout ratio would be materially higher. Price per unit $26.16 $30.93 $27.49

The Balance Sheet 2/5 Units outstanding 265.3 275.6 273.0

BEP’s balance is highly levered and its equity is richly val- Market capitalization $6,940 $8,524 $7,504 ued. Accordingly, we believe BEP has a greater amount of equity value at risk should interest rates rise compared to names like NPI and CPX. Net debt $8,478 $9,418 $10,152

Enterprise value $15,418 $17,942 $17,656 Business Operations 4/5 Revenue (TTM) $1,706 $1,704 $1,644 Management will need to execute on its development plans to unlock equity value upside from the current unit price. In our view, the market has yet to fully account for a EBITDA (TTM) $1,208 $1,216 $1,192 sustained low power price environment. FFO per unit (TTM) $2.24 $2.07 $1.79

EV/EBITDA (TTM) 12.8x 14.8x 14.8x Corporate Governance 3/5

No significant issues noted. P/FFO (TTM) 11.7x 14.9x 15.4x

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Page 25 Updated November 12, 2015 SELL CAE INC. Current Price C$14.69/ US$11.08 Intrinsic Value C$14.00 TSX-CAE; NYSE-CAE Current Yield 2.0%

TAXMAN SAVED THE QUARTER Although CAE managed to meet consensus expectation on its reported EPS, Q2-F16 earnings were supported by a tax recovery in Canada. Four out of the last six quarters, one-time items have boosted company’s earnings. In Q2-F16, CAE recorded an improvement in FFS utilization rate and increased the book-to-bill ratio for the civil segment. Despite these factors, civil segment’s operating margins dropped 1.6%, which becomes a 0.3% drop when comparing normalized margins.

Given these facts, the stock continues to trade at 8.7x 2016 consensus EBITDA estimate. We recommend investors to SELL the stock as one- time items and foreign exchange tailwind cannot become a mainstream business model that continuously supports CAE’s EPS.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 Our intrinsic value estimate of $14.00 reflects 3% annualized revenue growth through 2019, 100 bps improvement in civil operating CAE’s change of disclosures has impaired our ability to ana- margin driven by improved utilization, a resilient military business lyze the performance of the underlying Civil and Military backed by approximately three years of order backlog and an- businesses. nualized capex spend of $170 million.

Adjusted Cash Flows 2/5 Q2-F14 Q2-F15 Q2-F16 Free cash flow improved to $102 million in Q2-F16 compared to the negative $17 million in Q2-F15, mainly due to favorable changes in non-cash working capital (i.e. inven- Adjusted EPS $0.15 $0.13 $0.18 tory, contract in progress liabilities) and maintenance capex. Revenue, $ millions $488 $529 $617 The Balance Sheet 3/5 Price $12.0 $14.5 $14.7 CAE complies with financial covenants with net debt to capital under 40%, even though the ratio have improved in P/E 16.6 19.8 16.9 Q2-F16 YoY, the risk that goodwill of the acquired businesses could be impaired remains a concern. Price/book 2.4 2.6 2.1 Business Operations 3/5 EV/EBITDA (TTM) 9.0 11.4 10.3 After normalization, CAE’s Q2-F16 civil margin is 30 bps lower compared to Q2-F15’s normalized margin of 14%, despite Market capitalization, $ millions $3,128 $3,846 $3,955 the segment’s revenue growth of 23% since that time. CAE’s management attributes this to an unfavorable product mix and R&D costs, However, in our view the margin Enterprise value, $ millions $3,938 $4,844 $4,892 decline should serve as a warning sign to investors, as it could demonstrate the headwinds CAE is facing as it strives Net-debt/capital 38.7% 39.9% 33.5% to improve its margins.

Reported ROE 13.3% 12.9% 13.3% Corporate Governance 2/5 Adjusted ROE, ex-other gains During the last three years, metrics for measuring short-term 12.7% 12.5% 12.9% incentives for executives have changed routinely at CAE. Target thresholds have been reduced and new criteria has Shares outstanding, millions 261.5 265.6 269.3 been added.

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Page 26 Updated November 12, 2015

CALLIDUS CAPITAL CORP. Current Price C$10.53 TSX-CBL Market Capitalization (million) $520

G R A V I T Y Concerns related to the credit quality of Callidus’ loan book and uncertainty regarding the Catalyst loan loss guarantee combine to create uncertainty for investors attempting to value Callidus. Only half of the loan book (in dollar terms) at December 31, 2014 was guaranteed and given the portfolio concentration, a single large borrower impairment could significantly impact earnings and book value. The information we have gathered from bankruptcy court filings, industry par- ticipants, news media and various other sources suggests 20% of loan commitments could be at risk of impairment, absent the guarantee.

Risk Areas  Earnings quality — Due to the priority of payments structure related to interest income and the subjectivity related to potential loan impairments, we view there to be an increased risk to economic earnings.

 Disclosure — Limitations in disclosure related to accrued interest, loan valuation and the loan loss guarantee present a risk to investors in analyzing potential credit risk.

Updates Since Last Report  No updates.

TASO GEORGOPOULOS [email protected] 416-866-8783

Page 27 Updated November 13, 2015

CAMECO CORP. Current Price C$16.44US$12.36 TSX-CCO; NYSE-CCJ Market Capitalization (million) C$6,480/US$4,870

TAX MAN KNOCKING HARDER The Canada Revenue Agency (CRA) is pursuing Cameco for its use of an offshore tax haven, exposing the company to approximately $1.5 billion in back taxes and transfer pricing penalties through 2014 tax year. Our analysis of the Canadian tax code, court documents, and legal precedents suggest that the CRA’s case has a high likelihood of prevailing in court. In addition, should the CRA prevail, Cameco’s tax rate could rise to the full Canadian statutory tax rate of 26% in the future. The CRA is disputing both the structure and the transfer price established by Cameco. Consequently, the CRA needs to win on only one claim to prevail, while Cameco needs to win on both to defend itself successfully.

RISK AREAS

 Tax — Based on our analysis, there seems to be little business substance to CCO’s off-shore marketing structure given that all the key functions and risks are borne by the Canadian entity, while most profits accumulate off-shore. In addition, Cameco’s transfer pricing methodology requires a very high degree of comparability to market transactions. Yet, there seem to be significant differences between CCO’s intercompany arrangement and market transactions. We also note that the CRA’s position is consistent with past legal precedents. Furthermore, the recent reassessment by the US Internal Revenue Service has further bolstered the case against CCO.

 Earnings Quality — Despite the extremely material exposure, CCO recorded a cumulative charge of only $92M.

 Cash Flow Sustainability — CCO now expects that the tax court trial will commence in late September 2016 stretch- ing for four months into early 2017, with a decision expected within six to eighteen months thereafter. Thus we may not get a decision until 2018. Meanwhile, CCO will be required to make installment payments to the CRA, equaling 50% of the reassessed back taxes and penalties. All else equal, CCO’s cash tax rate may rise materially post 2016 re- gardless of the court case outcome, given the reset of the existing intercompany contracts between the Canadian parent and Cameco’s Swiss subsidiary.

UPDATES SINCE LAST REPORT

 None. The issue is expected to be resolved in 2016.

DIMITRY KHMELNITSKY [email protected] 416-866-8783

Page 28 Updated August 28, 2015 BUY CANADIAN IMPERIAL BANK OF COMMERCE Current Price C$95.60 / $72.30 Intrinsic Value C$101.00 TSX-CM; NYSE-CM Current Yield 4.7% STRONG EXECUTION IN THE DOMESTIC MARKET CM reported a strong Q3 result with growth in each of its business lines. Most notable was the continued progression in Retail & Business Banking as management’s restructuring of the business is translating into a more stable net interest margin, a more profitable business mix, above industry average lending growth and an improving client experience. While we remain concerned about the bank’s heavy reliance on the domestic market, we have more faith in management’s ability to navigate through the challenges that lie ahead. We have a BUY recommendation for the bank.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Intrinsic value is $101.00, calculated by applying a multiple of 10.4x to our F2016 EPS estimate of $9.75 and a multiple of 1.8x to Since Q4-F13, new disclosure has been provided on the our BV per share estimate of $55.41 at the end of F2016, and bank’s exposure to condo development projects, which as of taking the average of the two. Q3 amounted to 87 in total; up 1 sequentially and up 8 YoY. FY end Oct. 31 F13 F14 Q3-F15 Capital 4.5/5 C$

The bank’s CET1 ratio ended Q3-F15 at 10.8%, unchanged Common equity tier 1 ratio (BIII) 9.4% 10.3% 10.8% sequentially with organic capital generation roughly offsetting a 4.8% increase in risk-weighted assets. Excess capital above a CET1 ratio of 9.5% was approximately $2.0 Closing share price $88.70 $102.89 $93.46 billion at the end of the quarter. We don’t believe that FirstCaribbean fits well with CM’s long-term strategy and EPS (TTM) $8.11 $7.87 $8.94 anticipate that it will eventually be sold, freeing up additional capital. P/E (TTM) 10.9x 13.1x 10.5x Credit 4/5 BV/share $40.36 $44.30 $50.02 CM reported a loan loss ratio of only 25 bps in Q3, down from 30 bps last quarter and below the 33 bps reported in the P/BV 2.2x 2.3x 1.9x same quarter of last year. Management provided a stress scenario on the potential impact of low oil prices for a prolonged period of time, suggesting that it would between Dividend yield 4.3% 3.8% 4.6% $350mm to $650mm to loan losses over a three year period. Market capitalization (millions) $35,413 $40,850 $37,126 Business Operations 3.5/5 ROE 21.4% 18.3% 20.4% Retail & Business Banking reported 7% YoY earnings growth with strong revenue growth and operating leverage of 0.9%. The net interest margin increased for the second consecutive Net interest margin (AEA) 2.12% 2.05% 2.01% quarter, while lending growth was particularly strong in business banking and residential mortgages (with 15% growth # shares outstanding (millions) 399 397 397 in higher margin CIBC-branded mortgages). Wealth Management delivered 15% earnings growth from the prior year, while Wholesale Banking achieved earnings growth of BUSINESS COMPOSITION 8% over that period. Currently, CM’s adjusted retail/wholesale earnings mix is Corporate Governance 4/5 approximately 72%/28%. CIBC’s structure has remained unchanged since the corporate segment began to house the Nothing noted. bank’s P&C efforts in the Caribbean.

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Page 29 Updated November 6, 2015 SELL

CANADIAN NATURAL RESOURCES LTD. Current Price C$33.71 / US$25.60 Intrinsic Value C$29.00 TSX-CNQ; NYSE-CNQ Current Yield 2.7%

HORIZON EXPANSION LEAVES DOWNSIDE AT US$65 OIL Canadian Natural Resources Ltd. ('CNRL') continues to execute on its Horizon ramp-up targeting capacity of 170,000 bbl/d with Phase 2B by Q4-F16, growing to 250,000 bbl/d with Phase 3 by Q4-F17. Despite this growth, a long-run oil price assumption of US$65 WTI leaves 2018 free cash flows well below our desired 8% free cash flow yield. This is before considering any new environmental requirements or royalty increases that might come out of an NDP-led review in Alberta. We remain sellers of this name in advance of greater certainty on the outlook for royalties, environmental costs and oil prices.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 3/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value CNRL currently has over $7.79 B of project costs at Horizon $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 29.00 and Kirby that are not subject to depletion or depreciation. $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 39.00 So far in 2015, pre-tax interest of $184 MM or $0.17 per share has been capitalized to property plant and equipment $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 41.00 versus $147 MM or $0.13 per share in 2014. Our conservative case values Canadian Natural at $29 per share, reflecting a return to US$65 oil and US$3.75 gas in 2019. Adjusted Cash Flows 2/5 2015 Company Profile 2013 2014 9 mos Canadian Natural's leverage to long-term oil prices creates a significant valuation risk. At US$70 oil in 2018, Canadian Price 35.94 35.92 25.99 Natural is likely to generate $7.75 to $8.25 per share in cash Shares (millions incl. exch.) 1,087.3 1,091.8 1,094.4 flow. Chopping this assumption down to US$65 oil carves $0.75 per share off this target and removes most of the up- Market cap. ($ millions) 39,078 39,219 28,443 side from future growth in the oil sands. Revenue ($ millions) 16,145 18,863 9,570 The Balance Sheet 2/5 CFPS 6.64 7.75 3.79 Price to YTD CFPS 5.4x 4.6x 5.1x Canadian Natural exited 2015 Q2 with $16.5B of net debt, which is roughly 4.4x the cash flow we expect in 2016 at the ROE (annualized) 9.1% 14.4% (2.9%) current foward strip. The company had $3.37B borrwed on Dividends per share 0.58 0.90 0.69 its $7.48B of bank credit facilities; plus US$500MM in commercial paper that reduces availability. The facilities have Production (000's boe/d) 671 790 851 staggered maturities beyond 2017. The recent royalty sale CFO* per boe 29.46 29.32 17.81 provides $680MM in cash to reduce debt. Net debt to EV 20% 26% 37%

Business Operations 3/5 Net debt to CFO* 1.3x 1.7x 3.0x

Despite a downturn in cash flow YTD, CNRL's $4.2B in cash 2015 Cash Flow and Dividends 2013 2014 was enough to cover capital expenditures of $3.7B, with a 9 mos modest shortfall of $250MM after dividends. Despite the Reported CFO* 7,218.0 8,459.0 4,147.0 shortfall, management has remained committed to increasing its dividend, alluding to more dividend hikes in the near Capital expenditures (7,067.0) (11,398.0) (3,716.0) future. Available cash (shortfall) 151.0 (2,939.0) 431.0 Corporate Governance 3/5 Dividends declared 625.0 983.0 755.0 % of CFO* 9% 12% 18% CNRL got out in front of the public fallout from the Primrose leaks, keeping management's credibility intact. The current % of available cash 414% N/A 175% downturn presents an even bigger challenge.

*CFO is cash from operations after working capital and asset retirement expenditures

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Page 30 Updated November 3, 2015 SELL CANADIAN OIL SANDS LTD. Current Price C$9.93 Intrinsic Value C$6.25 TSX-COS Current Yield 2.0%

LOW OIL PRICES LEAVE NO ROOM FOR ERROR Based on our projections, we estimate that Canadian Oil Sands still requires a break-even WTI price of US$55+ to cover both capital and dividends. The company is likely to run cash shortfalls until prices recover to these levels. Cash costs are still running north of $40 per barrel with another $10 per barrel in overhead (development costs, admin, insurance and paid interest). We arrive at our break-even estimate by adding $8 to $10 per barrel for sustaining capital. Management highlights the potential for lower costs through greater future reliability, but investors patience is likely to have run out on that promise. WIth the prospect of negative cash flows over the next 12 to 18 months, we recommend shareholders tender to the Suncor offer equivalent to $8.85 per share.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 3.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value There are two IFRS adjustments to watch for: 1) capitalized $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 6.25 interest on major projects and 2) capitalized turnaround costs. $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 10.50 In 2013, these costs totaled $161MM, or $0.33 per share. In 2014, these costs were $182MM or $0.38 per share. So far this $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 14.50 year, these costs have totaled $140MM or $0.23 per share. Our conservative case values Canadian Oil Sands at $6.25 per share, reflecting a return to US$65 oil and US$3.75 gas by 2019. Adjusted Cash Flows 1/5 2015 Company Profile 2013 2014 9 mos To break even, we estimate COS needs revenues of $58 to $60 per barrel, net of royalties and transportation costs. This re- Price 19.98 10.42 6.31 quires U.S. WTI pricing of US$55+ per barrel, which raises the Shares (millions incl. exch.) 484.6 484.6 484.6 prospect of negative free cash flows for the next 12 to 18 months. Market cap. ($ millions) 9,682 5,050 3,058 Revenue ($ millions) 4,034 3,691 1,763 The Balance Sheet 1.5/5 CFPS 3.26 1.54 0.65 COS exited 2015 Q3 with net debt of $2.2B and $320MM drawn Price to YTD CFPS 6.1x 6.8x 6.1x on its $1.54B credit facility, which remains open through June ROE (annualized) 18.0% 10.0% (15.5%) 2019. If COS loses $250MM per quarter on an earnings basis and adds $250MM per quarter in debt, we estimate the com- Dividends per share 1.40 1.40 0.15 pany will violate its debt-to-capitalization covenant of 55% by Production (000's boe/d) 98 95 90 the end of 2016. It will cut its dividend long before this hap- pens, however. CFO* per boe 44.21 21.59 12.75 Net debt to EV 8% 27% 42% Business Operations 2/5 Net debt to CFO* 0.5x 2.5x 5.3x

Cash costs averaged $42.07 per barrel over the first nine 2015 Cash Flow and Dividends 2013 2014 months of 2015, including a turnaround-heavy quarter in Q2 9 mos and sub-$36 per barrel costs in 2015 Q1. Consistency remains Reported CFO* 1,582.0 745.0 315.0 an issue, however. Capital expenditures (1,342.0) (930.0) (312.0) Corporate Governance 2/5 Available cash (shortfall) 240.0 (185.0) 3.0 Dividends declared 678.0 678.0 73.0 Faced with disappointing Syncrude volumes since 2006, we % of CFO* 43% 91% 23% understand Suncor's by bidding for COS and desire to exert more influence on the operation. % of available cash 283% N/A >500%

* CFO is cash from operations after working capital and asset retirement expenditures.

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Page 31 Updated November 13, 2015 BUY CANADIAN TIRE CORP. Current Price C$115.88 Intrinsic Value C$156.00 TSX-CTC.a Current Yield 1.8%

STRONG Q3-2015 DRIVEN BY RETAIL; DIVIDEND INCREASING 9.5% Canadian Tire reported normalized FD EPS of $2.29 in Q3-2015, beating consensus of $2.01, and the sixth consecutive quarters of strong SSSG at CTR and FGL Sports. Management has been carrying out productivity initiatives effectively in the last two quarters, which helped to mitigate headwinds in the retail environment, including foreign exchange and economic slowdown in northern Alberta. Excluding the gain on sale of a surplus property, EBITDA increased by 10% or $34 million in Q3-2015, with the Retail segment accounting for $23 million of this increase. Canadian Tire also announced a 9.5% annual dividend increase and its intention to repurchase $550 million of Class A Non-Voting shares by the end of 2016.

Canadian Tire has the option to surface further value of its lucrative Financial Services business by selling up to an 29% equity interest to Scotiabank within the next 10 years at the then fair market value. In addition, Canadian Tire will benefit from the vend-in of its retained real estate into CT REIT over time as well as refinancing of the REIT’s intercompany loans with third parties, which will free up additional fund towards dividends increases, share buybacks and acquisitions. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We value Canadian Tire using a sum-of-parts approach and maintain our $156.00 intrinsic value, which consists of: Canadian Tire presents its financial statements with three reporting segments - Retail, Financial Services and CT REIT. Although EBITDA for  $99.00 for the Retail segment (including CTR, Mark’s, FGL each division within the Retail segment is not available, select key Sports and petroleum); metrics of each division are disclosed.  $30.00 for the 80% interest in Financial Services segment; and Adjusted Cash Flows 3/5  $27.00 for the 83.9% interest in CT REIT. Between 1999 and 2010, Canadian Tire focused on renewing its store concepts and building a stronger supply chain infrastructure. FY end December 2014 2015E 2016E As a result, Canadian Tire spent 88% of its operating cash flow on (C$ Millions, except as noted) capital expenditures. The efforts have paid off as Canadian Tire generated total free cash flow exceeding $2 billion from 2011 to 2014, more than quadrupling the free cash flow it generated in the Retail Revenue 11,035 11,617 11,942 previous 10 years. Canadian Tire achieved most of its five-year financial aspirations by 2014, and we expect the company to achieve its aspirations set out for 2015 to 2017. Consolidated Revenue 12,463 12,816 13,158

The Balance Sheet 3/5 Retail EBITDA 824 898 937 IFRS requires the consolidation of off-balance sheet securitized re- ceivables, leading to an increase in net debt-to-EBITDA from 2.5x to Retail EBITDA Margin 7.3% 7.7% 7.8% 4.4x in 2012. However, if we examine leverage at Retail and Finan- cial Services segments separately, debt levels appear manageable. Financial Services EBITDA 349 367 371 Business Operations 3/5 Consolidated EBITDA 1,463 1,495 1,555 The acquisition of FGL Sports increased Canadian Tire’s retail sales by 20%, making it the biggest sporting goods retailer in Canada, with a 35% market share. The company has a successful integration Consolidated EBITDA Margin 11.7% 11.7% 11.8% track record with FGL Sports and Mark’s. Share Price $109.13 $115.88 $115.88 Corporate Governance 2/5 Canadian Tire is structured to give the Billes founding family and the Market Capitalization 8,523 8,765 8,319 Dealers control through dual-class share structure. Public float is made up of Class A Non-Voting Shares. While common shares make EV 12,786 13,232 13,188 up just 4.6% of total shares outstanding, they represent 100% of the voting rights. The common shares are mainly held by the Billes family (~61% voting interest), C.T.C. Dealer Holdings Limited (~20% voting EV/EBITDA 8.7x 8.8x 8.5x interest) and deferred profit-sharing plan (~12% voting interest). 11 out of 16 (69%) Board of Directors are independent, with three elect- FD Shares Outstanding (mlns.) 78.1 75.6 71.8 ed by Class A shareholders.

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Page 32 Updated October 26, 2015 BUY CANADIAN UTILITIES LTD. Current Price C$35.26 Intrinsic Value C$37.50 TSX-CU Current Yield 3.3%

A SAFER WAY TO BET ON AB POWER

For investors interested in some exposure to potential long-term upside in Alberta spot power prices, ACO.X and CU are safer alternatives than the likes of Capital Power and TransAlta due to underlying portfolios of lower risk, regulated assets in Canada and Australia.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3.5/5 We believe CU is worth $37.50 per share ($41.00 per share previously) which implies a relatively low 1.4x average Better disclosure of financial results in its Energy seg- EV/rate base multiple for the Canadian gas and electric ment and a more detailed look at expenditures en- utilities. hances the relative transparency of CU’s financial results compared to its Canadian peers. Period Ending F13 F14 Q3-F15 (Amounts in C$)

Adjusted Cash Flows 2/5 Share price $35.67 $40.91 $36.11 Although lower pricing is impeding financial performance in CU’s Energy segment, a still-robust rate Shares (millions) base growth profile for the Utilities suggest ample EPS 261.0 263.9 266.0 and FCF growth prospects in the longer-term.

Market capitalization (millions) $9,311 $10,797 $9,604

The Balance Sheet 2/5 Net debt (millions) $7,720 $8,852 $9,472 CU’s leverage continued to increase in Q3-F15, alongside deteriorating business conditions in the Energy segment. Enterprise value (millions) $17,031 $19,649 $19,076

Business Operations 2/5 Adjusted EBITDA (TTM, millions) $1,548 $1,709 $1,640 The market has already “priced-in” a glim outlook for the Energy segment and regulatory risk is muted by Adjusted EPS (TTM) $2.21 $2.19 $1.94 recent cost of capital decisions.

EV / EBITDA (TTM) 11.0x 11.5x 11.6x Corporate Governance 3.5/5

The merits of a relatively low payout ratio are evi- P/E (TTM) 16.1x 18.7x 18.6x denced during challenging business conditions for a utility with a higher business risk profile. Net debt-to-EBITDA (TTM) 5.0x 5.2x 5.8x

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Page 33 Updated September 4, 2015 SELL

Current Price C$23.28 CANADIAN WESTERN BANK Intrinsic Value C$21.00 TSX-CWB Current Yield 3.8%

FACING HEADWINDS ON SEVERAL FRONTS We continue to have a negative view on the bank’s geographic footprint given current market conditions, with a strong possibility that low oil prices will lead to lagging economic growth in Western Canada relative to the rest of the country for an extended period of time. We are also concerned about the bank’s lack of revenue diversification as more than 90% of total revenue is dependent on the lending business. We maintain our SELL recommendation. QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 2.5/5 We revise our intrinsic value to $21.00, calculated by applying a multiple of 8.0x to our F2016 EPS estimate of $2.60 and a multiple of Management’s F15 adjusted EPS growth targets of 5-8% are 0.9x to our BV per share estimate of $24.13 at the end of F2016, and based on Combined Operations. Gains on sales of CDI and taking the average of the two. Valiant in Q3 had a material positive impact on F15 adjusted EPS results. FY end Oct. 31 F13 F14 Q3-F15 C$ Capital 4/5 Common Equity Tier 1 capital The CET1 ratio stood at 8.5%, up 60 bps sequentially, with all of 8.0% 8.0% 8.5% the gains related to the closing of the sale of both CDI and ratio Valiant Trust. Despite the bank’s depressed valuation multiples $33.44 $37.75 $24.60 relative to historical levels, closing the day at a P/BV multiple of Closing Share Price 1.1x, management noted that a buyback would not be an ideal way to deploy capital. Instead, the preference would be EPS (TTM) $2.36 $2.73 $2.70 to continue and grow the business with a specific focus on equipment financing and wealth management. P/E (TTM) 14.2x 14.0x 9.1x Credit 3/5 BV/share $17.54 $19.52 $22.01 The bank’s loan loss ratio was 0.17% in Q3, flat sequentially and up 1 bp YoY. With the majority of credit risk skewed towards the retail loan book, specifically unsecured lending, we believe that P/BV 1.9x 1.9x 1.1x the bank’s business mix (83% business lending) will be a modest positive through the current cycle with respect to credit losses. Dividend yield 2.2% 2.1% 3.6% Gross impaired loans as a percentage of total loans ended the quarter at 48 bps. While that ratio was up from 34 bps last year, it remains considerably lower than the most recent peak of 168 Market capitalization (millions) 2,662 3,034 1,980 bps reported in Q2-F10. ROE 14.2% 14.8% 11.7% Business Operations 3/5 CWB reported adjusted EPS from continuing operations of $0.65 Provision for credit losses (bps) 0.19% 0.15% 0.17% for Q3. YoY loan growth in the quarter was 11%. While still a strong result, this represents the lowest level of growth in three Net interest margin (ATA) 2.66% 2.59% 2.57% years. Notably, within retail lending, which comprises only 17% of the total portfolio, much of the growth was driven by a 25% # shares outstanding 79,620 80,369 80,479 jump in Optimum mortgage balances, the bank’s alternative (thousands) mortgage product. The largest negative in the quarter was a $5.0mm loss on the sale of securities. Removing securities gains/losses from earnings in both the current period and the BUSINESS COMPOSITION prior year would have resulted in EPS growth of 10%. More than 90% of total revenue is dependent on lending business and Corporate Governance 4/5 83% of the bank’s loan portfolio is business lending. Approximately, 42% and 33% of CWB’s total loans are sourced to Alberta and British Good. Columbia, respectively.

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Page 34 Updated October 27, 2015 BUY CAPITAL POWER CORP. Current Price C$19.20 Intrinsic Value C$24.00 TSX-CPX Current Yield 7.6%

OPPORTUNISTIC HEDGING BOOSTS FFO

Assuming average Alberta power prices stagnate at $40 per MWh to the end of the decade, we believe CPX would be capable of both maintaining its dividend and reducing its debt load by almost 15%—a level of sustainability that could be appealing to those willing to bet that Alberta power prices will eventually increase.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Due to lower power prices, we’ve reduced our value estimate to $24.00 per CPX share, from $27.75 per share previously, which implies a F16E FCF yield of 9.6%. CPX matched TA’s disclosure practices by providing revenue by plant and a higher level segmented adjusted EBITDA disclosure. Period Ending F13 F14 Q3-F15 (Amounts in C$)

Adjusted Cash Flows 4/5 Share price $21.30 $26.00 $18.88

CPX will generate significant excess FCF in 2015 despite a sharp downturn in Alberta power prices. Shares outstanding (millions) 101.1 106.5 99.2

The Balance Sheet 2/5 Market capitalization (millions) $2,153 $2,768 $1,873

CPX’s leverage and debt service ratios remain elevated. Net debt (millions) $2,144 $2,125 $2,371 However, ample excess FCF provides CPX the opportunity to lower these metrics in 2015, suggesting the dividend is Enterprise value (millions) safe (unlike TA). $4,297 $4,893 $4,244

Adjusted EBITDA (millions) $509 $423 $481 Business Operations 3/5

Adjusted EPS (TTM) $1.74 $0.72 $0.94 CPX’s exposure to Alberta is weighing on its share price, due to lower power prices and a less-optimistic outlook for electricity demand growth. EV/EBITDA (TTM) 8.4x 11.6x 8.8x

Corporate Governance 2.5/5 P/E (TTM) 12.6x 36.1x 20.1x

Given very low Alberta power prices, we believe CPX is Alberta average spot price (YTD) $80 $49 $37 taking the right approach to capital allocation by opting for share buybacks. If power prices remain low, CPX’s deci- Net-debt-to-EBITDA 4.2x 5.0x 4.9x sion to fortify its balance sheet today should leave it in a better position to transact on opportunistic M&A. Net debt-to-EV 50.0% 43.4% 55.9%

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Page 35 Updated October 7, 2015 BUY CAPSTONE INFRASTRUCTURE CORP. Current Price C$3.12 Intrinsic Value C$5.00 TSX-CSE Current Yield 9.6%

BUY CAPSTONE, GET BRISTOL FOR FREE

The current share price of CSE assigns no value to Bristol Water, suggesting an appealing entry point. In addition, although its payout ratio will trend above 100% until F17, CSE has ample liquidity to bridge the shortfall. BUY

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 We value CSE at $5.00 per share, based on a sum-of-parts DCF approach. CSE’s definition of adjusted funds from operations is remarkably conservative, understating its free cash FY end Dec. 31 F13 F14 Q2-F15 flow profile compared to other Canadian IPPs. C$ Millions

Adjusted Cash Flows 2.5/5 Share price $3.56 $3.20 $2.99

With Bristol now expected to pay an annul dividend Shares outstanding (millions) 95.8 96.8 97.2 during AMP6, CSE’s ability to sustain the dividend has improved materially. Market capitalization $341.0 $309.8 $290.6

Net debt $1,044.1 $1,213.6 $1,319.0 The Balance Sheet 2.5/5

Enterprise value $1,385.1 $1,523.4 $1,609.6 CSE has multiple levers available to offset cash flow shortfalls to F17, such as hydroelectric plant refinancing, leverage on the new Cardinal contract, DRIP Dividend per share (prospective) $0.30 $0.30 $0.30 participation, and a potential payment of $25 million from the OEFC. AFFO per share (TTM) $0.49 $0.58 $0.34

Payout ratio 60.8% 51.4% 88.2% Business Operations 3.5/5

CSE’s fundamental risk is very low, with the vast ma- Adjusted EBITDA (TTM) $128.4 $160.4 $137.5 jority of its cash flow and value attributable to contracted or regulated assets—a risk profile that is poor- EV/EBITDA (TTM) 10.8x 9.5x 11.7x ly communicated by its very high dividend yield.

7.3x 5.5x 8.8x Corporate Governance 2.5/5 Price-to-AFFO (TTM)

No issues noted. Debt-to-EBITDA (TTM) 8.1x 7.6x 9.6x

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Page 36 Updated November 3, 2015 SELL CENOVUS ENERGY INC. Current Price C$20.47 / US$15.65 Intrinsic Value C$17.50 TSX-CVE; NYSE-CVE Current Yield 3.1%

FREE CASH SQUEEZE CONTINUES

For a large cap whose growth plans are being slowed and deferred, free cash yield after sustaining capital becomes even more relevant. Unfortunately, if we apply an 8% yield requirement to Cenovus’ 2017 free cash flows at US$65 oil, we see 15% to 20% downside from its current share price. On balance, we believe the market is ignoring this outcome and hoping that Cenovus becomes a takeout candidate. Unless a bid emerges, we do not see a near-term catalyst for Cenovus' share price. SELL.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value Foster Creek's non-fuel operating costs dropped 16% year $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 17.50 over year in 2014, to $11.52. At least half of the decline was $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 29.00 due to capitalizing expenditures for some of the project's infill drilling program, which were previously expensed. This is $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 45.00 based on the judgement that these activities enhanced Our conservative case values Cenovus at $17.50 per share, reflecting a future production capability, thereby qualifying for capitali- return to US$65 WTI oil and US$3.75 NYMEX gas by 2019. zation. 2015 Company Profile 2013 2014 Adjusted Cash Flows 2/5 9 mos Price 30.40 23.97 20.24 We expect Cenovus to generate cash flow of $1.30 to to $1.50 per share next year at current strip pricing. Current Shares (millions incl. exch.) 756.0 757.1 833.3 dividends of $0.64 per share remain too high, however Market cap. ($ millions) 22,984 18,148 16,866 Cenovus' business plans are cushioned by cash on the balance sheet following its royalty sale. Revenue ($ millions) 18,657 19,642 3,726 The Balance Sheet 4/5 CFPS 4.68 4.66 0.73 Price to YTD CFPS 6.5x 5.1x 20.7x At 2015 Q3, Cenovus had $6.3B in unsecured, USD notes, ROE (annualized) and $4.0B available on a credit facility that is open through 6.7% 7.4% (6.8%) November 2018. The company is now sitting on $4.4B in Dividends per share 0.88 1.06 0.53 cash following a July sale of its royalty assets to Teachers' for $3.3B. With no apparent use for this money, we attribute Production (000's boe/d) 267 285 285 Cenovus' hoard of cash to a desire to protect the compa- CFO* per boe 36.25 33.92 7.82 ny's investment grade credit rating. Net debt to EV 10% 20% 20%

Business Operations 2.5/5 Net debt to CFO* 0.7x 1.3x 5.3x

Cenovus announced it will defer all development work not 2015 Cash Flow and Dividends 2013 2014 currently near completion in 2015, including Christina Lake 9 mos Phase G, Foster Creek Phase H, Narrows Lake, Telephone Reported CFO* 3,539.0 3,526.0 610.0 Lake and the majority of its conventional drilling. Capital expenditures (3,269.0) (3,058.0) (886.0) Corporate Governance 3/5 Available cash (shortfall) 270.0 468.0 (276.0)

It remains to be seen whether Cenovus' decision to defer Dividends declared 732.0 805.0 445.0 work and cut all non-essential staff and contractors in 2015 % of CFO* 21% 23% 73% will have a lasting effect on the company's corporate cul- % of available cash 271% 172% N/A ture. * CFO is cash from operations after working capital and asset retirement expenditures

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Page 37 Updated November 12, 2015

CGI GROUP INC. Current Price C$53.90 / US$40.61 TSX-GIB.A; NYSE-GIB Market Capitalization (millions) C$16,700 / US$12,600 EARNINGS QUALITY CONCERNS REMAIN About three years out of the Logica acquisition, CGI’s cash flow continues to fall short of its earnings-based metrics. Given the continuing, positive impact on earnings of the Logica-related accounting adjustments, amid ongoing organic revenue declines and decelerating margin expansion through F15, our concerns about earnings quality at CGI remain.

Risk Areas  Earnings quality / disclosure — We view ~$1.1 billion in Logica acquisition-related accounting adjustments as an earnings quality red flag, as they can drive earnings improvements without corresponding improvements to cash flow. CGI does not disclose the (indirect) P&L impact of the adjustments, which we believe will continue to materially benefit earnings, with a significant “run off” occurring in the first half of F16.

Updates Since Last Report  None.

KEVIN DUSSELDORP [email protected] 416-866-8783

Page 38 Updated November 12, 2015 BUY CHOICE PROPERTIES REIT Current Price C$11.39 Intrinsic Value C$12.20 TSX-CHP.un Current Yield 5.7%

Q3-2015 IN LINE; FIRST DISTRIBUTION INCREASE SINCE IPO Choice REIT derives 91% of annualized base rent from Loblaw, subjecting it to higher economic dependence risk than most retail commercial REITs. However, in our opinion, the risk of lack of diversification is mitigated by the underlying financial strength of Loblaw as a retailer in food and drug, sectors that tend to have stable performance less impacted by economic conditions. Moreover, the weighted average lease term to maturity on Loblaw leases is 12.2 years, at the longer end of the range of eight to 12 years for peers. Management has been successful at growing Choice REIT’s gross leasable area (“GLA”) with accretive acquisitions and development projects. Although there is refinancing risk in case of a rising interest rate environment, we expect the negative impact of debt refinancing to be mitigated by: i) The contractual rent escalations of 0.3% a year between 2014 and 2018, followed by 1.5% a year from 2019 onwards, and ii) AFFO accretion from the vend-in of Loblaw’s remaining owned real estate and the REIT’s own development pipeline. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We have updated our model to reflect the accretive investments made in Q3-2015. We value Choice REIT at 15.0x 2016E AFFO mul- The level of disclosure in the financial reports is in line with the tiple to derive a new $12.20 intrinsic value (up from $12.00), which reporting of the other publicly traded REITs in Canada. implies a 6.10% cap rate.

Adjusted Cash Flows 3/5 Although there is debt refinancing risk in light of a rising interest rate environment, we expect the negative impact of debt refinancing will be mitigated by: i) contractual rent escalations of FY end December 2014 2015E 2016E 0.3% per year between 2014 and 2018 followed by 1.5% per (C$ Millions, except as noted) year from 2019 onwards; and ii) AFFO accretion from the vend- in of the majority of Loblaw’s remaining owned retail space Square Footage (millions) 38.9 41.5 42.8 over the next 10 years. Property Revenue 683 729 761 The Balance Sheet 3/5 510 543 567 Choice REIT has a strong balance sheet with debt (including Net Operating Income (NOI) Class C LP units) to total assets was 44.9% at the end of Q3-2015, lower than the maximum limit of 65% under the Declaration of NOI Margin 74.7% 74.5% 74.5% Trust. The debt service coverage ratio was 3.6x, much higher than the minimum requirement of 1.5x. 100% of the Choice REIT’s portfolio is unencumbered. Both DBRS and S&P have as- EBITDA 487 521 545 signed a BBB (investment grade) credit rating to the Choice REIT. AFFO per Unit $0.75 $0.78 $0.81

Business Operations 3/5 Distribution per Unit $0.65 $0.65 $0.67 The Choice REIT has relatively lower leasing risk given Loblaw’s weighted average remaining lease term of 12.2 years Payout Ratio 87% 84% 82% (accounts for approximately 89% of GLA), which is longer than its peers at eight to 12 years. Overall occupancy rate was 98.5% Unit Price $10.63 $11.39 $11.39 at the end of Q3-2015, improved from 97.9% one year earlier.

Corporate Governance 3/5 Price/AFFO Multiple 14.3x 14.7x 14.0x

Loblaw holds an 83.0% effective interest in the REIT, George 6.1% 5.7% 5.9% Weston Limited holds 5.5% and the public owns 11.5%. Seven Distribution Yield out of nine members (78%) on the company’s Board of Trustees are independent. Units Outstanding (millions) 395 406 415

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Page 39 Updated October 30, 2015 BUY COGECO CABLE INC. Current Price C$69.05 Intrinsic Value C$72.00 TSX-CCA Current Yield 2.0%

WHAT IF COGECO PAID A DIVIDEND ON PAR WITH PEERS?

Cogeco remains underpriced, trading at 6.2x F16 EBITDA and a 9.5% FCFE yield, compared to the peer average of 7.2x EBITDA and 6.8% FCFE yield. In our opinion, part of the discount is due to the fact that Cogeco does not pay as high of a dividend. In this report, we explore how much Cogeco would be worth if it instituted a payout ratio more in line with peers. This quarter, Cogeco also exhibited an improvement in the TV and Internet subscriber trajectory, losing 1% of PSUs YoY, compared to 3.2% for Shaw. We continue to prefer Cogeco over Shaw from a valuation and operational perspective.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 We are maintaining our BUY and increasing our intrinsic value estimate to $72.00. The Company continues to capitalize reconnect costs. Oth- erwise, management is conservative in its accounting. YTD August 31, 2015 F13 F14 F15 C$ Millions

Adjusted Cash Flows 4/5 Revenue (TTM) $1,692 $1,932 $2,043

The $1.56 annual dividend equates to about 24% of F16 free cash flows and provides plenty of room for future growth. EPS $4.05 $4.01 $5.24

The Balance Sheet 3/5 EBITDA (TTM) $780.4 $874.4 $930.5

Management is focused on debt reduction with F16E net Share price (reporting date) $48.36 $61.46 $69.05 debt-to-EBITDA at 3.0x.

EV/EBITDA (TTM) 6.7x 6.5x 7.0x Business Operations 3/5 P/E (TTM) 12.5x 15.3x 13.2x Bell’s plan to expand IPTV from a 35% overlap to 70% in Co- geco’s territory over the next few year is a key risk. Manage- ment believes that there may be an opportunity to grow FCFE yield 7.2% 9.1% 8.5% subscribers with a Canadian TiVo launch in addition to a superior Internet product. Dividend Yield 2.1% 2.0% 2.3%

Corporate Governance 3/5 Market cap $2,476 $3,017 $3,398

Cogeco has done a good job of maintaining a fully independent board. However, we remain concerned over the Enterprise value $5,329 $5,666 $6,466 dual class voting shares. The multiple voting shares control 82.7% of votes but comprise only 32.3% of the outstanding shares. Net debt: TTM EBITDA 3.7x 3.0x 3.3x

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DESMOND LAU [email protected] 416-866-8783

Page 40 Updated November 12, 2015 BUY CRESCENT POINT ENERGY CORP. Current Price C$17.61 / US$13.28 Intrinsic Value C$19.00 TSX-CPG; NYSE-CPG Current Yield 6.8%

WAITING FOR THE TURN Crescent Point 's recent outlook for 2016 anticipated $1.05 to $1.35 billion of capex next year, depending on oil prices, and implied volume declines of up to 5% versus current levels. At this guidance, assuming US$44 oil and US$2.95 NYMEX , we expect the company to run a surplus of $150 million to $450 million before dividends, with dividends current set at ~$605 million per year. This gap is likely to close quickly, however, given our expectation for a rebound in WTI pricing post-2016. With top quartile light oil plays, Crescent Point remains well positioned for an eventual reversal in commodity prices. BUY.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value Impairment charges of ~$555MM were recorded in Q3-F15 $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 19.00 with $255 MM attributed to Canada and $300MM to the $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 26.00 U.S. These impairments were triggered by a decline in fore- $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 32.50 cast commodity prices which dragged down cash flow estimates for CGUs in Northern Alberta (early stage proper- Our conservative case values Crescent Point at $19.00 per share, re- ties) and Southwest Sask. (heavier liquids tied to WCS pric- flecting a return to US$65 WTI oil and US$3.75 NYMEX gas by 2019. ing). 2016 Company Profile 2013 2014 9 mos Adjusted Cash Flows 2.5/5 Price 41.25 26.91 15.27 Shares (millions incl. exch.) 395.7 447.7 504.6 At US$44 oil and US$2.95 gas, we view the dividend as modestly stretched in 2016, with the gap closing in 2017 on a Market cap. ($ millions) 16,321 12,047 7,705 rebound in oil prices. Revenue ($ millions) 2,669 4,212 1,788 CFPS 4.99 5.48 2.85 The Balance Sheet 2.5/5 Price to YTD CFPS 8.3x 4.9x 4.0x With net debt of $4.2B at the end of 2015 Q3, Crescent ROE (annualized) 1.7% 5.4% (6.8%) Point Net Debt to EBITDA reached 2.1x, well within the com- Dividends per share pany's 3.5x Senior Debt to EBITDA covenant. The company 2.76 2.76 1.81 had $2.2B drawn on its $3.6B credit facility at quarter-end. Production (boe/d) 120,288 140,803 159,425 CFO* per boe 44.95 47.78 32.94 Business Operations 3/5 Net debt to EV 10% 20% 36%

CPG has steadily accumulated some of the lowest cost, Net debt to CFO* 0.9x 1.2x 2.3x highest return drilling acreage in North America. These high 2015 Cash Flow and Dividends 2013 2014 quality assets have allowed Crescent Point to improve its 9 mos capital discipline during the current oil-price shakeout. Reported CFO* 1,973.3 2,455.6 1,437.5 Capital expenditures (1,746.9) (2,168.7) (1,239.9) Corporate Governance 3/5 Available cash (shortfall) 226.5 286.9 197.6 Management's recent efforts have focused on shoring up Dividends declared 1,081.6 1,174.6 867.6 volumes and averaging down decline rates, using acquisi- % of CFO* 55% 48% 60% tions, drilling inventories, unitization and waterflooding to create a more stable company. % of available cash 478% 409% 439% * CFO is cash from operations after working capital, cash interest and asset retirement expenditures

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Page 41 Updated November 11, 2015 BUY CT REIT Current Price C$12.78 Intrinsic Value C$14.10 TSX-CRT.un Current Yield 5.2%

Q3-2015 IN LINE; DISTRIBUTION INCREASE ANNOUNCED CT REIT derives 96.5% of annualized base minimum rent from Canadian Tire Corp. (“CTC”), subjecting it to higher economic dependence risk than most retail commercial REITs. However, in our opinion, the risk of lack of diversification is mitigated by the underlying financial strength of CTC as a retailer. An added benefit of the partnership with CTC is the lower leasing risk, as the leases with CTC have weighted average term of 13.9 years, among the longest in the industry. Although long-term interest rates are expected to increase in 2016, the negative impact of debt refinancing in 2016 should be mitigated by contractual weighted average rent escalations of 1.5% per year that began in 2015 and AFFO accretion from vend-in of CTC’s remaining 60 properties, or 4.0 million sq. ft. of available real estate, representing close to 20% potential growth from the current GLA base of 21.3 million sq. ft. CT REIT remains a BUY.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We value CT REIT at 16.0x 2016E AFFO multiple, which implies a 6.01% cap rate. We increase the intrinsic value to $14.10 (up from Disclosure in the financial reports appears to be in line with $13.70) to account for the newly announced investment activi- other publicly traded REITs in Canada. ties.

Adjusted Cash Flows 3/5 FY end December 2014 2015E 2016E (C$ Millions, except as noted) With 10% of indebtedness maturing in 2015 and 2016, CT REIT faces low debt refinancing risk. We expect the negative impact of debt refinancing in case of a rising interest Square Footage (millions) 20.4 21.6 22.1 rate environment will be mitigated by: i) contractual rent escalations of 1.5% per year that kicked in on Jan. 1, 2015; Property Revenue 344.8 376.6 398.0 and ii) AFFO accretion from continued vend-in of Canadi- an Tire’s retained real estate (estimated to be about 4 million sq. ft.). Net Operating Income (NOI) 268.1 290.8 307.2 The Balance Sheet 3/5 NOI Margin 77.8% 77.2% 77.2% The debt-to-asset ratio of CT REIT is 48.1% at the end of Q3- 2015, which is higher than its peers at 41% to 46%. The interest coverage ratio of CT REIT is at 3.22x, which is higher than EBITDA 259.7 281.3 297.2 its peers at an average 2.4x. 100% of CT REIT’s portfolio is unencumbered. Both DBRS and S&P have assigned a BBB AFFO per Unit $0.74 $0.82 $0.88 (investment grade) credit rating to CT REIT.

Business Operations 4/5 Distribution per Unit $0.65 $0.66 $0.68 CT REIT enjoys a 99.9% occupancy rate and has relatively less leasing risk given Canadian Tire’s weighted average Payout Ratio 88% 81% 77% remaining lease term is 13.9 years, which is longer than its peers at eight to 12 years. Moreover, only 1.5% of CT REIT’s Unit Price $13.11 $12.78 $12.78 leased space by base rent revenue is scheduled to mature between 2015 and 2019, significantly less than peers. Price/AFFO Multiple 17.8x 15.7x 14.5x Corporate Governance 3/5

Canadian Tire holds an 83.9% effective interest in the REIT Distribution Yield 5.0% 5.2% 5.3% while the public owns 16.1%. Four out of seven members (57%) on the company’s Board of Trustees are independ- Units Outstanding (millions) 180.6 187.9 191.0 ent.

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Page 42 Updated November 16, 2015 SELL DIRECTCASH PAYMENTS INC. Current Price $12.18 Intrinsic Value $11.00 TSX-DCI Current Yield 12.1%

CASH OUT OF DIRECTCASH

We believe the ongoing Cash Store Financial (“CSF”) and Money Mart (“MM”) run off and a declining core business will continue to pressure DCI’s revenue and cash flow into the foreseeable future. Although tuck-in acquisitions may slow the decline and we give management credit for some of its cost cutting efforts, we believe the company is fighting an uphill battle against strong secular decline trends and competitive factors in the Australian and Canadian ATM industries. In our view, DCI is over-levered and in the medium-to-long term, the company is likely to experience covenant compliance problems, which will limit growth opportunities and put the dividend at risk. We value DCI’s shares at $11.00 and rate it as a Sell.

QUALITY RATING INTRINSIC VALUE Our $11.00 valuation is DCF-based and utilizes a 10% WACC. Accounting & Disclosure 2/5 We estimate an average annual organic revenue decline for DCI’s ATM business in the 3% range going forward.

While DCI’s CSF–related disclosure has improved over Our valuation implies a 6.5x EV/EBITDA multiple on our F16 the past year, detailed ATM transaction data has been estimated EBITDA of $58 million, which we believe is reasona- scaled back materially. ble given expected organic revenue declines, high maintenance capex requirements and the continuing roll off of Adjusted Cash Flows 1.5/5 CSF/MM revenue.

We believe the loss of CSF/MM revenue, and strong sec- Period Ending F12 F13 F14 ular decline and competitive factors in the ATM industry CAD $ Millions (except as noted) will continue to result in organic cash flow declines. Giv- en organic declines, we view tuck-in acquisitions as maintenance capex, which limits free cash flow. Share price $23.38 $18.21 $19.45

The Balance Sheet 2/5 Shares outstanding (millions) 16.6 17.6 17.6

Given declining organic trends, we view DCI as over- levered at a 3.3x net debt/F16 Veritas EBITDA. Market capitalization $388 $320 $342

Business Operations 1.5/5 Enterprise value (EV) $562 $513 $524 In the past, the impact of organic revenue declines was partially offset by cost cutting. However, in our view, more recent evidence suggests DCI is approaching or Revenue $192 $242 $277 has reached the limit of the benefit it can obtain from cost cutting. Reported EBITDA $57 $68 $74 Corporate Governance 1/5

We question the business rationale for the DC Bank ac- Reported EPS $0.46 $0.00 $0.21 quisition. Additionally, the company has had seven CFOs since F07 and reports weaknesses in internal controls on an annual basis. EV-to-EBITDA 9.9x 7.5x 7.1x

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Page 43 Updated September 11, 2015 SELL DOLLARAMA INC. Current Price C$85.56 Intrinsic Value C$79.00 TSX-DOL Current Yield 0.4%

Q2-F2016 BEATS; RECORD SSSG AND GPM NOT SUSTAINABLE In Q2-F2016, Dollarama reported record SSSG and GPM of 7.9% and 44%, respectively, which led to a 35% increase in EBITDA. We have adjusted our forecast assumptions to reflect the record Q2 results. Dollarama’s multiple price point strategy is the key driver of its SSSG, with average transaction size increasing at 3% to 6% for the last several years. The increase in average transaction size at Dollarama is mainly due to an increase in selection of items above the $1.00 price point. However, sales generated from products above the $1.00 price point has reached a record high of 76.5% by Q2- F2016, and we do not believe the current SSSG is sustainable. At $85.56, we believe Dollarama is overvalued, as the stock price has already factored in a sustainable SSSG assumption of greater than 4.0%. Therefore, Dollarama remains a SELL.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We have derived a new $79.00 intrinsic value (up from $68.00) assuming that Dollarama opens 80 stores during F2016 and 60 stores a year Dollarama’s disclosures are on par with those of other Canadi- from F2017 onwards until it reaches the 1,400 saturation point by an retailers. Dollarama only disclosed % of sales from products F2022, a sustainable 4.0% SSSG, and GPM and SG&A margins in line above $1.00 price and not the units, make it very difficult to with management targets for F2016 and F2017. estimate the impact on same store sales growth.

Adjusted Cash Flows 4/5 FY end January F2015 F2016E F2017E We expect Dollarama to continue generating strong free cash (C$ Millions, except as noted) flow of $300 million and above starting in F2016.

The Balance Sheet 4/5 FD EPS $2.21 $2.77 $2.95

Dollarama is a de-leveraging story. Dollarama generates strong Same Store Sales Growth 5.7% 5.5% 4.0% free cash flow and we expect future cash flows will be used for debt repayment, share repurchase and dividends increase. New Stores Openings 81 80 60 Business Operations 3/5 Revenue 2,331 2,615 2,840 Dollarama has more than doubled its store network over the past nine years, while rival dollar stores have seen their market share shrink by 40%. Dollarama is Canada’s largest dollar chain EBITDA 461 560 583 and unparalleled at providing its consumers with disposable- type value merchandise. DOL’s multiple price point strategy has EBITDA Margin 19.77% 21.40% 20.52% allowed the company to broaden its product offering and offer higher priced items to help absorb cost inflation and negative Share Price $48.04 $85.56 $85.56 foreign currency movements. Dollarama is considering introducing products beyond $3.00 price point to combat margin pressures in late F2017. Dollarama implemented Kronos ad- P/E 21.8x 30.8x 29.0x vanced scheduling system and new POS terminals running on SAP platform, which contributed to improved labour scheduling Market Capitalization 6,333 10,961 10,678 and in-stock inventory positions. It is investing in WiFi technolo- gies to help speed up checkout and inventory replenishment. EV 6,858 11,525 11,247 Corporate Governance 3/5 EV/EBITDA 14.9x 20.6x 19.3x Dollarama has ten directors, including seven independent directors. Over 6% of shares outstanding are owned by Larry Ros- sy, the CEO. Shares Outstanding (millions) 131.8 128.1 124.8

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Page 44 Updated November 2, 2015 BUY ELDORADO GOLD CORP. Current Price C$4.57/ US$3.50 Intrinsic Value US$4.10 TSX-ELD; NYSE-EGO Current Yield 0.8%

DOING THE RIGHT THIN GS Eldorado has revised its 2015 production upwards to 710 koz from 690koz on the back of strong production. While this is a positive sign, the uncertainty in Greece still weighs on Eldorado’s share price. However, a recent temporary injunction awarded by Greece’s Council of State and our translation of Greek legal and technical documents (see our August 27th report “Greek Translations Spell Opportunity”) gives us confidence that Eldorado will prevail. We have revised our risk adjusted valuation to $4.10/sh, and we note that at Eldorado’s current share price, investors are getting two Greek projects (Skouries and Perama Hill) for free. As a result, we continue to recommend buying these shares.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 1/5 Long-Term Gold Price Intrinsic Value Estimate

Despite high Chinese non-controlling interests, the compa- US$1,100 per ounce US4.10 per share ny makes no mention of attributable production in its results. Eldorado also gives few details regarding resource +/- US$100 per ounce +/- US$1.20 per share fees in China, a type of tax. Moreover, the company doesn’t accrue withholding taxes, implying it doesn’t ex- Our unrisked sum-of-the-parts valuation is $4.70 per share. After pect to repatriate profits. risking for uncertainty in Greece, we arrive at our intrinsic value estimate of $4.10 per share, assuming long-term gold prices of Adjusted Cash Flows 3/5 $1,100 per ounce.

We estimate that Eldorado will generate $60 million of Fiscal year ends December 31 F15 cash before growth spending, this year, assuming $1,100 F13 F14 US$ millions, except as noted gold. But after growth capex, we see the company burn- 9 mos ing $240 million on lower capex spending.

Closing price, end of period 5.69 6.08 3.22 The Balance Sheet 5/5

With net debt of $185 million, Eldorado has the strongest Shares outstanding, millions 716 716 716 balance sheet in our coverage. We estimate 2016 net debt-to-EBITDA at 0.6x after the company spends over $350 million on growth. Market cap 4,074 4,384 2,306

Business Operations 4/5 Gold production, 000s oz 721 789 554 At $900/oz, Eldorado’s 2015 YTD all-in costs were among the lowest in our coverage. Lower sustaining capex Revenue 1,124 1,068 664 spending helped keep costs down, while improving grades at the company’s Chinese mines suggest the operations are turning the corner. CFPS 0.50 0.47 0.25

Corporate Governance 3/5 Cash flow per ounce 494 434 328 In Q3F15, management cut salaries by 10% in response to the lower gold price. While the savings as a result will be minimal, the signal to the market is positive. Management Price to cash flow 11.4x 12.9x 12.9x seems to be pro-active and planning for further decreases in the gold price. Net debt to EV (1%) 2% 8%

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SID SUBRAMANI [email protected] 416-866-8783

Page 45 Updated November 18, 2015 SELL EMERA INC. Current Price C$42.79 Intrinsic Value C$40.50 TSX-EMA Current Yield 4.4%

BETTER OPTIONS REMAIN

Although EMA’s share price declined 7% since our Q2-F15 update, we continue to believe better value options are available elsewhere—specifically, we suggest Hydro One Ltd. and Fortis Inc. as lower risk alternatives that trade at a discount to EMA. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2.5/5 We’ve increased our value estimate to $40.50 per share on account of accretion we see in the proposed TECO transaction. EMA’s level of disclosure is on par with its Canadian peers. FY end Dec. 31 F13 F14 Q3-F15 (Amounts in C$ Millions) Adjusted Cash Flows 2.5/5

A stronger U.S. dollar, higher New England capacity Price $30.57 $38.64 $44.27 pricing, and Muskrat Falls-associated transmission investments support robust FCF growth to F19. How- ever, the sustainability of EMA’s FCF growth could be Shares (millions) 142 144 145 undermined by lower capacity pricing in F20 and beyond. Market capitalization $4,329 $5,556 $6,437 The Balance Sheet 2.5/5

Net debt $5.101 $5,172 $4,983 EMA will increase leverage significantly if the TECO acquisition is approved, but its largely regulated business mix facilities access to liquidity should other op- Enterprise value $9,430 $10,728 $11,420 portunities arise.

Business Operations 3/5 Adjusted EBITDA (TTM) $830 $947 $1,001

Limited organic growth in its base regulated utilities is Adjusted EPS (TTM) $1.84 $2.01 $2.00 offset by favourable conditions at EMA’s U.S. power assets and robust transmission growth projects. EV / EBITDA (TTM) 11.4x 11.3x 11.4x Corporate Governance 2.5/5

P/E (TTM) 16.5x 19.2x 22.1x Based on our review of the Maritime Link hearings and the most-recent FAM audit, we believe relations with the UARB have improved. Net debt-to-EBITDA (TTM) 6.1x 5.5x 5.0x

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Page 46 Updated September 11, 2015 BUY EMPIRE COMPANY LTD. Current Price C$27.88 Intrinsic Value C$29.00 TSX-EMP.a Current Yield 1.4%

Q1-F2016 MISS ON INTEGRATION CHALLENGES WITH CANADA SAFEWAY Sobeys’ Q1-F2016 adjusted EBITDA declined by 5% to $314.2 million due to integration issues with Canada Safeway, which led to higher shrinkage and ineffective promotional programs. Management expects these challenges to persist until the end of the current fiscal year. As a result, we are reducing our EBITDA estimates for Canada Safeway. Sobeys realized $51 million in synergies in Q2-F2015 and remains well on track to realize its $200 million annual synergies target by the third year following the Canada Safeway acquisition. Since F2015, Empire has been engaged in a number of initiatives aimed at improving efficiency and profitability – selling non-core assets, closing underperforming stores, consolidating back-office support functions, closing three distribution centres and investing in the automation of a newly acquired distribution centre. Sobeys should begin to reap the benefits of these projects in the latter part of F2016 and F2017. We maintain our BUY rating on Empire.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We value Empire using a sum-of-the-parts approach and apply a higher multiple to Safeway due to its relatively higher margins com- Disclosures are lacking, as is with the typical Canadian retailer. pared to grocer peers. We derive a new $29.00 NAV (down from Empire only has two reporting segments: food retailing versus $31.00) after incorporating operational issues that led to the weaker- investments and other operations (i.e. real estate), making it than-expected Q1-F2016 results. difficult to assess results of the more significant food retailing segment, especially Canada Safeway’s performance.

FY end April Adjusted Cash Flows 3/5 F2015 F2016E F2017E (C$ Millions, except as noted) We expect the significant integration issues at the Canada Safeway business to persist for the rest of F2016, with some spillo- ver effects in F2017, resulting in lower food retailing EBITDA mar- Revenue 23,929 24,277 24,982 gins in F2016 and F2017 compared to F2015 levels. We expect free cash flow to gradually recover from F2016. Food EBITDA (Sobeys) 815 785 838

The Balance Sheet 2/5 Sobeys EBITDA Margin 4.57% 4.32% 4.48% The issuance of debt to finance the Canada Safeway acquisition increased Empire’s lease-adjusted net debt-to-EBITDAR Food EBITDA (Canada Safeway) 407 352 428 ratio from 2.1x to 3.0x. However, we expect that free cash flow from Canada Safeway and cash proceeds from the sale of Canada Safeway EBITDA Margin 6.67% 5.74% 6.81% non-core assets will help Sobeys to deleverage and reduce its lease-adjusted net debt-to-EBITDAR to under 2.0x by F2016. Other EBITDA 104 106 107

Business Operations 3/5 Total EBITDA 1,326 1,242 1,373 Canada Safeway is a strong grocery operator and generates higher EBITDA margins than Sobeys. Taking into account the Total EBITDA Margin 5.54% 5.12% 5.50% $200m annual synergies, we estimate that the acquisition will boost Empire’s EBITDA margin from 4.8% in F2014 to 5.1% by Share Price $26.63 $27.88 $27.88 F2017. 7,376 7,674 7,627 Corporate Governance 3/5 Market Capitalization

Ten out of 17 Board of Directors members are independent EV 9,376 9,481 9,125 directors (59%). Out of the 276.9m common shares in total, 178.8m are non-voting Class A shares and the remaining 98.1m EV/EBITDA 7.1x 7.6x 6.6x are Class B voting common shares. The Sobeys family owns 32.7% of the total shares outstanding, but holds 88.1% of the voting rights. Shares Outstanding (millions) 277.0 275.2 273.6

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Page 47 Updated November 18, 2015 SELL ENBRIDGE INC. Current Price $50.28 Intrinsic Value $47.50 TSX-ENB Current Yield 3.7%

THE TURNING OF THE TIDES

The scarcity value of the Canadian Mainline export pipeline system is appealing, but the negative impact of lower commodity prices on ENB’s growth prospects (i.e. residual toll downside, reduced Alberta feeder system growth, and continued uncertainty regarding the Clipper expansion) undermine its value proposition.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Our Enbridge intrinsic value estimate is $47.50 per share, which implies a 22x multiple of our $2.15 2015E EPS.

Enbridge’s disclosure is essentially on par with its closest peer, TransCanada Corp. For the Period Ended F13 F14 Q3-F15 (Amounts in C$)

Adjusted Cash Flows 3/5 Share price $46.41 $59.74 $49.55 ENB’s cash flow profile, including the significant funding activities in recent months, provides ample footing for its lofty growth capital spending plan in the coming years. Shares 832 852.1 863.7

The Balance Sheet 4/5 Market capitalization $38,590 $50,904 $42,794

Enbridge’s updated funding plan suggests it will not have to issue common equity, instead relying on additional pre- Net debt $35,565 $46,566 $49,386 ferred share issuances and asset drop-downs to fill its remaining equity requirement. Enterprise value $74,155 $97,470 $92,180

Business Operations 3/5 Dividend per share $1.40 $1.86 $1.86 (prospective) The upcoming decision on TransCanada’s northern leg of Keystone XL will have material implications for Enbridge’s common carrier system. If approved, the project could Adj. EPS (TTM) $1.78 $1.90 $2.11 depress organic earnings growth prospects under the CTS in the near-term, but better the odds of an Alberta Clipper expansion approval, and associated growth beyond F17. Payout ratio 79% 98% 88%

Corporate Governance 4/5 P/E (TTM) 26.1x 31.4x 23.5x

Enbridge’s willingness to increase the payout ratio has been well received by the market. Net debt-to-EV 50.0% 47.8% 53.6%

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Page 48 Updated November 13, 2015 SELL ENCANA CORP. Current Price C$10.07 / US$7.60 Intrinsic Value US$6.50 TSX-ECA; NYSE-ECA Current Yield 3.7%

LEVERAGE LIMITS UPSI DE DESPITE “CORE FOUR” GROWTH In our view, Encana’s strategy of building out its “Core Four” plays in the Duvernay, Eagle Ford, Montney and Permian Basin, while selling off its non-core assets, or allowing them to wind down, is a risky proposition given low commodity prices. Even assuming favorable growth in the Core Four, Encana’s cash flow is likely to remain strained with persistently high debt levels, which we expect to limit future upside in its share price. Ongoing impairments are an additional sideshow to Encana’s built-in headwinds – under U.S. Full Cost accounting rules $5.67 billion has been impaired year-to-date. We expect further impairments by year-end. We remain sellers of this name.

QUALITY RATING INTRINSIC VALUE

Intrinsic WTI Oil Price HH Gas Price USD/CAD XR Accounting & Disclosure 2.5/5 Commodity Case Value 2016 / 2019 2016 / 2019 2016 / 2019 USD Under U.S. GAAP, reserves are tested for impairment based on trailing-twelve-month pricing. So far this year, WTI pricing $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 6.50 reset to US$82 in Q1, US$71 in Q2 and $59 in Q3, triggering $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 10.50 impairments of US$5.7B YTD. With trailing prices set to fall to ~US$42 in Q4, we expect another US$1.5-$2.5B in impair- $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 14.00 ments to Encana's $4.0B in proved property assets by year Our conservative case values Enerplus at US$6.50 per share, reflecting a end. Encana's US$5.7B in unproved properties are likely to return to US$65 WTI oil and US$3.75 NYMEX gas by 2019. fare better given more lenient rules for impairment. Company Profile 2015 2013 2014 Adjusted Cash Flows 1.5/5 (amounts in $US) 9 mos There remains considerable uncertainty as to how success- USD Price 20.47 13.87 6.44 ful Encana is likely to be in rolling out its growth plans, how Shares (millions incl. exch.) 740.9 741.2 843.1 much the plans will cost and what future netbacks will ultimately look like. This uncertainty carries over to the com- Market cap. ($ millions) 15,166 10,280 6,408 pany's future cash flows and debt levels. Revenue ($ millions) 5,858 8,019 2,079 The Balance Sheet 1.5/5 CFPS 3.09 3.60 1.46 Price to YTD CFPS 6.6x 3.9x 3.9x Encana finished 2015 Q3 with US$6.1B of debt US$0.4B of cash, and US$3.1B of undrawn credit on facilities open ROE (annualized) 4.5% 45.7% -74.0% through 2020. The sale of Haynesville and DJ Basin assets Dividends per share 0.67 0.28 0.21 post-Q3 adds US$1.8B in cash, but net debt levels remain high relative to future cash flows. Production (000’s mcfe/d) 3,100 2,871 2,433 Business Operations 2/5 CFO* per boe 12.14 15.27 11.11 Net debt to EV 23% 41% 47% We believe Encana needs to keep its annual capex budget roughly level at $2.0 to $2.3B to grow its core plays in the Net debt to CFO* 2.0x 2.6x 3.5x high single digits over the next several years. With other 2015 Cash Flow and Dividends 2013 2014 assets winding down, overall production growth will be 9 mos much slower, albeit with a more liquids-rich profile. Reported CFO* 2,289.0 2,667.0 1,233.0 Corporate Governance 3.5/5 Capital expenditures (2,712.0) (2,526.0) (1,952.0) Encana's CEO compensation structure is multi-layered but Available cash (shortfall) (423.0) 141.0 (719.0) well aligned with shareholder interests. While on the surface, Mr. Suttles' total compensation was $21.3MM in 2013 Dividends declared 494.0 207.0 166.0 and 2014 combined, close to three quarters was in share- % of CFO* 22% 8% 13% linked awards with delayed vesting. This comp carries a % of available cash N/A 147% N/A much lower value if share prices remain at current levels. * CFO is cash from operations after working capital and asset retirement expenditures. Torpedo Risky Neutral Better Best Quality Scale

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Page 49 Updated November 12, 2015 BUY ENERPLUS CORP. Current Price C$6.84 / US$5.18 Intrinsic Value C$10.50 TSX-ERF; NYSE-ERF Current Yield 5.3%

RIDING OUT THE STORM

With the release of 2015 Q3 earnings, Enerplus took the opportunity to cut 2016 dividends and capex to sustainable levels . Enerplus will cut its F16 capital budget by ~30% versus F15, trimming its monthly dividend by 40% to $0.03 per share. Volumes are forecast to hold up despite the sharp cuts to capital spending. Extensive hedging in 2016 gives us confidence that cash flows will exceed $2.50 per share next year, giving the company a current cash flow multiple of less than 3.0 times. We view this as bargain territory. BUY.

QUALITY RATING INTRINSIC VALUE

WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value With more than 50% of its balance-sheet assets in the U.S. $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 10.50 and greater than 50% U.S. ownership, Enerplus switched its $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 15.00 reporting to U.S. GAAP in 2014 to maintain its U.S. listing. U.S. full-cost tests Enerplus' book value at trailing, rather than $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 19.00 forecast pricing, which explains $1.1B in YTD impairments as Our conservative case values Enerplus at $10.50 per share, reflecting a of Q3-F15. A loophole in the debt-to-cap covenant allows return to US$65 WTI oil and US$3.75 NYMEX gas by 2019. Enerplus to add back a $1.1B adjustment taken on conver- 2015 sion to U.S. GAAP. Company Profile 2013 2014 9 mos Adjusted Cash Flows 1.5/5 Price 21.62 11.19 6.50 Shares (millions incl. exch.) 200.6 205.7 206.5 In 2016, hedging covers ~34% of crude production net of royalties with an average floor of US$64.35, while gas hedg- Market cap. ($ millions) 4,336 2,302 1,342 es cover ~36% of net production at an average floor of Revenue ($ millions) 1,311 1,761 797 US$3.00. This gives us confidence that cash flows will exceed $2.50 per share in 2016. CFPS 3.82 3.83 1.88 Price to YTD CFPS 5.7x 2.9x 2.6x The Balance Sheet 2.5/5 2.5/5 ROE (annualized) 2.5% 14.4% (64.4%) At the end of 2015 Q3, Enerplus reduced its credit facility by Dividends per share 1.08 1.08 0.53 $200MM to $800MM saving $1MM annually. The company Production (boe/d) 89,793 103,130 106,396 had only $90MM drawn on this facility at quarter-end. The company should remain well within covenants, which in- CFO* per boe 23.39 20.91 13.35 clude a 50% Debt-to-Capitalization restriction (currently at Net debt to EV 19% 33% 48% 32%) and a 3.5x Debt-to-EBITDA limit (currently at 1.8x). Net debt to CFO* 1.3x 1.4x 2.4x

Business Operations 3/5 2015 Cash Flow and Dividends 2013 2014 9 mos Enerplus is scaling back on its drilling while it waits for eco- Reported CFO* 766.5 787.2 388.8 nomics to improve, but volume growth should resume when commodity prices recover, post-2016. Capital expenditures (687.9) (818.0) (407.2) Available cash (shortfall) 78.6 (30.8) (18.4) Corporate Governance 3/5 Dividends declared 216.9 221.1 109.2 With improving capital efficiencies, particularly on its U.S. % of CFO* 28% 28% 28% plays, Enerplus appears to be well on its way to reducing costs and generating higher drilling returns, which is the % of available cash 276% N/A N/A product of management's improved focus. * CFO is cash from operations after working capital, cash interest and asset retirement expenditures

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Page 50 Updated November 11, 2015 BUY FORTIS INC. Current Price $38.30 Intrinsic Value $44.50 TSX-FTS Current Yield 3.9%

FORTIS FITS THE BILL

FTS’ geographically diversified portfolio of almost-entirely regulated assets trades at a discount to valuations observed in recent North American utility transactions, despite modest regulatory risk due to recent cost of capital updates at several of its platform utilities.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We value FTS at $40.00 per share based on a sum-of-parts, net asset value approach.

Fortis provides a summary of key regulatory develop- ments, which enhances investor awareness of ex- FY end Dec. 31 pected trends in allowed returns and rate base F13 F14 Q3-F15 growth. If it would state mid-year rate base in mil- (Amounts in C$ Millions) lions, as opposed to billions, the disclosure would be even more useful to investors. Price $30.43 $38.96 $38.17 Adjusted Cash Flows 3.5/5 Shares (millions) 213 276 280 Robust organic rate base growth and relatively low regulatory risk enhances FTS’ FCF profile and divi- Market capitalization $6,488 $10,769 $10,695 dend growth prospects.

The Balance Sheet 4/5 Net debt (incl. preferred $9,320 $13,776 $13,815 shares)

In the current climate, diversified, mostly-regulated businesses have access to considerable amounts of Enterprise value (EV) $15,808 $24,535 $24,510 low-cost capital. FTS’ 2014 debt service ratios were inflated by capital issued to fund the UNS acquisition. EBITDA (TTM) $1,441 $1,711 $2,231 Business Operations 3.5/5 Adjusted EPS (TTM) $1.70 $1.80 $2.11 Following the sale of real estate and power assets, FTS is now essentially a pure-play regulated utility, EV/EBITDA (TTM) 11.0x 14.3x 11.0x suggesting its risk profile is lower than that of its closest Canadian peers, CU and EMA. Price-to-earnings ratio (TTM) 17.9x 21.6x 18.1x Corporate Governance 2.5/5

Net debt-to-EBITDA (TTM) 6.5x 8.1x 6.2x No significant issues noted.

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Page 51 Updated August 4, 2015 BUY GEORGE WESTON LTD. Current Price C$109.84 Intrinsic Value C$117.00 TSX-WN Current Yield 1.5%

Q2-2015 IN LINE; BAKERY PRICE INFLATION KICKS IN George Weston generated 91% of its EBITDA from Loblaw and the remaining 9% from Weston Foods. We value George Weston using a net asset value (“NAV”) model, with a large majority of the value coming from the Loblaw shareholding. The remainder of George Weston’s NAV is made up of its 5.4% direct interest in Choice Properties REIT and Weston Foods (bakery operations). George Weston owns approximately 46% interest in Loblaw and a $1.00 change in Loblaw’s intrinsic value would change George Weston’s NAV by about $1.30. On July 24, 2015, we published a report on Loblaw and increased its intrinsic value to $75.00 (up from $70.00). The bakery industry is challenged by input cost headwinds, although modest price inflation has kicked in at the retail channel and provided a boost to Weston’s topline growth since the start of this year. We are increasing George Weston’s NAV to $117.00 (up from $109.00) mainly due to the increase in Loblaw’s intrinsic value. George Weston remains a BUY.

QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 2/5 We estimate a $130.00 undiscounted NAV for George Weston, which consists of $111.00 for the 46% interest in Loblaw, $2.00 for the 5.4% New accounting standards forced the disclosure of cost of interest in Choice Properties REIT, and $17.00 for Weston Foods. We inventory, thus allowing us to calculate gross profit margins. We apply a 10% holding company discount to derive a $117.00 intrinsic would like to see more detailed sales and EBITDA breakdown at value estimate for George Weston. the different segments within Weston Foods.

Adjusted Cash Flows 3/5 FY end December 2014 2015E 2016E Between 2006 and 2011, Loblaw has been beefing up its invest- (C$ Millions, except as noted) ment in stores and infrastructure. Under-spending in the past resulted in peak IT spending in 2012, which represented 1.8% of Fully Diluted EPS $5.35 $6.45 $7.12 sales. Going forward, we expect IT spending to gradually decline in the next few years as Loblaw approaches the end of its SAP implementation period. For 2015, Loblaw announced plans Weston Foods Revenue 1,923 2,031 2,071 for $1.2 billion capital expenditures, including a significant investment in its retail network, and Weston Foods announced plans for $300 million capital expenditures, both of which would Consolidated Revenue 43,918 46,828 47,418 decrease free cash flow.

The Balance Sheet 5/5 Weston Foods EBITDA 311 284 300 We believe that George Weston’s management will continue to assess strategic options for the deployment of its $2.7 billion Consolidated EBITDA 3,539 4,082 4,435 cash. We find it comforting that management is looking at strategic and valuation criteria in its vetting efforts, and seeking to acquire synergistic businesses at reasonable prices. Weston Foods EBITDA margin 16.2% 14.0% 14.5% Business Operations 3/5 Consolidated EBITDA margin 8.1% 8.7% 9.4% George Weston generates over 90% of EBITDA from Loblaw and the remaining 10% from the higher-margin Weston Foods, which consists of a fresh & frozen bakery business in Canada, a frozen Share Price $84.90 $109.84 $109.84 baking operation in the U.S. and a biscuit, cookie, cone and wafer business in the U.S. P/E Multiple 15.9x 17.0x 15.4x Corporate Governance 3/5

Wittington Investments Ltd. owns 63% of George Weston Lim- Market Capitalization 10,883 14,052 14,052 ited, which in turn owns 46% of Loblaw Companies Ltd. George Weston’s Board of Directors consists of eight independent directors out of 12 members. Shares Outstanding (millions) 128.2 127.9 127.9

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Page 52 Updated November 2, 2015 SELL GOLDCORP INC. Current Price C$16.73 / US$12.82 Intrinsic Value US$10.50 TSX-G; NYSE-GG Current Yield 1.9%

SLOWLY GENERATING FREE CASH FLOW

Goldcorp reported free cash flow before dividends of $243 million during the quarter, however our calculations point to a far smaller number of $103 million. While Goldcorp adjusts its cash flow from operations to exclude changes in working capital (a $127 million benefit during Q3), it neglects to do the same for free cash flow. At a gold price of $1,100, we estimate Goldcorp’s intrinsic value to be $10.50/share causing us to maintain our SELL recommendation.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 Long-term gold price Intrinsic value estimate US$1,100 per ounce US$10.50 per share Although Goldcorp reports co-product cash costs based on forecasted commodity prices rather than actual prices, +/- US$100 per ounce +/- US$6 per share the figures are reconcilable. Assuming long-term gold prices of $1,100/oz, we value the shares at $10.50. Adjusted Cash Flows 3/5

In Q3 2015, Goldcorp managed to generate some free Fiscal year ends December 31 F15 cash flow, but the forecast for the rest of the year seems F13 F14 bleak due to the lower gold price. Despite exchange US$ millions, except as noted 9 mos rates going in Goldcorp’s favour—costs haven’t reduced significantly Closing price, end of period 21.67 18.52 12.50 The Balance Sheet 4/5

Shares outstanding, millions 812 814 814 With ample liquidity, Goldcorp can endure lower gold prices than many of its peers. However, we are concerned by how much debt it has started to take on. Market cap 17,596 15,075 10,175

Business Operations 3/5 Gold production, 000s oz 2,667 2,871 2,555

Even without M&A, we expect Goldcorp’s financial pro- Revenue 3,609 3,436 3,886 spects to improve with the ramp-up of new mines such as Cerro Negro, Eleonore, and Couchenour. Cash flow per share 0.80 1.15 1.26

Corporate Governance 3/5 Cash flow per ounce 359 353 358 By declining to one-up its rivals in the bidding for Osisko, Goldcorp demonstrated a more disciplined approach to capital allocation than we had previously thought. With Price to cash flow 27.1x 23.1x 9.9x Osisko now out of the picture, we suspect Goldcorp will target development-stage assets. Net debt to EV 10% 17% 19%

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Page 53 Updated October 21, 2015 SELL HUDSON’S BAY COMPANY Current Price C$24.91 Intrinsic Value C$23.00 TSX-HBC Current Yield 0.8%

DEBUNKING MANAGEMENT’S VALUATION: WEAK R ETAIL AND IMPUTED RENT In their most recent presentation, Hudson’s Bay Company’s (HBC) management provided a sum-of-the-parts valuation of their retail operations and real estate, based on EBITDA, rents and cap rates, which arrives at a $50.00 net asset value (“NAV”) for its shares. We see this figure as inflated by optimistic valuations of the company’s retail operations and the appraisal value of the Saks Fifth Avenue flagship property in Manhattan. Our valuation is much lower, at $23.00 per share, implying a $27.00 per share difference. After comparing the two valuations, our analysis shows that the biggest discrepancy between management and our NAV comes from the value of the retail operations. Given lower EBITDAR margins generated by HBC and Kaufhof, we value HBC and Kaufhof at a blended 5.2x EBITDAR multiple, which is at a discount to the peers’ average EBITDAR multiple of 6.2x. The recent announcements concerning realignment initiatives and closing of the Kaufhof transaction do not alter our thesis on the stock. We maintain our SELL rating on HBC.

QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 2/5 We are increasing our NAV to $23.00 (up from $22.00) due to higher expected cost savings from recently announced restruc- HBC changed the accounting disclosure in Q1-2014 by grouping turing initiatives along with other tweaks to our forecast model. SSSG of the Bay and L&T together, but grouped sales from L&T with Saks when reporting revenue. The lack of detailed and consistent disclosure creates challenges for analyzing performance of different banners within the retail segment. FY end January 2015E 2016E 2017E Adjusted Cash Flows 2/5 (C$ Millions, except as noted) (Jan. 31/16) (Jan. 31/17) (Jan. 31/18) HBC generated $234 million FCF in 2014. However, we expect negative FCF in 2015 due to increase in capex from the pursuit of digital innovations and significant renovations planned at the Saks Fifth No. of Stores 476 478 484 Avenue flagship store in Manhattan. The addition of Kaufhof is expected to be mildly accretive—the business generates positive cash flows, partially offset by higher rent expense to be paid to Simon-HBC JV. HBC Sales 9,276 9,497 9,049 The Balance Sheet 2/5 Kaufhof Sales With the recently closed JV transactions, the company received 4,537 4,582 4,628 approximately $1.1 billion in cash proceeds (new mortgages on properties transferred to JVs), which was used to reduce HBC’s debt Incremental Cost Savings and in 2015, but it still owns a majority of the JVs’ debt due to its owner- Synergies (HBC realignment initiative 12 109 13 ship interest. The $3.8b Kaufhof acquisition will be financed through + Saks integration + Kaufhof integration) a sale leaseback on 41 properties to the Simon-HBC JV. HBC made equity to the JV for $1.4b in connection to the sale, financed by debt, but is in the process of selling around 40% - 60% of its equity HBC Normalized EBITDAR 981 1,110 1,203 stake in the U.S. JV to third parties to reduce leverage. Business Operations 1/5 HBC EBITDAR Margin 10.6% 11.7% 13.3% Canadian department stores have been losing market share to U.S. and foreign specialty retailers. Poor performance at HBC’s legacy business has been masked by stronger results from Saks (acquired in Kaufhof Normalized EBITDAR 570 590 609 2013), but Saks’ performance is also lagging peers, and recent slowdown in tourist spending is hurting Saks’ full-line sales. Kaufhof has seen tepid growth despite owning the dominant market share among German multi-brand retailers. In relation to the Kaufhof deal, Kaufhof EBITDAR Margin 12.6% 12.9% 13.2% management indicated opportunities for increased e-Commerce presence, expansion of Saks into Europe and $30m-$50m acquisition synergies (around 1% of target company’s sales). Free Cash Flow (233) 41 273 Corporate Governance 3/5 Fully Diluted Shares Outstand- The Board of Directors is comprised of 10 directors, six of whom are 200.9 200.9 200.9 independent (60%). ing (mlns.)

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Page 54 Updated November 5, 2015 SELL HUSKY ENERGY INC. Current Price C$19.05 Intrinsic Value C$17.00 TSX-HSE Current Yield 6.3%

CUT FIRST, ASK QUESTIONS LATER

Husky’s cash dividend was eliminated in Q3 as the company worked to maintain its investment grade credit rating. With a 70% increase in net debt since Q4-F14 and a cash shortfall looming for Q4-F15 of up to $135 million after capex (our estimate), the dividend became expendable. Even with more modest spending planned for next year, we estimate a full reinstatement of the dividend requires US$55 WTI. Given significantly lower free cash flow ahead, we continue to view Husky as expensive. SELL.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value Husky's Indonesian operations have run into IFRS 11 report- $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 17.00 ing restrictions requiring equity accounting. The partners $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 28.50 have rights to the net assets of a business arrangement (a 'joint venture'), which requires equity accounting, rather $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 41.50 than direct rights and obligations on the assets themselves Our conservative case values Husky at $17.00 per share, reflecting a (a 'joint operation'), which would allow proportionate con- return to US$65 WTI oil and US$3.75 NYMEX gas by 2019. solidation. 2015 Company Profile 2013 2014 Adjusted Cash Flows 2/5 9 mos Price 33.70 27.50 20.81 At current strip pricing, we expect Husky to generate EBITDA Shares (millions incl. exch.) per share of $3.25 to $3.50 in 2016 assuming US$44 WTI, be- 983.4 983.7 1,010.9 fore exploration expenses. The market is currently paying a Market cap. ($ millions) 33,140 27,053 21,038 8.0x multiple to our estimate, factoring in roughly $7.60 per share in debt. Typically the stock has traded below 6.5x, Revenue ($ millions) 23,317 24,092 12,551 which implies downside from here. CFPS 4.72 5.68 2.44

The Balance Sheet 3/5 Price to YTD CFPS 7.1x 4.8x 6.4x ROE (annualized) 9.3% 6.2% -1.1% Husky ended 2015 Q3 with $6.8B of debt, no cash and and Dividends per share 1.20 1.20 0.60 $3.0B of unused credit on its borrowing facilities. Debt remains manageable relative to Husky's earnings next year. Production (000's boe/d) 312 340 342 CFO* per boe 40.79 44.99 26.38 Business Operations 2.5/5 Net debt to EV 12% 17% 25% Net debt to CFO* 0.9x 1.0x 2.1x Husky is diversifying away from its traditional Atlantic and Western Canadian base with the startup of Liwan and Sun- 2015 Cash Flow and Dividends 2013 2014 rise. Mid and Downstream EBITDA remains an outsized con- 9 mos tributor to overall operating income. The company is on Reported CFO* 4,645.0 5,585.0 2,469.0 track to add about 85,000 bbl/d by the end of 2016. Capital expenditures (5,028.0) (5,023.0) (2,379.0) Corporate Governance 2/5 Available cash (shortfall) (383.0) 562.0 90.0

Husky is a creature of Li Ka Shing who controls, directly and Dividends declared 1,193.0 1,193.0 885.0 indirectly, a 70.74% interest. In Q1, Husky finally appointed a % of CFO* 26% 21% 36% new CFO, Jon McKenzie, the former Chief Commercial % of available cash N/A 212% >500% Officer at Irving Oil. *CFO is cash from operations after working capital and asset retirement expenditures.

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Page 55 Updated November 5, 2015 SELL IAMGOLD CORP. Current Price C$2.04 / US$1.53 Intrinsic Value US$1.50 TSX-IMG; NYSE-IAG Current Yield 0.0%

RETREATING TO LOWER GROWTH

We upgraded IAMGOLD last quarter on the view that IAMGOLD’s operational issues at Westwood and other key mines were overstated in the share price. IAMGOLD has provided ample opportunities over the year to trade its stock, as volatility provided multiple entry and exit points. The stock has had a nice run-up since then and IAMGOLD currently trades above our sum-of-the-parts valuation of US$1.50 per share (assuming $1,100 gold). Given the risks at Westwood and no clear near term catalysts, we are downgrading the stock to SELL. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 Long-Term Gold Price Intrinsic Value Estimate

US$1,100 per ounce US$1.50 per share The company overemphasizes earnings-based metrics; to adjust for differences in accounting and depreciation, we +/- US$100 per ounce +/- US$1.00 per share prefer figures based on cash flows. Our valuation assumes $10/oz of resources at Essakane, Rosebel, Adjusted Cash Flows 1/5 and Sadiola. Furthermore, we assume that all growth capex is at least value neutral. Despite a successful cost cutting program, we estimate Fiscal year ends December 31 F14 IAMGOLD will burn $181 million of cash in 2015 at $1,100/oz F12 F13 after growth and replacement. US$ millions, except as noted 9 mos

The Balance Sheet 3/5 Closing price, end of period 11.47 3.33 2.76

IAMGOLD is flush with cash after selling Niobec for $500 Shares outstanding, millions 377 377 377 million. It has further improved its balance sheet by monetizing its Diavik diamond royalty. Market cap 4,319 1,254 1,040 Business Operations 1/5 Gold production, 000s oz 885 835 603 Even after the ramp-up of Westwood, we estimate two mines will represent 70% of production for the next few years. Unfortunately, both mines are marginal producers, Revenue 1,670 1,147 909 making the company very risky.

CFPS 1.17 0.65 0.64 Corporate Governance 4/5

Cash flow per ounce 498 295 398 IAMGOLD is introducing metrics to track cost management, cash preservation, and free cash flow for the purposes of determining management’s compensation. This Price to cash flow 9.8x 5.1x 3.2x should incentivize management to make better decisions for shareholders. Net debt to EV (10%) 17% 23%

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Page 56 Updated Nov 2, 2015 SELL IMAX CORP. Current Price US$38.39 Intrinsic Value US$20.00 NYSE-IMAX Current Yield 0.0%

A GROWTH STORY UNDER SIEGE

We view IMAX as a growth story at an inflection point. The company’s shares have run up on a strong 2015 film slate and at 16x EV/F16E EBITDA, high hopes for growth are priced into the stock. However, we believe IMAX’s valuation is premised on a story of operating leverage that no longer reflects reality and new risks facing the company. While the recently- completed IMAX China IPO introduces an element of Chinese investor sentiment to the mix, we remain focused on the medium-to-long term fundamentals, and continue to rate IMAX a sell, with a US $20 intrinsic value.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Our intrinsic value estimate of $20 reflects an expected deterioration of per-screen economics after 2015 due to China saturation, We have no major concerns with IMAX’s U.S. GAAP ac- lagging JV screen performance and increased competition. counting; however, we believe the company’s Adjusted Our best case of $32 reflects optimistic per-screen economics. EBITDA metric (used for credit agreement purposes) over- Our worst case of $13 reflects reduced installations in China due states the economics of its business because it excludes to a sustained real estate market slowdown. stock-based compensation, and production and DMR costs. All valuation scenarios are DCF-based and utilize a 9% WACC.

Adjusted Cash Flows 3/5 Period Ending F12 F13 F14 Due to IMAX’s royalty-based business model, cash flow US $ Millions (except as noted) largely tracks performance of its theatres, and is therefore subject to box office volatility. Its high-performing theatres generate a strong royalty stream, with minimal ongoing Share price $22.48 $29.48 $30.90 costs.

The Balance Sheet 5/5 Shares outstanding (millions) 66.5 67.8 69.0 IMAX is in a net cash position which has been bolstered by the October 8, 2015 IPO of IMAX China. Market capitalization $1,492 $1,998 $2,132

Business Operations 3/5 Enterprise value (EV) $1,481 $1,969 $2,074

IMAX is a valuable brand for a niche market. But we believe its economic moat is shrinking due to increased competi- Revenue $283 $288 $291 tion, and that new theatre performance will significantly underperform the street’s expectations. Reported EBITDA $107 $113 $108

Corporate Governance 3/5 Adjusted EPS $0.80 $0.81 $0.75 No major risks identified.

EV-to-EBITDA 13.9x 17.4x 19.2x

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KEVIN DUSSELDORP [email protected] 416-866-8783

Page 57 Updated November 20, 2015 SELL IMPERIAL OIL LTD. Current Price C$41.86 / US$31.40 Intrinsic Value C$41.86 TSX-IMO; NYSE-IMO Current Yield 1.2%

KEARL’S PROFITABILIT Y REMAINS A QUESTION MARK Imperial is getting closer to full ramp up on their Kearl oil sands mining production but with a lack of segmented reporting on the project, its profitability remains a question mark. Management offers blue-sky cost projections of $20 per barrel with a full expansion to the 340,000-350,000 barrel a day regulatory limit, but we view this target as optimistic. We expect significant negative free cash flows in 2016 and a corresponding increase in debt. We remain sellers of the name.

QUALITY RATING INTRINSIC VALUE

WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 3/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value The Canadian Securities Administrators allow cross listed $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 30.00 Canadian issuers to report under U.S. GAAP without $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 46.50 reconciliation to IFRS. Imperial has elected this option using successful efforts (SE) accounting. U.S. SE impairments $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 61.50 begin by comparing undiscounted cash flows to book Our conservative case values Imperial Oil at $30.00 per share, reflecting value which, for long life assets like oil sands, is a cakewalk. US$65 oil and US$3.75 gas in 2019.

Adjusted Cash Flows 2.5/5 2015 Company Profile 2013 2014 9 mos At the current strip, we expect Imperial to generate just Price 47.04 50.05 42.28 $2.50 to $2.70 per share in cash flows next year, versus $5.20 per share in 2014. Shares (millions incl. exch.) 847.6 847.6 847.6

The Balance Sheet 2/5 Market cap. ($ millions) 39,871 42,422 35,837 Revenue ($ millions) 32,929 36,966 20,659 Much of the debt needed to finance Kearl Lake is drawn on an existing ExxonMobil credit facility. The Exxon facility CFPS 3.88 5.20 2.08 had $5.85 B of its $7.75 B capacity drawn at the end of 2015 Price to YTD CFPS 12.1x 9.6x 15.3x Q3. Imperial's variable interest rate on this facility in 2014 averaged just 1.2%. It is worth noting that the loan can be ROE (annualized) 15.8% 18.0% 6.0% called with 370 days notice. Imperial increased its short Dividends per share 0.49 0.52 0.40 term borrowing to $2.0B in Q3. Production (000's boe/d) 295 310 355 Business Operations 2.5/5 CFO* per boe 30.63 38.93 18.13 With extremely limited segmented reporting, it is impossible Net debt to EV 13% 14% 18% to track the performance of Imperial's Kearl project other than through volumes and blend sale prices. Kearl's is likely Net debt to CFO* 1.8x 1.5x 3.4x disappointing, however. Imperial's upstream production 2015 Cash Flow and Dividends 2013 2014 and manufacturing expenses were $26 per barrel prior to 9 mos Kearl's startup in 2012. They have averaged over $31 per Reported CFO* 3,292.0 4,405.0 1,762.0 barrel so far this year. Capital expenditures (8,020.0) (5,654.0) (2,431.0) Corporate Governance 2.5/5 Available cash (shortfall) (4,728.0) (1,249.0) (669.0) ExxonMobil's dominant position in Imperial Oil (close to 70% Dividends declared 415.0 441.0 330.0 ownership) raises the possibility of an opportunistic buyout % of CFO* 13% 10% 19% such as the one used by Royal Dutch Shell to take out its Canadian sub in 2006. For this reason, we suggest a 10% % of available cash N/A N/A N/A minority shareholder discount. * CFO is cash from operations after working capital and asset retirement expenditure

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SAM LA BELL [email protected] 416-866-8783

Page 58 Updated November 12, 2015 SELL KINROSS GOLD CORP. Current Price C$2.41 / US$1.80 Intrinsic Value US$1.30 TSX-K; NYSE-KGC Current Yield 0.0%

GROWTH PROJECTS UNDERWHELM Without the Tasiast expansion, we see Kinross as a melting ice cube – as reserves, production, and cash flows fall over time. In Q3, Kinross provided preliminary details on Tasiast and La Coipa pre-feasibility studies – both are growth projects that Kinross needs to pursue in order to replace a steep production cliff after 5 years. While we await more details of both the feasibility studies – due early next year – our initial impressions on the two options are not positive. Other than leverage to gold, we see few reasons for investors to own the stock and maintain our SELL recommendation.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Long-Term Gold Price Intrinsic Value Estimate US$1,100 per ounce US$1.30 per share Kinross reports “costs per gold-equivalent ounce,” which includes silver. Since the figures are based on the consoli- +/- US$100 per ounce +/- US$2.25 per share dated income statements, they may include non-cash amounts as well. Our $1.30 valuation assumes Kinross successfully implements moderate cost reductions and is able to eventually replace its Russian Adjusted Cash Flows 2/5 operations with an accretive Tasiast expansion. We estimate the company needs gold prices of $1,150 to break even on a cash flow basis, and will burn about $100 Fiscal year ends December 31 F15 million at current gold prices of $1,100 based on reduced F13 F14 US$ millions, except as noted 9 mos capital spending guidance.

The Balance Sheet 3/5 Closing price, end of period 4.38 2.82 1.72 Despite the dividend suspension, Kinross’s balance sheet deteriorates at $1,100 gold. However, the Tasiast expan- Shares outstanding, millions 1,143 1,144 1,144 sion deferral should prevent further damage.

Market cap 5,008 3,226 1,967 Business Operations 3/5

The company operates in high-risk jurisdictions, with two Gold production, 000s oz 2,631 2,710 1,991 mines — one in Mauritania and one in Russia — representing nearly half of Kinross’s valuation, by our estimates. By acquiring Barrick’s assets in Nov 2015, Kinross reduces Revenue 3,780 3,466 2,346 some of the geography risk but they are higher cost assets and will compete with Tasiast and La Coipa for investment. CFPS 0.70 0.70 0.51 Corporate Governance 1/5

The company’s $7.1-billion acquisition of Red Back diluted Cash flow per ounce 303 303 293 Kinross shareholders by 60%. In return, shareholders got the benefit of a mere 20% increase in reserves. With the full amount written off, it’s clear management overpaid — Price to cash flow 6.3x 6.3x 3.4x though that’s not surprising given executive bonuses were 30% weighted toward making acquisitions, for which Kin- ross gave itself a better-than-perfect rating in the year it Net debt to EV 21% 21% 33% acquired Red Back.

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SID SUBRAMANI [email protected] 416-866-8783

Page 59 Updated November 5, 2015 BUY LINAMAR CORP. Current Price C$77.22 Intrinsic Value C$97.00 TSX-LNR Current Yield 0.5%

UNDETERRED BY SLOWDOWN IN AWP INDUSTRY

Once again, Linamar’s results exceeded analysts’ expectations, both revenue and earnings topped analysts’ estimates. LNR’s booked business increased to $6.4 billion as of Q3-F15, driven by new product wins, resulting in an annualized revenue growth of 12% through 2019, after adjusting for productivity give backs and a 5-10% existing business roll-off. While its EBIT and ROIC continue to expand to 11.3% and 17.0% respectively, increased trade-in allowances in the SkyJack business is somewhat disconcerting.

In our view, LNR can continue to outperform, driven by regulatory and technological changes, as OEMs seek new and redesigned parts while continuing to outsource additional work to help control costs. We maintain our Buy recommendation with an intrinsic value of $97 per share. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 We believe that Linamar should trade at a premium to its peers because it is a growth company in a mature industry. Our intrinsic The company does not provide a geographical segment value is calculated using a WACC of 7.1%, including a cost of break-out for its automotive business. This makes it difficult equity of 7.7% and a terminal growth of 2.0% to discount future to analyze and compare the operating margins of each cash flows. It implies an EV/EBITDA target of 7.7x our 2016 EBITDA estimate of $895 million. geographic segment with other parts suppliers.

Adjusted Cash Flows 4/5 $ Millions Q3-F13 Q3-F14 Q3-F15 We expect LNR’s capex to increase sharply to $400 million in F15, compared to $241 million in F14, as it invests in new program launches. We estimate a free cash flow yield of NA production volumes (in millions) 4.0 4.3 4.5 5.8%. European production volumes (in mil- 4.5 4.5 4.8 The Balance Sheet 4/5 lions)

We estimate LNR’s leverage (Net Debt/EBITDA) to increase Powertrain revenues 766 853 1,064 to 1.5x in 2016, should the company decide to fund Montu- pet’s acquisition using debt. Powertrain EBIT 66 83 107 Business Operations 4/5 Industrials revenues 128 168 210 Linamar’s deep domain expertise, its global presence and strong customer relationships have created a moat around its automotive business which cannot easily be replicated Industrials EBIT 8 27 37 by other deep pocket suppliers. Since 2000, its content has increased by 1.4x in NA and 14x in Europe. We believe that Market capitalization 2,309 3,730 5,028 LNR’s ability to leverage Skyjack’s existing capacity will result in improvements to operating margins, with minimal capex requirements for at least the next two-to-three years. Net debt 539 335 371

Corporate Governance 2/5 EV/EBITDA (TTM) 5.8 6.1 6.5 Although Linamar now conducts voting on individual directors, the Board of Directors remains relatively small with six ROIC (TTM) 12.5% 18.1% 19.3% members. Since 2003, there have been no changes to the board, with the only exception being last year, after the death of the director. Shares outstanding (in millions) 66.5 66.6 66.7

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VARUN MEHROTRA [email protected] 416-866-8783

Page 60 Updated November 19, 2015 BUY LOBLAW COMPANIES LTD. Current Price C$70.33 Intrinsic Value C$75.00 TSX-L Current Yield 1.4%

Q3-2015 IN LINE ON GROSS PROFIT STRENGTH Loblaw’s Q3-2015 adjusted EBITDA increased by 2% to $1,022 million. Both Loblaw and Shoppers Drug Mart reported strong SSSG and gross profit growth, partly due to the realization of operational synergies. Since the closing of the Shoppers Drug Mart acquisition in Q1-2014, Loblaw has realized $222 million in annualized operational synergies (net of related costs), and remains on track to realize $300 million target by 2016. We believe Loblaw is well positioned in a competitive environment amongst peers because it can utilize synergies to fund price discounting. In addition, Loblaw achieved its deleveraging goal of reducing debt by $1.9 billion in the latest quarter, and plans to utilize excess free cash flow (after dividends) to fund dividend increases and share repurchases going forward. Loblaw will face headwinds from the Ontario Drug Reform from Q4-2015 onwards, which we estimate would reduce the drugstore EBITDA by about $68 million, offsetting the benefits from closure of underperforming stores and efficiencies gained from the new labor agreement signed in 2015. Although the financial services segment makes up just 5% of Loblaw’s annual consolidated EBITDA, Loblaw can consider following Canadian Tire’s footsteps to seek a financial partner for monetizing its lucrative credit card portfolio. Loblaw also has an 83.0% interest in Choice Properties REIT and will benefit from the accretive vend-in of retained properties (~5.7 million square feet) into the REIT over time. Furthermore, the closure of 52 underperforming stores is expected to improve operating income by $35 million, which would boost Loblaw’s grocery EBITDA margin to 6.6% in 2016. Loblaw remains a BUY. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 We have incorporated the negative impact of the healthcare reforms into our model. We value Loblaw’s grocery segment at 9.0x Loblaw began reporting the sales and profitability of its retail EBITDA and Shoppers Drug Mart at 11.0x EBITDA to drive an intrinsic segment and financial services segment beginning in Q1-2011. value of $75.00. We are looking for more detailed disclosure on the performance of Shoppers Drug Mart versus Loblaw food retail. FY end December 2014 2015E 2016E Adjusted Cash Flows 3/5 (C$ Millions, except as noted) Free cash flow should improve as IT spending gradually declines to less than 1% of sales by 2016. Loblaw will also benefit from the Consolidated Revenue 42,611 45,780 46,460 higher-margin Shoppers Drug Mart business and related operational synergies. Consolidated EBITDA (Adj.) 3,236 3,674 3,973 The Balance Sheet 3/5 Consolidated EBITDA Margin 7.6% 8.0% 8.6% The acquisition of Shoppers increased lease adjusted net-debt- to-EBITDAR ratio from 1.3x to 3.1x, which is still within the lever- Shoppers Drug Mart EBITDA 988 1,540 1,708 age ratio range of DBRS’ BBB credit rating. We expect the company to use its $1b+ annual free cash flow to reduce leverage to 2.7x before the end of 2016. Shoppers Drug Mart EBITDA Margin 10.9% 13.0% 12.9%

Business Operations 3/5 EBITDA Impact of Store Closures - 4 26 Grocery is a mature industry and the acquisition of Shoppers Drug Mart will help Loblaw to benefit from the aging de- Share Price $50.73 $70.33 $70.33 mographics and the strong growth of generic drugs. Loblaw should realize benefits from SAP system implementation in 2015 Dividend per Share $0.98 $1.00 $1.00 and 2016.

Market Capitalization 20,925 29,257 29,257 Corporate Governance 3/5

Loblaw’s Board of Directors consists of a majority of independ- EV 32,134 39,192 39,192 ent directors, with nine out of 13 considered independent (69%). Unlike the majority of Canadian retailers, Loblaw does EV/EBITDA 9.9x 10.7x 9.9x not have a typical dual class voting structure. The issuance of shares to finance the acquisition of Shoppers reduced George Weston’s interest in Loblaw from 62.8% to 46.0% in late 2013. Shares Outstanding (millions) 412 416 416

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KATHLEEN WONG [email protected] 416-866-8783

Page 61 Updated November 13, 2015 MACDONALD DETTWILER &

ASSOCIATES LTD. Current Price C$80.57 Market Capitalization (million) $2,900 TSX-MDA

MIND THE GAAPS

In our opinion, MDA’s reported Operating Earnings materially overstate the underlying economic earnings of the company.

Risk Areas  Earnings quality / disclosure — The cumulative Operating Earnings over the past seven years have exceed free cash flow and operating cash flow by 119% and 39%, respectively. Based on our analysis, the wide disconnect is primarily driven by non-reversing investments in working capital, the exclusion of cash-settled stock based compensation costs, capitalization of internal development costs and the boost to earnings due to non-cash profits that stem from certain accounting adjustments made to the SS/L purchase price allocation.

 Non-GAAP metrics — The exclusion of material and recurring cash stock-based compensation costs, combined with the boost from accounting adjustments related to the SS/L acquisition and the excess of cost capitalization over amortization, inflate reported Operating EBITDA and Operating Earnings.

 Management Compensation — Management is compensated based on Operating Earnings, which in our opinion overstate MDA’s true economic performance. We would like to see more focus on ROE/ROIC and cash flow generation.

Updates since last report  No updates.

DIMITRY KHMELNITSKY [email protected] 416-866-8783

Page 62 Updated November 6, 2015 BUY MAGNA INTERNATIONAL INC. Current Price C$62.42/ US$47.35 Intrinsic Value US$60.00 TSX-MG; NYSE-MGA Current Yield 1.7%

THE NORTH AMERICAN BUMP

On November 5, 2015, Magna’s stock price declined by 12% because of a disappointing operating performance mainly resulting from forex headwinds, plant inefficiencies in North America, declining vehicle assembly volumes and struggling production volumes in Asia. We suggest investors to look at the bigger picture as Magna takes the following steps in right direction by improving their operating performance, enhancing their product offerings through acquisitions and effectively leveraging their balance sheet.

However, because of the temporary setback in operating performance in North America and slowdown in China, we are reducing our intrinsic value to $60.00 from $62.70, implying a 7.0x multiple of our estimate of 2016 EBITDA.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 We reduced our intrinsic value to $60.00 from $62.70, implying a 7.0x multiple of our estimate of 2016 EBITDA to reflect weakness in Magna reports under U.S. GAAP while the other Canadian au- North American margins and Asian business for 2016. We have to-parts suppliers report under IFRS, making comparisons diffi- used a WACC of 8.6% and a terminal growth of 2.0% to discount cult. The company does not release separate disclosures about future cash flows. R&D costs, and provides little detail on its equity-accounted investments. Magna is currently trading at a discount to its peers. In our view, it should currently trade at par, if not at a premium, because of its Adjusted Cash Flows 3/5 strong balance sheet and revenue growth profile. Magna’s FCF was $247 million for Q3-F15, 48% lower than Q3- F14 because of increased investment in fixed assets and a high- USD$ Millions Q3-F13 Q3-F14 Q3-F15 er non-cash portion from its gain on disposal. Magna is likely to incur roughly $1.5 billion in capex in 2015, which is expected to remain at elevated levels due to a high number of program NA production volumes launches. 3.8 4.2 4.3 (in millions) The Balance Sheet 4/5 European production volumes 4.4 4.7 4.7 We estimate that Magna can raise additional financing of $1 (in millions) billion if it increases its leverage to 1.2x adjusted EBITDA by F15 end. Further, the sale of its interior business and F15 free cash will Revenues 8,338 8,820 7,661 add $535 million and $1.5 billion, respectively. After adjusting $2 billion for the Getrag acquisition, it will have roughly $1 billion to buyback approximately 18 million, or 4.3%, of outstanding EBITDA 708 829 762 shares.

Business Operations 3/5 Market capitalization 19,258 21,698 21,828 Although NA production volumes and the Canadian dollar created headwinds, Magna reported a 2% increase in sales Y/Y Net debt (723) (360) (384) driven by higher production volumes. In its European business, EBIT margins have improved to 3.5% in Q3-F15 from 2.1% in Q1- F13, mainly driven by Magna’s effort in restructuring its opera- EV/EBITDA (TTM) 6.5 6.1 6.3 tions, selling its interior business and turning away low profitability business ventures. ROE (TTM) 15% 20% 22% Corporate Governance 3/5

Short-term and long-term incentive plan hurdles are clearly Shares outstanding (in millions) 448 424 413 disclosed and are aligned with the interests of outside investors.

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Page 63 Updated November 5, 2015 SELL MANITOBA TELECOM SERVICES INC. Current Price C$27.97 Intrinsic Value C$26.00 TSX-MBT Current Yield 4.4%

CUTTING TO THE BONE

Manitoba Telecom has announced a three-year transformation plan that involves streamlining capital expenditures, voluntary workforce reductions and strengthening the MTS brand. However, we are skeptical that the company can operate at a capital intensity level lower than peers, and are yet to be convinced of the sustainability cost savings. All of MTS’ peers and competitors are investing heavily and we would have expected that the loss of 3.2% MTS customers YoY would have limited further capital expenditure reductions. Furthermore, we continue to believe that an Allstream sale is reasonably priced in at current levels. We are maintaining our SELL recommendation and $26 intrinsic value estimate.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We are maintaining our SELL recommendation and $26 intrinsic value estimate.

Handset subsidy costs are deferred, unlike peers. Otherwise, accounting remains conservative.

YTD September 30, 2015 F13 F14 F15 C$ Millions Adjusted Cash Flows 3/5

After a 24% dividend cut, MBT is paying between 70% to Revenue (TTM) $1,477 $1,616 $1,610 80% of Manitoba operations’ free cash flows. Allstream is expected to be free cash flow positive after restructuring. EPS (TTM) $1.81 $0.13 $1.12

The Balance Sheet 3/5 EBITDA (TTM) $563.0 $558.2 $552.7

MBT’s net debt to EBITDA ratio is about 1.6x. This metric rises Share price (reporting date) $29.49 $29.89 $29.26 to 2.3x after including the solvency deficit and expensing deferred wireless costs. EV/EBITDA (TTM) 5.2x 5.7x 5.8x

P/E (TTM) ex restructuring 16.3x 16.5x 22.2x Business Operations 3/5

FCFE yield (TTM) 7.7% 5.9% 7.0% Allstream EBITDA increased 4.9% YoY. However, we are skeptical of the expected benefits of Allstream’s restructuring, as the previous restructuring round yielded no long- Dividend yield (%) 5.8% 5.7% 4.4% term benefits. Market capitalization $1,998 $2,324 $2,320

Corporate Governance 3/5 Enterprise value $2,920 $3,159 $3,200

Reasonable. Net debt: TTM EBITDA 1.6x 1.5x 1.6x

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DESMOND LAU [email protected] 416-866-8783

Page 64 Updated November 13, 2015 BUY

Current Price C$21.35 / US$16.06 MANULIFE FINANCIAL CORP. Intrinsic Value C$24.50 TSX-MFC NYSE-MFC Current Yield 3.2% SMALL EXPOSURE LEADS TO LARGE LOSS Overall it was a relatively weak quarter that included a material fair value loss on the company’s oil and gas investments, which largely drove investment-related experience charges of $220MM. However, the oil and gas exposure, which totaled $1.9 billion as of Q3, is manageable as it accounts for only 0.6% of total invested assets of $300 billion. But despite its small size, the portfolio punches well above its weight from a risk perspective as MFC has now taken cumulative charges of close to $1 billion since the fall-off in energy prices began last year. The risk of more material charges is not very high as it would require a meaningful decline in oil prices from already-depressed levels. We maintain our BUY recommendation.

QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 3/5 Our intrinsic value of $24.50 incorporates a multiple of 1.2x on our 2016 Starting Q2-F15, MFC discloses additional information on its BV/share estimate of $20.48. Wealth and Asset Management (WAM) business and provides FY end Dec. 31 financial information by line of business (WAM, Insurance, Other F13 F13 Q3-F15 Wealth). The disclosures allow better assessment of financial C$ performance, especially in the WAM business, and facilitates comparisons with asset management peers. Management also Share price (at end of period) 20.96 22.18 20.64 disclosed that the ROE objective of 13% by 2016 will not be achieved. Book value / share 13.98 16.42 18.98 Capital 3/5 P:BV 1.5x 1.4x 1.1x The MCCSR ratio stood at 226% at end of Q3-F15, down 10% from 236% last quarter. The decline was primarily due to the maturity of $1.7 billion of debt. MCCSR (of Canadian subsidiary) 248% 248% 226% The Balance Sheet 2.5/5 Reported ROE 12.8% 11.9% 6.5% The debt maturity in the quarter pushed the company’s leverage ratio lower to 22.7% at end of Q3-F15 from 26.2% at end of Q2-F15. MFC’s relatively low leverage ratio along with a Dividend yield 2.5% 2.8% 3.3% relatively high MCCSR place the company in a favorable position in terms of capital flexibility. Reported core EPS (TTM) 1.34 1.48 1.62 Business Operations 3/5 Core P:E 15.6x 15.0x 12.7x MFC reported Q3-F15 core earnings of $870MM, or $0.43/share, slightly below consensus of $0.45/share. Core EPS was relatively unchanged sequentially (down $0.01/share) but up 10% from Market capitalization ($B) 38.7 41.3 40.7 the prior year. However, the true underlying performance was much weaker. When we remove both the favorable impact of a lower Canadian dollar ($107MM benefit) and the contribution # of shares O/S ($M) 1,848 1,864 1,971 from acquisitions ($47MM benefit), EPS would have been only $0.36/share; a decline from the prior year period. Canada and Asia performed well in Q3. The Canadian division delivered 39% AUM ($B) 599 691 818 core earnings growth YoY, or 22% excluding the impact of Standard Life acquisition. MFC’s Asia division delivered 8% core earnings growth YoY, or 16% growth on constant currency basis. BUSINESS COMPOSITION U.S. division core earnings were down slightly, primarily due to unfavourable policyholder experience. Excluding Corporate and Other, 33% of MFC’s core earnings was generated in Asia, 31% in Canada, and 36% in U.S. Balanced Corporate Governance 3/5 growth across all operating divisions highlight MFC’s strong earnings diversification. No issues noted.

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MIKE RIZVANOVIC [email protected] 416-866-8783

Page 65 Updated October 30, 2015 BUY MAPLE LEAF FOODS INC. Current Price C$20.79 Intrinsic Value C$22.70 TSX-MFI Current Yield 1.5%

BETTER BUT NOT WHERE THEY SHOULD BE

With the release of 2015 Q3 results, Maple Leaf’s target of 10% EBITDA margins was pushed back to 2016. The Q3 margin of 7.1% missed our expectations, but featured some positives including: a 120 bps improvement in primary margins (revenue less inventory costs of goods sold) and a 140 bps reduction in SG&A expenses as a percentage of revenues. These positives were dragged down by non-inventory overhead in COGS, which ballooned 160 bps to 10.8% of revenue in Q3. We are not inclined to pay for the 10% promise, but see 9% as achievable in F16, which gives shares upside to $22.70 assuming a reduced 9.0x EV to EBITDA margin. We remain buyers of this name.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2.5/5 Our updated valuation of $22.70 per share incorporates 8.9% EBITDA margins in 2016, with $3.25 billion in sales and a 9.0 times The bulk of Maple Leaf’s ‘provisions’ account has now be- Enterprise Value to EBITDA multiple. come current ($31.0 MM of $45.6 MM at the end pf 2015 Q3). The provisions primarily cover future cash payments for restructuring, to be completed in 2015.

FY end Dec. 31 F15 F13 F14 Adjusted Cash Flows 3/5 C$ Millions 9 mos

We expect Maple Leaf to generate about $80 to $110 MM of net cash flows in 2015, after $13 MM of restructuring costs Price 16.79 19.47 20.79 and $120 MM in capital expenditures.

Shares outstanding, millions 139.9 142.9 139.6 The Balance Sheet 5/5

The sale of Rothsay Rendering and Canada Bread in 2014 Market capitalization 2,348.9 2,782.3 2,902.3 has greatly improved the balance sheet, with just under $3.30 per share of net cash on the books at end of Q3. Net debt (cash) 451.7 (485.8) (460.0)

Business Operations 3/5 Enterprise value 2,800.6 2,296.5 2,442.3 In our view, primary margins should normalize near 24% of sales, while a 5% reduction in SG&A and non-inventory 2,954.8 3,157.2 2,419.8 COGS versus Q3-F15 levels is a reasonable target, excluding Revenue* depreciation and amortization. This would push Maple Leaf’s EBITDA margins to 8.9% in 2016. EBITDA (adjusted)* (48.7) 14.8 144.1

EPS (adjusted)* (1.08) (0.58) 0.34 Corporate Governance 3/5

The modernization of Maple Leaf’s supply chain leaves P/E multiple (adjusted) NA NA 45.9x management with no more excuses. Operational execution over the next year will be a crucial test of Mr. McCain’s leadership. EV / EBITDA NA NA 12.7x

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Page 66 Updated November 10, 2015 SELL MARTINREA INTERNATIONAL INC. Current Price C$11.50 Intrinsic Value C$9.10 TSX-MRE Current Yield 1.0%

BLIND CURVE AHEAD

Although MRE reported improved margins and earnings on an adjusted basis, to achieve its margin guidance of 6% for 2017, it requires an operational leap that management has so far failed to make. MRE’s performance has fallen short of guidance for the past several years, while deadlines for margin improvement have been repeatedly pushed back. The company’s operations have struggled because of plant shutdowns, excess capacity, production problems, labour issues and weak internal controls. We maintain our intrinsic value of $9.10, which implies an EV/EBITDA multiple of 5.0x our 2016 EBITDA forecast of $293 million and rate the stock as SELL.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 We believe that MRE should continue to trade at a discount to its peers reflecting the risks associated with investing in the business. Our MRE’s selection of accounting policy helps it to amortize a fixed intrinsic value estimate is $9.10 per share which assumes a WACC of amount of capitalized development cost over the life of the 9.0%, implies an EV/EBITDA target of 5.0x our 2016 EBITDA estimate of program, irrespective of production volumes. As a result, higher $293 million. amounts are amortized during production ramp-up, and lower amounts when production reaches maturity. $ Millions F13 F14 9M-F15 Adjusted Cash Flows 2/5

MRE’s free cash flow is highly sensitive to operating profitability Revenue 3,222 3,599 2,832 and capex requirements. In the last ten years, MRE has only generated free cash flows in two years. On a cumulative basis over the past ten years, MRE has burned $332 million of free cash, even before deducting the $262 million it invested in ac- EBIT 105 132 119 quisitions.

The Balance Sheet 2/5 Free Cash Flow -55 42 -16 Net-debt-to-leverage is the highest among MRE’s Canadian peers. Although it is targeting a reduction in leverage to 1.5x EBITDA in 2017, in our view the company is most likely going to P/E Adjusted Basis, (TTM) 10.3 13.3 8.5 miss this target.

Market capitalization 842 1,116 958 Business Operations 2/5 Working from a smaller OEM base introduces mandate volatility, as MRE’s business is dependent on the product launch cycle of Net debt 416 640 713 these OEMs. Given MRE’s high portfolio concentration towards GM and Ford in its legacy business, any fluctuation in program volumes could result in significant operating volatility. EV/EBITDA (TTM) 5.9 6.9 6.1

Corporate Governance 2/5 ROE (TTM) 3.7% 13.7% 14.2% MRE pays a significant portion of its cash compensation in form of direct profit participation. While it is reasonable for the bonus to be linked to pre-tax profits, we calculate that MRE’s executives draw the highest compensation as percentage of pre-tax Shares outstanding (in millions) 84.5 85.4 86.3 income among Canadian auto parts manufacturers.

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VARUN MEHROTRA [email protected] 416-866-8783

Page 67 Updated November 19, 2015 BUY METRO INC. Current Price C$37.95 Intrinsic Value C$42.00 TSX-MRU Current Yield 1.2%

Q4-F2015 Beats; Firing on All Cylinders Metro reported a strong Q4-F2015 with +3.4% SSSG, 69 bps GPM improvement to a historical high of 20.0%, and a 10% increase in EBITDA. This was the fifth consecutive quarter of positive SSSG and gross profit dollar/margin improvement, as driven by a combination of successful promotional strategy and increased focus on fresh offerings. EBITDA improvement was also supported by disciplined expense control. Although Metro does not have acquisition synergies to fund price discounts, contributions from the higher-margin Marche Adonis ethnic grocery chain and Premiere Moissan artisan bakery helped to partly offset the negative impact of price discounting on margins. Marche Adonis and Premiere Moissan represent just 8% of Metro’s total EBITDA by our estimates, but they generate 7%-9% net margins, which are much better than the 2%-3% net margins at the Big Three Canadian grocers. Metro has a healthy balance sheet and $1.7 billion (or $7.00 per Metro share) worth of Alimentation Couche-Tard shares, so it has ample funding for making acquisitions in the grocery or pharmacy sector. Metro remains a BUY.

QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 3/5 We have incorporated the better-than-expected Q4 results and new store openings expected into our model. We also rolled for- New accounting standards force the disclosure of cost of ward our model to derive a new intrinsic value of $42.00 (up from inventory, allowing us to calculate gross profit margins. $39.00) for Metro using a DCF model. Excluding the value of the Couche-Tard shareholding, this implies that we value Metro’s grocery operations at about 10x F2016E EBITDA. Adjusted Cash Flows 4/5

Metro’s return on equity was more than 14.5% over the last FY end September F2015 F2016E F2017E 10 years. Management has been using more than 50% of its (C$ Millions, except as noted) annual free cash flow to buy back stock in the last few years. Metro’s latest dividend increase (in January 2015) was the 20th consecutive year of dividend growth. Fully-Diluted EPS $2.02 $2.17 $2.27

The Balance Sheet 4/5 Revenue 12,224 12,603 12,995 Lease-adjusted net debt/EBITDAR as of Q4-F2015 sat at 2.3x, EBITDA (excluding equity-accounted 858 912 944 showing consistent improvement since F2005 (3.5x) when earnings from Couche-Tard) Metro acquired A&P Canada. Management’s target adjusted net debt/EBITDAR ratio is to reach 2.5x by the end of EBITDA Margin 7.02% 7.24% 7.26% F2016. Share Price $32.81 $37.95 $37.95 Business Operations 4/5

After the acquisition of A&P Canada in 2005, Metro consoli- Price/Earnings 16.3x 17.5x 16.7x dated its five banners in Ontario into the Metro brand and simplified its operating structure. Following the success of Price/Book 3.0x 3.1x 2.9x the new merchandising program, “Always Fresh; Always in Stock; Always Great Prices”, at Food Basics stores since Market Capitalization 7,949 9,005 8,815 late 2013, Metro is rolling out a similar program under its Super C banner in Quebec. EV 9,325 10,303 9,981

Corporate Governance 4/5 EV/EBITDA 10.1x 10.6x 9.9x Metro’s Board of Directors consists of a majority of independent directors, with 12 out of 14 independent (86%). Shares Outstanding (millions) 242.3 237.3 232.3

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Page 68 Updated October 2, 2015 SELL

Current Price C$43.16 NATIONAL BANK OF CANADA Intrinsic Value C$43.00 TSX-NA Current Yield 4.8%

EQUITY RAISE BOLSTERS CAPITAL; COST CONTAINMENT BECOMING A FOCUS NA announced a common share offering intended to strengthen the bank’s capital position, which is being adversely impacted on several fronts. NA also announced an $85mm restructuring charge for Q4-F15 that is expected to result in annual pre-tax savings of $35mm to be fully realized in F2016. While we view the restructuring charge as positive, it highlights a more pessimistic outlook for top line growth that we believe will become more pronounced in the coming years for all of the Canadian banks as lending growth in Canada continues to moderate. We maintain our SELL recommendation.

QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 3/5 Intrinsic value for NA is $43.00, calculated by applying a multiple of 9.8x on our F2016 EPS estimate of $4.64 and a multiple of 1.3x on our Management is contemplating the possibility of creating a book value estimate of $31.00 at the end of F2016, and taking the fourth operating segment that would include the bank’s average of the two. international investment portfolio along with Credigy. We would certainly welcome such an initiative as it would likely provide FY end Oct. 31 further transparency into the business. F13 F14 Q3-F15 C$ Capital 3/5 Common equity tier 1 ratio (BIII) 8.7% 9.2% 9.5% NA’s CET1 ratio was unchanged at 9.5% at the end of Q3. Risk- weighted assets grew by 2.3% sequentially, but that was more Closing share price $45.24 $52.68 $45.74 than offset by earnings in the quarter (net of dividends). Unrealized losses on AFS securities under volatile market conditions reduced CET1 ratio by 15 bps in first two months of EPS (TTM) $4.34 $4.36 $4.52 Q4-F15. Restructuring charges in Q4 are expected to lower CET1 ratio by a further 9 bps, while the common share offering will improve the ratio by 44 bps. NA guided to 9.8% CET1 ratio by P/E (TTM) 10.5x 12.1x 10.1x end of Q4-F15. Note that a full write-down of NA’s investment in Maple Financial Group Inc. will reduce CET1 ratio by ~13 bps. BV/share $22.97 $25.76 $27.60 Credit 4/5 P/BV 2.0x 2.0x 1.7x Credit conditions remain benign for NA with losses trending at a very low 20 bps range. Management continues to guide Dividend yield 3.9% 3.6% 4.6% toward a 20 bps to 30 bps loss ratio over the next two quarters.

Business Operations 2.5/5 Market capitalization (millions) 14,747 17,347 15,094

Financial Markets continues to make an outsized contribution to consolidated results, accounting for 47% of adjusted net ROE 20.1% 17.9% 18.8% income to shareholders in Q3, slightly ahead of the contribution from P&C Banking. With management being clear that they will Net interest margin (AEA) 2.28% 2.24% 2.18% not impede the growth of the capital markets business, we remain concerned about the added volatility to NA’s earnings, # shares outstanding 325,983 329,297 330,001 particularly if the shift continues. P&C Banking, Wealth (thousands) Management, and Financial Markets delivered 6%, 11% and 9% YoY growth, respectively. The announced restructuring charges will result in $35 million of annual pre-tax cost savings that will be BUSINESS COMPOSITION fully realized in F2016. NA’s retail/wholesale earnings mix is approximately 61%/39% on an Corporate Governance 4/5 adjusted basis, excluding the Other segment. Canadian P&C banking contributes 40% of earnings. Essentially all of its exposures are in No items noted. Canada with significant concentration in the province of Quebec.

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Page 69 Updated November 9, 2015 SELL NEWMONT MINING CORP. Current Price US$17.54 Intrinsic Value US$15.00 NYSE-NEM Current Yield 0.6%

STILL EXPENSIVE DESPITE COST REDUCTIONS In the past we have questioned how sustainable Newmont’s cost reductions actually are. Newmont has managed the downturn by reducing costs, as all-in-sustaining costs (AISC) fell 14% y-o-y in Q2 and 16% y-o-y in Q3. Costs in Q4 are expected to increase due to declining grades and production in Yanacocha and Ahafo – the impact of which we are beginning to see in Q3 results. At the current share price, we estimate the market is not only pricing in the sustainability of Newmont’s current cost reductions but also another round of reductions equal to those achieved in the past year. As a result, we continue to view the shares as expensive. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Long-term gold price Intrinsic value estimate

Newmont reports under US GAAP which makes its costs US$1,100 per ounce US$15 per share less comparable to peers. E.g., some by-products are credited to costs, while stripping costs are expensed rather +/- US$100 per ounce +/- US$5 per share than capitalized. And significant non-controlling interests mean many adjustments are needed. Our $15/share valuation assumes the company’s recent cost reductions are sustainable.

Adjusted Cash Flows 3/5 Fiscal year ends December 31 F15 F13 F14 Despite an average realized price of $1,179/oz, we esti- US$ millions, except as noted 9 mos mate Newmont generated $437 million of normalized free cash flow, before growth and replacement costs in Q2, an improvement from prior quarters. While the company is Closing price, end of period 23.03 18.90 16.07 maintaining a dividend, we would rather see the money being used to reduce debt. Shares outstanding, millions 498 499 512

The Balance Sheet 3/5 Market cap 11,467 9,431 8,227 Net debt is now 21% of enterprise value—which is high among gold producers, but buffered by Newmont’s $249 million of investments. Gold production, 000s oz 5,463 5,231 4,302

Business Operations 3/5 Revenue 8,414 7,292 5,913 Newmont has successfully reduced AISC below $1,000/oz thanks to production and higher grades from Batu Hijau. Cash flow per share 3.10 2.89 3.65

Corporate Governance 3/5 Cash flow per ounce 282 275 435

The company’s new CEO promises to focus on returns, cost reduction, and community relations — all areas ig- Price to cash flow 7.4x 6.5x 4.4x nored by his predecessor. Having cut his teeth at Rio Tinto, he brings with him a cadre of ex-Rio employees to help him with his quest. But his copper aspirations warrant cau- Net debt to EV 31% 31% 29% tion.

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Page 70 Updated November 19, 2015 BUY NORTHLAND POWER INC. Current Price $18.26 Intrinsic Value $18.00 TSX-NPI Current Yield 5.9%

DELIVERING WHERE IT COUNTS

Gemini is ahead of schedule and progress is on track at Nordsee, lending more support to our belief that NPI can deliver on its large-scale offshore development plans, which would provide ample cash flow to offset anticipated price reductions in Ontario. Looking forward, we expect NPI to continue to look abroad for additional growth opportunities, which, given management’s strong track record, could translate to meaningful equity value accretion.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We value NPI at $18.00 per share.

Compared to BEP.UN, NPI’s FCF disclosure is conservative, since it accounts for debt repayments on active wind farms. FY end Dec. 31 F13 F14 Q3-F15 C$ Millions

Adjusted Cash Flows 3.5/5 Share price $15.48 $15.29 $17.39

Without any assumed development beyond Nordsee 1, we Shares o/s (millions) 135.0 150.4 170.1 believe NPI can increase its dividend to $1.17 in 2018.

Market capitalization $2,089.8 $2,299.6 $2,958.0 The Balance Sheet 3/5 Long-term investments $0.0 $0.0 $0.0

We believe NPI has ample liquidity to bridge anticipated Net debt and preferred shares $1,959.7 $3,469.8 $4,719.3 FCF cash shortfalls to 2018.

Enterprise value $4,049.5 $5,769.4 $7,677.3 Business Operations 3/5 Revenue (TTM) $535.2 $760.1 $744.8 2015 will be an active year at NPI, with financial close on Nordsee 1, COD at Phase 3 of the Ontario ground-mounted Free cash flow (TTM) $130.1 $164.9 $189.1 solar farms and Cochrane/Kirkland Lake PPA renegotiations on schedule. Avg. units o/s (TTM, millions) 123.5 153.3 166.0

Cash flow per share (TTM) $1.05 $1.10 $1.14 Corporate Governance 3/5 Price-to-free cash flow (TTM) 14.7x 13.9x 15.3x

No issues noted. Payout ratio (TTM) 103% 98% 95%

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Page 71 Updated November 13, 2015

OPEN TEXT CORP. Current Price: C$60.00/US$45.14 Market Capitalization (million) C$7,290/ TSX-OTC; NASDAQ-OTEX US$5,470

RISKS TO THE ROLL-UP Without an organic growth metric, it’s difficult to gauge the health of OTEX’s ongoing business. In our estimation, revenue has been flat or declining on an organic basis for several years now, with F11 being the last time the company registered organic revenue growth at more than the rate of inflation. However, the bull case is primarily premised on continuing acquisitions, cost-cutting and an advantaged tax structure. As long as acquisition opportunities exist, we don’t dispute that there’s potential for the roll-up strategy to yield high returns. However, we are concerned with the recent reassessment by the US Internal Revenue Service, which may deprive OTEX from its tax advantage.

Risk Areas  Earnings quality — We estimate that OTEX cannot materially grow revenues without acquisitions; therefore, “special charges” should be viewed as recurring in nature.  Tax — The company has been reassessed by the IRS and OTEX’s disclosure related to reassessment is extremely vague in our opinion, which precludes investors from gauging the ultimate tax risk. In addition, the Luxembourg tax structure may be challenged by U.S. or European tax authorities.

Updates since last report  The roll-up story continues with more acquisitions, but the key risks have not changed.

DIMITRY KHMELNITSKY [email protected] 416-866-8783

Page 72 Updated November 12, 2015 SELL PENGROWTH ENERGY CORP. Current Price C$1.16 / US$0.88 Intrinsic Value C$0.40 TSX-PGF; NYSE-PGH Current Yield 3.4%

PENGROWTH PAST ITS CONVENTIONAL LIMIT With Pengrowth already effectively selling itself piece by piece, the company is a sum-of-the-parts exercise. We estimate the value of Lindbergh Phase I at ~$1.40 per share, assuming US$65 oil. At $30,000 per flowing barrel equivalent, Pengrowth’s conventional assets are worth ~$2.25 per share, after it completes the sale of its Bodo and Jenner assets. Subtracting ~$3.05 per share in remaining debt following these sales, Pengrowth has an equity value of just $0.60 per share. We can’t fathom paying much more for the conventional assets, given the struggle Pengrowth is likely to have maintaining volumes in 2016. Ditto future phases of Lindbergh which we see as impossible given current debt levels. SELL. QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 1.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value Under IFRS, Pengrowth realized impairments of $409 MM for $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 0.40 Q3-F15 in their Central, Eastern, West Central, Southern and $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 1.05 Northern Alberta CGU and its Olds CGU, blamed on lower $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 1.85 future commodity price assumptions. Pengrowth continues to move interest paid out of operatting cash flows into cash At our US$65 oil price, we estimate Pengrowth's intrinsic value at $0.40 flows from financing, which is allowed under IFRS, but mis- per share, more than 65% below its current share price. leading, in our view. 2015 Company Profile 2013 2014 9 mos Adjusted Cash Flows 1.5/5 Price 6.57 3.66 1.14

The company plans to spend just $190 to $210MM on capex Shares (millions incl. exch.) 522.0 533.4 543.0 in 2015, with Lindbergh taking up between $80 and $90MM. Market cap. ($ millions) 3,430 1,952 619 We expect 2016 capital spending to shrink below $150MM, in line with cash flows at US$44 WTI oil. Revenue ($ millions) 1,176 1,633 337 CFPS 1.03 1.03 0.64 The Balance Sheet 1.5/5 Price to YTD CFPS 6.4x 3.5x 1.3x At the end of 2015 Q3, Pengrowth had $260 MM drawn on ROE (annualized) (9.0%) (16.3%) (33.3%) its $1.3 B credit facility, with the facility open through March 2019. Net debt now stands at more than 7.5 times our cash Dividends per share 0.48 0.48 0.22 flow estimate for 2017 under US$65 WTI. Leverage will only Production (boe/d) 84,527 73,288 72,580 come down if Pengrowth can scratch out more asset sales. CFO* per boe 17.41 20.58 17.37 Business Operations 2.5/5 Net debt to EV 26% 49% 77% Net debt to CFO* 2.2x 3.4x 4.5x Beyond Lindbergh's current ramp up, Pengrowth has little to offer investors. Volumes are likely to decline on underinvest- 2015 Cash Flow and Dividends 2013 2014 ment and further asset sales next year. 9 mos Reported CFO* 537.1 550.6 345.1 Corporate Governance 2/5 Capital expenditures (695.8) (904.0) (182.2) Pengrowth saw an executive shakeup this year as its COO Available cash (shortfall) (158.7) (353.4) 162.9 and Senior VP of Operations departed in early July. The Dividends declared 248.5 253.6 116.8 company essentially substituted a co-COO structure with Steve De Maio as thermal head and Randy Steele as head % of CFO* 46% 46% 34% of conventional production. In our view, this is not the easi- % of available cash N/A N/A 72% est time to make this switch. * CFO is cash from operations after working capital and asset retirement expenditures

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Page 73 Updated November 12, 2015 SELL PENN WEST PETROLEUM LTD. Current Price C$1.63 / US$1.23 Intrinsic Value Nil TSX-PWT; NYSE-PWE Current Yield 0%

RUNNING OUT OF TIME AND SALEABLE ASSETS Following the Q4 sales of Mitsue and Weyburn properties, Penn West will be reduced to ~75,000 barrels of oil equivalent per day and pro- forma net debt of ~$2.0 billion ($4 per share), including working capital. A value of $35,000 per flowing on 70,000 boe per day in 2016, after debt, leaves $435 million in equity value or $0.85 per share. This highlights our worry that Penn West cannot: 1) sell enough assets; 2) soon enough; 3) at a high enough price; 4) while still maintaining volumes on its remaining production. The liquidation risks on this name are too high for our liking. SELL.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value Given the exhaustive internal and external review of Penn $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 0.00 West's accounting since July 2014, the company's financials $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 1.00 now look to be on more solid ground. We will likely never know whether the accounting errors were willful or simply $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 2.25 careless, but they did serve to cover up the company's If WTI oil prices remain at or below US$65 per barrel through 2019, we view Penn West's equity value as likely to be wiped out by cash short- astronomical operating costs. falls and volume declines. This leaves Penn West in a race against time to sell more assets.

Adjusted Cash Flows 0.5/5 Restated 2015 Company Profile 2014 2013 9 mos Year-to-date, Penn West has generated funds flow of just Price 8.87 2.43 0.60 $173MM or $0.34 per share. In contrast, capital spending has totaled $371MM year-to-date. Shares (millions incl. exch.) 489.1 497.3 502.2 Market cap. ($ millions) 4,338 1,208 301 The Balance Sheet 0/5 Revenue ($ millions) 2,363 2,068 994 CFPS 1.98 1.71 0.29 Penn West settled some of its debt with post-Q2 asset sales and now carries roughly $1.9B outstanding. Given post- Price to YTD CFPS 4.5x 1.4x 1.5x settlement volumes, we don't see the company reaching ROE (annualized) (10.0%) (26.5%) (7.3%) $300 MM in EBITDA in either 2016 or 2017. With debt reach- Dividends per share 0.82 0.56 0.02 ing more than 6.0x EBITDA, Penn West is headed for further restructuring. Production (boe/d) 135,284 103,989 89,736 CFO* per boe 19.60 22.34 18.07 Business Operations 0.5/5 Net debt to EV 36% 63% 88% Net debt to CFO* 2.5x 2.5x 11.4x Penn West has trimmed its asset base to a set of liquids Restated 2015 plays with passable economics, if oil were in the US$70s. In Cash Flow and Dividends 2014 our view, the company has run out of time to revamp its 2013 9 mos operations. Reported CFO* 968.0 848.0 148.0 Capital expenditures (704.0) (732.0) (371.0) Corporate Governance 1.5/5 Available cash (shortfall) 264.0 116.0 (223.0) Dividends declared The May 2013 appointment of Rick George as Chairman, as 394.0 277.0 15.0 well as the installation of a new CEO, David Roberts, former- % of CFO* 41% 33% 10% ly of Marathon Oil, only proved that bad assets trump good % of available cash 149% 239% N/A management. The decision to carry minimal hedging heading into 2015 has proven to be disastrous. * CFO is cash from operations after working capital, cash interest expense and asset retirement expenditures * a Financial statement data are based on IFRS.

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Page 74 Updated November 18, 2015 PEYTO EXPLORATION & DEVELOPMENT CORP. SELL Current Price C$27.81 Intrinsic Value C$26.00 TSX-PEY Current Yield 4.7%

WHY FREE CASH MATTERS MORE THAN GROWTH Peyto has managed to grow quickly in recent years, with volumes increasing by 27% CAGR over the six years ended 2015. It is tempting to just consider this growth when valuing Peyto, but we warn that Peyto has been growing from a small base and that oil & gas prices have reduced the economics of Peyto’s continuous stream of reinvestment. We estimate the company needs to spend ~$525 million annually to maintain our projected Q4 volumes of 101,500 barrels of oil equivalent per day (boe/d). This gives Peyto ~$125 million in free cash flow in 2016, implying a free cash yield of just under 3% at current share prices. Given such a low FCF yield and challenged commodity pricing, we remain sellers of this name. QUALITY RATING INTRINSIC VALUE

WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value

$65 Oil - Base Case 40 / 65 2.75 / 3.75 0.75 / 0.85 26.00 Non-IFRS funds flow leaves out the cash costs associated $75 Oil Case 44 / 75 2.95 / 4.00 0.76 / 0.88 33.00 with performance compensation, inflating the metric. Payments totaled $12.6 million in 2012, $16.3 million in 2013 $85 Oil Case 55 / 85 3.25 / 4.25 0.80 / 0.92 36.50 and $19.2 million in 2014. Our valuation for Peyto under our most conservative price deck is $26.00 per share, which assumes a return to US$65 WTI oil and US$3.75 NYMEX gas in 2019. Adjusted Cash Flows 2.5/5 2015 Company Profile 2013 2014 9 mos We expect Peyto to generate $3.80 to $4.00 per share in Price 32.51 33.47 27.75 2016 funds flow, assuming C$3.15 for AECO gas. This is Shares (millions incl. exch.) 148.9 153.9 159.0 based on an agressive spending plan that is likely to add up to $250MM in debt. Market cap. ($ millions) 4,842 5,150 4,412 Revenue ($ millions) 535 782 506

CFPS The Balance Sheet 3/5 2.73 4.18 2.51 Price to YTD CFPS 11.9x 8.0x 8.3x

Peyto exited 2015 Q3 with $1.02B in net debt, including ROE (annualized) 11.8% 19.0% 9.5% working capital. The company had $540MM drawn on its Dividends per share 0.88 1.14 0.98 $1.0B credit facility, which remains open until April 2017. Production (boe/d) 59,313 76,372 81,847

CFO* per boe 18.82 23.05 17.84

Business Operations 3/5 Net debt to EV 15% 15% 18%

Net debt to CFO* 2.1x 1.4x 1.8x We see Peyto's assets producing significant volume growth 2015 through 2018, on the order of a 15% CAGR, however we Cash Flow and Dividends 2013 2014 9 mos view this growth as priced in. Reported CFO* 407.4 642.5 399.7 Capital expenditures (578.0) (690.4) (431.3) Corporate Governance 2/5 Available cash (shortfall) (170.6) (47.9) (31.6) Dividends declared 130.9 174.8 155.7 We are not fans of Peyto's reserve-based bonus, which pays % of CFO* 32% 27% 39% management 4% of any increase in proved producing % of available cash N/A N/A N/A reserve value. * CFO is cash from operations after working capital, cash interest expense and asset retirement expenditures

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SAM LA BELL [email protected] 416-866-8783

Page 75 Updated November 12, 2015 SELL PRAIRIESKY ROYALTY LTD. Current Price C$25.66 Intrinsic Value C$24.50 TSX-PSK Current Yield 5.1%

SELLING UPSIDE FOR SCALE After purchasing Canadian Natural's royalty assets for $1.8 billion, PrairieSky has dramatically increased the scale of its business. By financing the deal entirely with shares, however, the assets are likely to generate very little cash in excess of new dividend requirements. The second knock on the financing is that PSK's shares are being sold at the bottom, which means outside investors will pick up a share of any future rebound in pricing and sliding royalties. As a result, we view the deal as neutral to PSK’s valuation under our US$65 oil scenario and dilutive at US$75+ oil. We continue to view PrairieSky as overvalued given our conservative long-run price deck of US$65 for WTI and US$3.75 for NYMEX gas. SELL.

QUALITY RATING INTRINSIC VALUE

WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value We highlight that IFRS accounting allows immediate recog- $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 24.50 nition of non-monetary assets received in lieu of lease bo- $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 30.00 nuses. In Q2. this allowed PSK to book a future royalty stream as one-time lease bonus revenue, affecting income, $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 35.50 cash flows and asset reporting. Our conservative case values PrairieSky at $24.50 per share, assuming a return to US$65 WTI oil and US$3.75 NYMEX gas by 2019. F13 F14 Q4 2015 Adjusted Cash Flows 3/5 Company Profile pro-forma 219 days 9 mos We estimate cash flows from the acquired CNRL assets at Recent/IPO price 28.00 30.60 25.36 $80 to $100 million this year, which roughly matches PSK’s Shares (millions incl. exch.) 130.0 149.3 156.3 increased dividend obligations on 71.4 million shares. Market cap. ($ millions) 3,640 4,569 3,964 The Balance Sheet 5/5 Revenue ($ millions) 282 199 170 CFPS 1.31 1.24 0.80 As of the end of 2015 Q3, PrairieSky had no debt and Price to YTD CFPS 21.3x 14.8x 23.8x $204MM of cash, after raising $190MM in the second quar- ROE (annualized) ter from an offering of 6.34MM shares at $31.25 per share. NA NA 7.2% Dividends per share 1.27 0.63 0.98 Business Operations 2/5 Production (boe/d) 14,275 16,249 17,088 CFO* per boe 32.81 51.96 26.68 PrairieSky's Q3 volumes declined 11% versus Q1, no doubt Net debt to EV 0% 0% 0% contributing to the decision to buy CNRL's royalty assets. The decline is due both to lower sliding scale royalties and Net debt to CFO* 0.0 0.0 0.0 to reduced third party volume drilling. F13 F14 Q4 219 2015 Cash Flow and Dividends pro-forma days 9 mos Corporate Governance 2.5/5 Reported CFO* 170.9 184.9 124.8 Capital expenditures** 13.2 0.0 0.0 With a relatively unique business model, evaluating man- Available cash (shortfall) 184.2 184.9 124.8 agement's performance other than through share returns is challenging. As a result, PrairieSky's compensation arrange- Dividends declared 165.0 98.3 147.9 ments are skewed towards total returns and benchmarked % of CFO* 97% 53% 119% against a peer group that mixes royalty companies and % of available cash 90% 53% 119% dividend-paying oil and gas names. * CFO is cash from operations after working capital. We have added EBITDA from the Encana's development properties at a 25% effective tax rate **Net of lease bonus payments

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NIMA BILLOU [email protected] 416-866-8783

Page 76 Updated November 2, 2015 BUY

PROGRESSIVE WASTE SOLUTIONS LTD. Current Price $24.05 Intrinsic Value $30.00 TSX-BIN; NYSE-BIN Current Yield 2.1%

BIN BOUNCES BACK We believe the negative reaction to unanticipated expenditures overstates the probability of failure for BIN’s 5-year cost reduction plan. Assuming only a 50% probability of success, we’ve established a value estimate of $30.00 per BIN share.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Assigning only a 50% probability to BIN’s cost reduction plans, we’ve reduced our value estimate to $30.00 per share.

A more detailed view of its operating costs would improve BIN’s ranking for accounting & disclosure.

Period Ending F13 F14 Q3-F15 US$ Millions Adjusted Cash Flows 5/5

Share price $24.75 $30.08 $26.42 We expect BIN’s FCF per share to grow at a CAGR of 11% between F15 and F18, providing it ample liquidity to finance acquisitions, dividend increases or share buybacks. Shares outstanding (millions) 115.2 112.5 109.3

The Balance Sheet 3/5 Market capitalization $2,851 $3,384 $2,888

BIN’s debt service metrics are in line with sector averages Net debt $1,630 $1,629 $1,582 for debt-to-EBITDA and interest coverage.

Enterprise value (EV) $4,481 $5,013 $4,470 Business Operations 4/5

Revenue (TTM) $2,026 $2,009 $1,946 The relatively large contribution of commercial collection and landfill/transfer stations to BIN’s revenue bodes well for margin expansion in a rising volume environment. EBITDA (TTM) $531 $523 $493

Adjusted EPS (TTM) $1.10 $1.33 $1.24 Corporate Governance 3/5

Net debt-to-EBITDA (TTM) 3.1x 3.1x 3.2x BIN’s revised incentive compensation program, which en- courages capital spending discipline, should boost FCF conversion and returns. EV-to-EBITDA (TTM) 8.4x 9.6x 9.1x

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Page 77 Updated November 9, 2015 BUY QUEBECOR INC. Current Price C$32.62 Intrinsic Value C$40.00 TSX-QBR.b Current Yield 0.5%

BEST OF THE CABLE AND WIRELESS WORLD Quebecor was the only company to report a sequential increase in cable PSUs (primary service units) in Q3-15, limiting cable subscriber losses to only 2,000. At the same time, wireless ARPU grew 11.2% YoY, with a 5.8% sequential increase in subscribers, giving investors the best of both the cable and wireless world. We continue to believe that Quebecor’s best-in- class cable results, rapidly growing wireless business, the opportunity to sell its non-Quebec spectrum, buy back the Caisses’s remaining stake and a very reasonable valuation (6.1x excluding wireless business and non-Quebec spectrum) warrant a Buy recommendation (Top Pick), with an intrinsic value estimate of $40.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We are maintaining our BUY rating and $40 intrinsic value estimate.

Disclosures are improving, with management citing wireless churn of 1.6% and slightly positive wireless EBITDA. YTD September 30, 2015 F13 F14 F15 C$ Millions Adjusted Cash Flows 4/5

Revenue (TTM) $4,355 $4,189 $3,871 Improving wireless profitability, continued cable EBITDA growth and moderating cable capital intensity will help increase free cash flow over time. EBITDA (TTM) $1,439 $1,503 $1,433

$25.92 $28.75 $31.90 The Balance Sheet 2.5/5 Share price (reporting date)

EV/EBITDA (TTM) - proportionate 7.4x 7.2x 8.2x Net debt: TTM EBITDA sits at 3.5x after Quebecor increased its QMI stake from 75% to 81%. Dividend yield 0.4% 0.3% 0.4% Business Operations 4/5

Market capitalization $3,201 $3,531 $3,905 Wireless is driving growth, with 40,000 net additions and an 11.2% increase in ARPU. Quebecor was the only cableco to report a 0.2% gain in cable PSUs in Q3-15. Enterprise value $7,930 $8,117 $9,049

Corporate Governance 3/5 QMI Net debt: TTM EBITDA 3.3x 3.0x 3.5x

The rights of Class B shareholders are limited due to a com- Wireless subscribers (thousands) 478 590 743 bination of a dual class share structure and the Caisse’s ownership (includes veto rights for dividend increases, acquisitions and the right to force an IPO of QMI by 2019). Wireless ARPU $41.55 $44.16 $49.12

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Page 78 Updated July 23, 2015 BUY REPUBLIC SERVICES INC. Current Price US$40.60 Intrinsic Value US$48.25 NYSE-RSG Current Yield 3.0%

BEING IN THE RIGHT PLACES

We believe RSG’s regional footprint is well positioned to benefit from key economic trends such as lower crude oil prices and increased U.S. homebuilding activity.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 We increased our RSG value estimate to $48.25 per share, from $46.50 per share previously, on account of early-evidence of benefits from pricing discipline, its geographic leverage to lower crude oil prices, and increased homebuilding activity in the U.S. RSG’s disclosures are above average, with a detailed break-down of operating costs, and a thorough summary of contingencies. Period Ending F13 F14 Q2-F15 US$ Millions Adjusted Cash Flows 3/5 Share price $33.20 $40.25 $39.17

We believe RSG can increase its FCF per share at an average annual rate of 4% between 2014 and 2018. If it contin- Shares outstanding (millions) 360.6 353.1 349.3 ues to make progress in converting CPI-linked business, that growth rate could escalate. Market capitalization $11,972 $14,211 $13,682 The Balance Sheet 2/5

Net debt $8,281 $9,010 $9,599 RSG employs the most debt in the sector, although organic EBITDA growth and ample excess FCF provide it sufficient capital to lower leverage as needed. Enterprise value (EV) $20,253 $23,221 $23,281

Business Operations 4/5 Revenue (TTM) $8,417 $8,788 $8,963

$2,437 $2,468 $2,543 RSG’s relatively large landfill presence, with a sector-high EBITDA (TTM) expected remaining service life of 65 years, lowers its relative risk profile. Adjusted EPS (TTM) $1.97 $1.96 $2.05

Corporate Governance 3/5 Net debt-to-EBITDA (TTM) 3.4x 3.7x 3.8x

The timing seems off on RSG’s Tervita acquisition, but the value at risk is negligible. EV-to-EBITDA (TTM) 8.3x 9.3x 9.2x

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Page 79 Updated October 23, 2015 BUY ROGERS COMMUNICATIONS INC. Current Price C$52.25/US$39.90 Intrinsic Value C$53.00 TSX-RCI.B; NYSE-RCI Current Yield 3.7%

TURNAROUND JUST STARTING Following initiatives to improve customer service and offer user-friendly roaming packages, Rogers’ wireless results are starting to improve meaningfully. On an organic basis, ARPU increased by 3% and impressively, churn remained flat amidst higher competition during the double cohort period. At this point, we believe that the turnaround is just starting – as customers begin to adopt and use Roam Like Home, the higher roaming volumes will offset lower prices; lower customer complaint levels should also translate into further churn improvements. Finally, the completion of capex programs should allow Rogers to deliver 10%+ free cash flow growth in 2016.

QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 4/5 We are maintaining our BUY recommendation and increasing our intrinsic value estimate to $53

Accounting and disclosures are good. Rogers has started to disclose wireless ARPA in 2015 and began disclosing Share QTD September 30, 2015 Everything adoption in 2014. C$ Millions F13 F14 F15

Adjusted Cash Flows 3/5 Revenue (TTM) 12,724 12,727 $13,328 At the $1.92 dividend, Rogers is paying about 67% of F15 free cash flows and has flexibility to increase this amount by EPS (TTM) $3.54 $2.74 $2.93 5% to 10% in 2016.

1,341 1,312 1,345 The Balance Sheet 4/5 EBITDA

Price (reporting date) $45.83 $42.80 $52.25 Rogers’ net debt to F15 EBITDA ratio is approximately 3.1, above the Company’s 2.0x to 2.5x target ratio. EV/EBITDA (TTM) 6.9x 7.3x 8.2x

Business Operations 3/5 P/E (TTM) 13.0x 15.6x 17.8x

FCFE yield 6.3% 7.8% 5.4% Wireless ARPU trends should improve over the longer-term, as roaming plans and simplified pricing effects are worked through the base. NHL content is being used as a tool to Dividend yield 4.0% 3.8% 4.2% attract/retain high-value subscribers and encourage more data consumption. Market capitalization 23,638 22,031 26,895

Corporate Governance 4/5 Enterprise value 34,592 36,099 41,316

Good. Net debt: TTM EBITDA 2.3x 3.0x 3.1x

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Page 80 Updated August 27, 2015 BUY

Current Price C$72.10/US$54.20 ROYAL BANK OF CANADA Intrinsic Value C$77.00 TSX-RY; NYSE-RY Current Yield 4.4%

STRONG IN A TOUGH OPERATING ENVIRONMENT There were several positives in RY’s Q3-F15 results including a record quarter in Canadian Banking, strong growth in the loan book despite a challenging operating environment and a continuation of benign credit conditions with no material signs of deterioration. We continue to like RY’s scale and diversification, which we believe will lead to relative outperformance in the face of a weak Canadian economy. We maintain our BUY recommendation.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3.5/5 Intrinsic value for RY is $77.00, calculated by applying a multiple of 11.5x to our F2016 EPS estimate of $6.75 and a multiple of 1.8x We have a favourable view on RY’s disclosure by business line on our P/BV estimate of $42.42 at the end of F2016, and taking as the bank has five reporting segments (excluding Corporate the average of the two. Support and International P&C, which is very small), providing better transparency than any of its peers. FY end Oct. 31 F13 F14 Q3-F15 C$

Capital 4/5 Common equity tier 1 ratio 9.6% 9.9% 10.1% (BIII) RY ended Q3 with a CET1 ratio of 10.1%, up 10 bps sequentially. We see minimal risk if RY ends up being classified as a G-SIB $70.02 $80.01 $76.26 (global systemically important bank), as we do not believe that Closing share price OSFI will disadvantage the bank by increasing its capital requirements relative to the other large Canadian banks. EPS (TTM, consolidated) $5.53 $6.03 $6.57

Credit 4/5 P/E (TTM) 12.7x 13.3x 11.6x

RY reported a low loss ratio of only 23 bps, slightly lower than 25 BV/share $29.87 $33.69 $38.20 bps last quarter and 26 bps last year. Management guided to a gradual increase in the loss ratio to 40 bps and 50 bps in a stressed scenario of prolonged low oil prices, while guiding to a P/BV 2.3x 2.4x 2.0x normalized loss ratio in the 30 bps to 35 bps range. Dividend yield 4.0% 3.8% 4.0% Business Operations 4/5 Market capitalization (millions) 100,903 115,393 110,058 Canadian Banking delivered 5% YoY earnings growth in Q3, marking a record quarter as the business continues to fire on all cylinders despite a tough operating environment. However, we ROE (consolidated) 19.7% 19.0% 18.1% note the gradual decline in the YoY growth rate in the segment over the past several quarters. Wealth Management remained Net interest margin 1.56% 1.56% 1.44% flat YoY, while Insurance reported a 19% earnings decline over that period primarily due to higher taxes resulting from a change in tax legislation. I&TS delivered 21% YoY growth # shares outstanding (millions) 1,441 1,442 1,443 excluding the additional month that was included in the Q3-F15 result in order to align the reporting period for the segment. Capital Markets reported a 15% earnings decline from the prior BUSINESS COMPOSITION year. RY’s retail/wholesale earnings mix is approximately 77%/23% with nearly two-thirds of revenue earned in Canada. Canadian P&C Corporate Governance 4.5/5 contributes 52% to overall earnings. The U.S. and other International each contribute 37% of total revenue. No issues noted.

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Page 81 November 13, 2015

SILVER WHEATON CORP. Current Price C$16.40/US$12.35 TSX-SLW / NYSE-SLW Market Capitalization (million) C$6,700/US$4,980

THE TAX MAN COMETH Based on our analysis of Silver Wheaton’s corporate structure, the Income Tax Act and recent legal precedents on transfer pricing, we believe the CRA has a much stronger case against the company than management is letting on. Based on our analysis, we believe that: 1) The case for incorporating in the Caymans based on geographic proximity or financial expertise is questionable; 2) Most of the company’s value-added functions appear to take place in Canada; and 3) Silver Wheaton’s peers do not use offshore structures to the same extent. Should Silver Wheaton lose to the CRA’s tax challenge, we estimate that back taxes, interest and transfer pricing penalties through 2014 could amount to $793 million or $1.96 per share. In addition, the CRA challenge also threatens to reduce future earnings and cash flow by the Canadian tax rate of about 26%. Ultimately, a ruling that invalidates Silver Wheaton’s Cayman arrangements also has the potential to reduce the company’s competitiveness when sourcing future deals.

Risk Areas  Tax — The Income Tax Act explicitly prevents transactions for the sole purpose of tax reduction. Our analysis reveals that: Cayman employees appear to be limited to administrative functions; about half of the company’s total compensation is paid to Canadian-based executives; and flight times and flight costs are generally worse from the Cay- mans than from Silver Wheaton’s Canadian headquarters. Our analysis of two key recent legal precedents suggests that SLW’s transfer pricing could be flawed because it failed to encompass all factors that an independent third party would consider relevant. In addition, we find it telling that SLW’s peers make limited use of off-shore structures. For example, Sandstorm Gold, run by Silver Wheaton’s former CFO, has not structured streams through its offshore subsidiary since 2009, citing that the tax benefits do not outweigh the risks.

 Earnings Quality — Despite the massive exposure, SLW did not record any provision for the reassessment.

 Cash Flow Sustainability — All else equal, SLW’s tax rate may rise materially threatening to reduce future earnings and cash flow by the Canadian tax rate of about 26%. Meanwhile, the company has to make a deposit of C$177 million representing 50% of the reassessed amounts of tax, interest and penalties for 2005-2010 tax years.

Updates Since Last Report  The issue is not expected to be resolved anytime soon, as management strongly disagrees with the CRA. Therefore, we suspect that the matter will be ultimately decided in tax court, which could take several years. Meanwhile, SLW will have to remit 50% of the reassessed amounts for 2005-2014 tax years or approximately $400M by our estimation, over the next few years.

DIMITRY KHMELNITSKY [email protected] 416-866-8783

Page 82 Updated October 23, 2015 SELL SHAW COMMUNICATIONS INC. Current Price C$26.44/US$20.18 Intrinsic Value C$26.00 TSX-SJR.b; NYSE-SJR Current Yield 4.5%

PERSISTENT SUBSCRIBER PROBLEMS Shaw’s subscriber losses only worsened this quarter, with a decline of 76,000 RGUs, compared to 24,000 in Q3-F15. We don’t see major improvements to the customer trajectory, given EBITDA guidance of flat to low single digits and significant headwinds, including a weak Western Canadian economy and pick-and-pay regulations coming into effect March 2016. While Shaw’s shares are the worst performing in the sector, having declined 16% YTD, the stock still trades at 7.5x F16 EBITDA (7.1x sector average) and the F16 FCFE yield of 5.2% (6.7% sector average) does not suggest that the shares are cheap on a relative basis.

INTRINSIC VALUE QUALITY RATING We are maintaining our SELL recommendation and $26.00 intrinsic value estimate. Accounting & Disclosure 3/5

YTD August 31, 2015 F13 F14 F15 Good aside from capitalization of equipment subsidies, C$ Millions compared to expensing by peers.

Revenue (TTM) $5,145 $5,241 $5,488 Adjusted Cash Flows 3/5

EPS (TTM) $1.63 $1.84 $1.67 Management is targeting 5% to 10% dividend increases over the next two years. The annual dividend of $1.185 per EBITDA $2,220 $2,262 $2,379 share equates to about 79% F16 payout ratio.

The Balance Sheet 3/5 Share price (at end of period) $24.73 $27.75 $26.44

Shaw’s net debt-to-EBITDA of 2.2x and balance sheet is EV/EBITDA (TTM) 7.2x 7.6x 7.6x reasonable.

FCFE Yield (TTM) 5.4% 5.5% 5.2% Business Operations 3/5 P/E (TTM) 15.2x 15.1x 14.8x

Pricing power is eroding in the consumer segment amidst consistent subscriber declines. ViaWest is expected to grow Market cap $11,190 $14,011 $12,527 in the double-digits, but consumer and media still equate to about 87% of consolidated EBITDA. Enterprise Value $15,886 $17,157 $18,098 Corporate Governance 3/5

Net debt: TTM EBITDA 2.0x 1.8x 2.2x The Shaw family continues to effectively control the company through ownership of 79% of the multiple voting Dividend Yield 4.0% 4.1% 4.3% shares.

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Page 83 Updated November 5, 2015 SELL

Current Price C$44.67/US$33.93 SUN LIFE FINANCIAL INC. Intrinsic Value C$41.00 TSX-SLF; NYSE-SLF Current Yield 3.5% THE CHALLENGES FOR MFS ARE GROWING Our primary concern on is the performance of MFS, which struggled during the quarter in the face of market volatility as the pace of net redemptions picked up significantly. MFS reported a fifth consecutive quarter of net redemptions with large Q3-15 outflows of US$9.0 billion, more than the US$6.0 billion in total net outflows recorded during the previous four quarters, in aggregate. Total gross sales fell markedly to US$16.5 billion in the quarter; down 17.9% versus both the prior quarter and the same quarter of last year. The stock currently trades at a very rich P/BV multiple of 1.5x despite its relatively modest ROE that remains in the 12% range, at the lower end of management’s medium term objective. We maintain our SELL recommendation.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Our intrinsic value is $41.00, based on projected F2016 BV/share of $32.57 and a 1.3x target multiple. During Q3-F15, SLF renamed the MFS segment to SLF Asset Management. SLF Asset Management includes operations of MFS and Sun Life Investment Management (SLIM). SLIM includes SLF’s third-party FY end Dec. 31 institutional investment management business, which incorporate the F13 F14 Q3-F15 recently acquired Bentall Kennedy, Prime Advisors Inc., Ryan Labs Asset C$ Management Inc. MFS contributes to the majority of SLF Asset Management’s operating net income, SLIM had a minimal contribution of $3MM in comparison to $173MM to MFS. Share price (at end of period) 37.52 41.92 43.04

Capital 4/5 Book value / share 24.16 26.87 30.03

The MCCSR ratio ended Q3-F15 at 229%, up from 223% last quarter. The announced acquisition of Assurant Employee Benefits business is P:BV 1.55x 1.56x 1.43x expected to reduce MCCSR ratio by 3%. MCCSR (of Canadian subsidi- 219% 217% 229% The Balance Sheet 3/5 ary)

As at Q3-F15, SLF had a $5.8B exposure to the energy sector for debt Reported Operating ROE 14.8% 12.2% 10.5% securities and corporate loans, up 2% sequentially and representing approximately 4.3% of total invested assets. Of the $5.8B exposure, 92.6% is investment grade and above. Approximately 45% of SLF’s energy Dividend yield 3.8% 3.5% 3.5% exposure is to pipeline, storage and transportation entities and 15% is to integrated oil and gas entities. The remaining exposure is mainly related to E&P, refining, drilling and servicing companies, including 6% invested in 2.61 2.96 3.29 drilling and oil field services. Reported Underlying EPS (TTM)

Business Operations 2.5/5 Underlying P:E 14.4x 14.2x 13.1x SLF reported Q3-F15 underlying earnings of $528MM, or $0.86 per share. However, if we remove the $58MM favorable impact of a weaker Market capitalization ($B) 22.9 25.7 26.3 Canadian dollar, earnings in the quarter would have been a much more modest $0.77 per share, down 2% from the same quarter last year. Asia growth continues to be strong, with underlying earnings up 39.6% from # of shares O/S ($M) 609 613 611 prior year. SLF is ahead of achieving its 2015 target of $225MM in Asia. SLF U.S. also reported strong results with underlying earnings up 62.2% YoY. However, SLF Canada earnings declined by 26.6% YoY. MFS earnings AUM ($B) 640 734 846 declined 13.6% YoY and gross sales declined by 18% both QoQ and YoY. MFS also reported net redemptions for the fifth consecutive quarter while total AUM in MFS declined 8.3% sequentially and 5.0% YoY. We remain concerned over performance of MFS. BUSINESS COMPOSITION

SLF’s primary active businesses are in Canada, Asia, and the U.S. In Q3, 33% Corporate Governance 3/5 of SLF’s underlying net income came from SLF Canada, 33% from SLF Asset Management (include MFS), 18% from SLF U.S. and 13% from SLF Asia. The No significant issues noted. remaining 3% is from Corporate segment, which includes SLF U.K. (run-off).

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Page 84 Updated November 20, 2015 SELL SUNCOR ENERGY INC. Current Price C$37.11 / US$27.91 Intrinsic Value C$26.50 TSX-SU; NYSE-SU Current Yield 3.1%

COST IMPROVEMENT BUILT ON SHIFTING SANDS Suncor's main selling point for investors between now and major project completions in 2017 is the prospect of operational improvements. As we see it, the key drivers of Suncor improving unit costs in the oil sands are not cost control per se but: 1) a shift to in-situ volumes; 2) scale economies in mining; and 3) lower natural gas costs. The contribution of each of these factors is likely to slow, which should limit cost improvements going forward. As a result, we see the market as overly optimistic about Suncor's cash flow potential and expansion plans. SELL.

QUALITY RATING INTRINSIC VALUE WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 2/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value IFRS requires the capitalization of financing costs tied to $65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 26.50 major projects under construction, which was optional un- $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 41.50 der Canadian GAAP. Suncor’s interest capitalization per share has increased as a result, to $0.26 in 2013, $0.29 in $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 55.00 2014, and $0.24 to $0.31 per share projected for 2015. Our conservative case values Suncor at $28.00 per share, reflecting a return to US$65 WTI oil and US$3.75 NYMEX gas by 2019. 2015 Adjusted Cash Flows 2.5/5 Company profile 2013 2014 9 mos With the completion Fort Hills and other project spending, Price 37.24 36.90 35.69 we expect 2019 cash flow of roughly $9.4B assuming US$75 WTI. Deducting $4.0B in sustaining capex sets free cash flow Shares (millions incl. exch.) 1,478.3 1,444.1 1,445.8 at roughly $3.70 per share. Under an 8% required yield, Market cap. ($ millions) 55,052 53,288 51,599 shares would rise to $46.20 in 2019 - a return of ~7% CAGR versus current prices, plus dividends. The same math at Revenue ($ millions) 40,297 40,490 23,087 US$65 WTI generates $7.8B of cash flow in 2019 and nega- CFPS 6.83 6.19 3.76 tive CAGR returns versus today. Price to YTD CFPS 5.5x 6.0x 7.1x The Balance Sheet 3.5/5 ROE (annualized) 9.7% 6.5% 0.0% At the end of Q3 2015, Suncor's net debt was $9.5B or 1.4x Dividends per share 0.73 1.02 0.86 trailing twelve month cash flows, with the company carry- Production (000's boe/d) ing $5.4B in cash on the balance sheet. 562 535 576 CFO* per boe 49.20 45.77 34.50 Business Operations 3/5 Net debt to EV 10% 13% 16% Suncor expects Fort Hills and Hebron to commence produc- Net debt to CFO* 0.6x 0.9x 1.3x tion on schedule in late 2017, increasing volumes by more 2015 than 100,000 barrels per day. Oil sands will need to shoul- Cash Flow and Dividends 2013 2014 der the load between now and then. 9 mos Reported CFO* 10,100.0 8,936.0 5,441.0 Corporate Governance 3/5 Capital expenditures (6,777.0) (6,961.0) (4,637.0)

Suncor's new CEO, Steven Williams, has promised that he Available cash (shortfall) 3,323.0 1,975.0 804.0 will not pursue 'growth at any cost'. While the Voyageur Dividends declared 1,095.0 1,490.0 1,085.0 upgrader was cancelled (a positive), Fort Hills continues to move forward despite marginal economics. Suncor's Octo- % of CFO* 11% 17% 20% ber 5th bid for Canadian Oil Sands shows management's % of available cash 33% 75% 135% frustration at the lack of execution at Syncrude. * CFO is cash from operations after working capital and asset retirement expenditures

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Page 85 Updated November 6, 2015 BUY TELUS CORP. Current Price C$41.91 / US$30.80 Intrinsic Value C$45.00 TSX-T; NYSE-TU Current Yield 4.0%

WIRELESS BALANCE OF POWERS RESTORED For the last two years, Telus have preyed on Rogers’ customer service problems and taken more than fair share of net postpaid subscriber additions. However, we are seeing subscribers warm back up to Rogers following the launch of customer-friendly roaming programs and efforts to improve customer service. This quarter, Rogers finally bounced back, taking 35% of postpaid net adds, while holding churn flat YoY. Going forward, we believe that the re-balancing of powers means that there will be less easy prey for Telus to feast on. As a result, we see less reason for the stock to outperform, as the company also trades at a premium valuation multiple. We are maintaining our BUY recommendation for Telus and $45 intrinsic value estimate and believe that the ARPU dilutive changes will be beneficial in the long run.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 We are maintaining our BUY recommendation and $45 intrinsic value estimate

Accounting and disclosures are reasonable. YTD September 30, 2015 F13 F14 F15 Adjusted Cash Flows 4/5 C$ Millions

We estimate that Telus will pay out about 85% of F16 free Revenue (TTM) $11,307 $11,822 $12,413 cash flows at the new annual dividend of $1.76 per share.

EPS (TTM) $2.01 $2.30 $2.36

The Balance Sheet 4/5 EBITDA (TTM) $4,014 $4,166 $4,282

The net debt-EBITDA ratio of 2.7x sits outside of the 2.0-2.5x Share price (reporting date) $36.90 $40.89 $41.91 target and will limit the extent of share buybacks that can be done in the future. EV/EBITDA (TTM) 7.6x 8.2x 8.6x Business Operations 3/5 P/E (TTM) 18.4x 17.8x 17.8x

Telus continues to generate industry-leading wireline results, including RGU growth of 1.3% and 4.6% revenue growth, FCFE yield (TTM) 5.1% 3.4% 4.8% with EBITDA growth of 3.4% ex restructuring. Wireless ARPU suffered from a self-inflicted hit to data overage revenues, Dividend Yield 3.5% 3.6% 3.9% as a result of an initiative to notify customers of real-time usage. Market capitalization $22,989 $25,025 $25,146 Corporate Governance 4/5 Enterprise value $30,302 $34,278 $36,859 Good. Net debt: TTM EBITDA 1.8x 2.2x 2.7x

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Page 86 Updated October 8, 2015 BUY THE JEAN COUTU GROUP (PJC) INC. Current Price C$20.60 Intrinsic Value C$26.00 TSX-PJC.a Current Yield 2.1%

Q2-F2016 IN LINE; WE CONTINUE TO EXPECT PROFESSIONAL ALLOWANCES TO INCREASE FROM 15% TO 23% Jean Coutu reported flat EBITDA growth in Q2-F2016, an improvement from Q1-F2016. On a trailing 12-month basis, Pro Doc’s EBITDA increased by $1.6 million, partly offsetting a $4.3 million EBITDA decline at the franchising business, as driven by generic drug price reductions. We are waiting for Quebec Treasury Board’s decision regarding the potential elimination of the cap on professional allowances (“PAs”), which is expected to be announced in the coming weeks. As indicated in our July 8 and September 4 research reports, following the removal of the cap, we expect PAs will increase from the current 15% to 23% of generic drug prices in order to fully offset the $133 million loss from the reduction of dispensing fees under Bill 28. Jean Coutu also has a strong balance sheet with no debt and has increased its dividend by 18% a year in the last seven years. We believe the market has overreacted to current regulatory uncertainties. Jean Coutu remains a BUY. QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 Incorporating the impact of Bill 28 and our expected increase in PAs from the current 15% to 23%, we derive a $26.00 intrinsic value for Disclosures are on par with those of other Canadian retailers Jean Coutu using a NAV model by applying a 12.1x forward EBITDA across the board. Jean Coutu reports Pro Doc as a separate multiple to the franchising business and 16.1x forward EBITDA multiple segment. to Pro Doc. Adjusted Cash Flows 3/5 FY end February Cash flows are positive and stable, and should grow at a steady F2015 F2016E F2017E pace. We expect free cash flow to decline from $198m reported (C$ Millions, except as noted) in F2014 to $120m in F2015, largely due to higher investment in a new, larger distribution centre, and recover to $220m by the following fiscal year. Fully-Diluted EPS $1.16 $1.19 $1.28 The Balance Sheet 4/5 Jean Coutu has a strong balance sheet with no debt and $93m Retail Sales 4,175 4,334 4,570 in cash at the end of Q2-F2016. Management indicated on Q2- F2014 conference call its optimal capital structure is about 1.5x to 2.0x EBITDA. The book value of Jean Coutu’s land and buildings Revenue 2,814 2,933 3,077 was about $364 million at the end of F2015 and management indicated that the market value of its owned real estate is about EBITDA 332 337 347 $500 million, including $30 million worth of surplus real estate. Therefore, Jean Coutu has access to capital either by crystallizing the value of its real estate or levering up its balance sheet. EBITDA Margin 11.80% 11.51% 11.29% Business Operations 4/5 Share Price $23.98 $20.60 $20.60 Jean Coutu is the number one pharmacy player in Quebec and benefits from the aging demographics. Pro Doc (generic drug manufacturer acquired by Jean Coutu in 2007) is the key profit P/E 20.6x 17.3x 16.1x driver and will help to mitigate the negative impact of recent drug reforms. Pro Doc’s EBITDA margin is in the 40% range, much better than the 6.50% regulated mark-up for prescription whole- Market Capitalization 4,506 3,832 3,640 sale revenues.

Corporate Governance 2/5 EV/EBITDA 13.2x 11.0x 10.4x The Jean Coutu family controls about 93% of the votes with 57% of outstanding equity through owning 100% of Class B shares Net Debt/Capital (13%) (10%) (2%) having 10 votes per share. Should the Jean Coutu family cease to be the beneficial owner of at least 50% of the outstanding votes, the Class B shares will revert back to one vote per share. Eight out Shares Outstanding (millions) 188 186 177 of 13 directors (62%) are independent.

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Page 87 Updated November 4, 2015 BUY TORONTO DOMINION BANK Current Price C$54.11 / US$41.44 Intrinsic Value C$55.50 TSX-TD; NYSE-TD Current Yield 3.8%

WHY TD SHOULD SELL ITS CANADIAN P&C INSURANCE BUSINESS TD Bank’s Canadian property and casualty (P&C) insurance operations have significantly underperformed industry peers over the past several years. While TD Insurance (TDI) has experienced very strong top line growth over the past decade, that growth has come at the expense of profitability with mispriced policies resulting in loss ratios well above industry levels and underwriting losses in five of the past six years. In our view there is limited value for TD Bank to remain in the P&C insurance business, an industry that has historically reported a through-the-cycle average ROE of approximately 10%, comfortably below the bank’s current ROE of roughly 15%. Unlike some of TD’s other higher margin insurance products such as creditor and travel insurance, P&C insurance cannot be sold through the branch network, negating the bank’s distribution advantage. We estimate TD’s P&C insurance business is worth between $1.6B and $2.2B.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3.5/5 Intrinsic value for TD is $55.50, calculated by applying a multiple of 11.0x on our F2016 EPS estimate of $4.82 and a multiple of 1.6x on On the Q3-F15 conference call, management indicated that our BV per share estimate of $36.12 at the end of F2016, and taking NIM is expected to remain under pressure in the near future in the average of the two. both Canada and the U.S. (in the absence of a Fed rate FY end Oct. 31 increase). Management guided to another large F13 F14 Q3-F15 restructuring charge coming up in Q4 at around the same C$ size as the one taken last quarter ($337mm pre-tax). Most of Common equity tier 1 ratio 9.0% 9.4% 10.1% the restructuring work will be completed at year end and is (BIII) expected to help reign in expense growth, which the bank has struggled with in recent years. Closing share price $47.82 $55.47 $52.77

EPS (TTM) $3.46 $4.15 $4.19 Capital 4/5 TD ended Q3 with a CET1 ratio of 10.1%, up 20 bps from the P/E (TTM) 13.9x 13.4x 12.6x prior quarter as organic capital generation and an increase in AOCI more than offset a 7.5% jump in risk-weighted assets. BV/share $25.33 $28.45 $33.25 Credit 3/5 P/BV 1.9x 1.9x 1.6x Credit losses ticked up to 33bps in Q3-F15 versus 32 bps last quarter and 28 bps in the prior year period. Unlike the Dividend yield 3.7% 3.5% 3.7% majority of its large Canadian peers, TD did not experience a sequential decline in its loan loss ratio. Market capitalization (millions) 87,700 102,300 97,800 Business Operations 4/5 ROE 14.2% 15.4% 14.9% The Canadian Retail segment continues to perform well in Q3, with 8% YoY earnings growth in Q3-F15. Insurance results Net interest margin (AEA) 2.20% 2.18% 2.01% were helped by low claims and related expenses in the most recent quarter, which were down 22% from the prior year but # shares outstanding (millions) 1,835 1,845 1,854 are expected to normalize next quarter. U.S. Retail had only modest growth of 1% YoY in Q3, mainly due to higher loan losses, which include an allowance build in business banking. BUSINESS COMPOSITION Wholesale Banking delivered strong 11% YoY earnings growth in the most recent quarter. TD’s retail/wholesale earnings mix is 90%/10%. Geographically, 64% of revenues are from Canada, 33% from the U.S., and the Corporate Governance 4/5 remaining from Other International. Canadian P&C banking contributes 64% of adjusted earnings, excluding the Corporate Good. segment.

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Page 88 Updated November 3, 2015 SELL

TRANSALTA CORP. Current Price $6.20 Intrinsic Value $6.00 TSX-TA Current Yield 11.6%

RISKS OVERSHADOW DISCOUNT VALUATION With its share price down 41% YTD, TA now trades at a discount to its most similar Canadian peer, CPX, based on F16E FCF. However, lingering dividend uncertainty, the risk of a credit downgrade and optimistic F16 guidance are reasons to remain on the sidelines.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3/5 We reduced our TA value estimate to $6.00 per share, which implies a F16E FCF yield of 10.6%.

With CPX now disclosing EBITDA by segment alongside plant output and revenue, we view TA’s disclosure as essen- Period Ending tially equivalent to its most comparable Canadian peer. F13 F14 Q3-F15 (Amounts in C$)

Adjusted Cash Flows 2/5 Share price $13.48 $10.52 $6.20

Shares outstanding (millions) 270 277 284 Assuming TA targets a long-term average payout ratio of 50% and power prices remain depressed, we believe its $0.72 dividend would be cut in half. Market capitalization (millions) $3,645 $2,914 $1,761

The Balance Sheet 1/5 Adjusted EPS (TTM) $0.31 $0.25 $(0.01)

Adjusted EBITDA (TTM, millions) $1,023 $1,036 $978 Lower power prices in Alberta diminish the scale of funding available from asset drop-downs and excess free cash flow, accentuating the liquidity crunch currently facing TA. Adjusted FFO (TTM, millions) $729 $762 $722

Business Operations 2/5 EV/EBITDA (TTM) 9.3x 8.5x 8.9x

P/E (TTM) 43.5x 42.1x nm TA’s ageing fleet of coal plants in Alberta combined with an uncertain future for Centralia lessen its investment appeal compared to CPX. Average Alberta power price (YTD) $80 $49 $37

Corporate Governance 2/5 Common share dividend $1.16 $0.72 $0.72

Adjusted cash flow-to-debt 15.2% 16.9% 14.8% We’re concerned by the potential conflict of interests between TA and RNW, due to the former’s balance sheet issues. Net debt-to-EV 61.9% 67.0% 80.0%

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Page 89 Updated November 19, 2015 UNDER REVIEW

TRANSALTA RENEWABLES INC. Current Price $10.44 Intrinsic Value $11.75 TSX-RNW Current Yield 8.0%

CONFLICTING INTERESTS The levered return we associate with the proposed drop-down of Australian power and pipeline assets from TransAlta Corp. leaves little value upside for RNW shareholders, while the deal could be dilutive to equity value absent debt financing for South Hedland. Given TransAlta Corp.’s ongoing struggle to maintain an investment grade credit rating, we question whether it will endorse more third-party debt at RNW.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 We value RNW at $11.75 per share, with a view that the proposed Australian asset drop-down has an immaterial effect on equity value. Not surprisingly, RNW’s accounting and disclosure is essentially the same as TA. However, since TransAlta Renewa- ble’s financial performance is more dependent on renewa- Period Ending F13 F14 Q3-F15 ble output, we’re surprised it didn’t include a MD&A disclo- (Amounts in C$) sure of actual output vs. expectations.

Adjusted Cash Flows 4/5 Share price $10.99 $11.48 $10.28

Shares outstanding (millions) 114.7 114.7 190.8 RNW’s cash flow is relatively low risk, given output is entirely contracted. Accordingly, the only risk revolves around the output from renewable assets. Market capitalization (millions) $1,261 $1,317 $1,961

The Balance Sheet 4/5 Free cash flow per share (TTM) $1.24 $0.78 $1.00

Dividend per share (Current) $0.77 $0.77 $0.84 Our balance sheet rating focuses on the risk of leverage, which is relatively low at RNW. In fact, we’d characterize RNW as under-levered, especially following the Australian Payout ratio 62% 99% 84% asset drop-down. Electricity output—wind (GWh) 2,518 3,011 2,911 Business Operations 3/5

Electricity output—hydro (GWh) 367 340 383 Concerns remain regarding LTA estimates which might be overly optimistic based on historic precedent. Adjusted EBITDA (TTM) $184 $176 $219

Corporate Governance 2/5 EV/EBITDA 10.7x 11.4x 13.4x

Adjusted EPS (TTM) $0.48 $0.43 $0.60 We’re concerned that a conflict of interests might prevent RNW from employing more debt to enhance shareholder returns. Net debt-to-EV 36% 34% 34%

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Page 90 Updated November 9, 2015 BUY

TRANSCANADA CORP. Current Price $43.32 Intrinsic Value $49.25 TSX-TRP Current Yield 4.8%

UPGRADING TRP Following the denial of KXL, TRP’s share price now implies a less-than-50% probability to Energy East and the B.C. LNG pipeline projects. While development risk remains, we believe TRP offers compelling upside against a backdrop of still-strong support for Energy East.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 4/5 Removing KXL from our value estimate, we now value TRP at $49.25 per share. Compared to its most similar peer, Enbridge Inc., we find TRP’s disclosure to be slightly better, since it offers a more granular look (i.e. EBITDA and earnings vs. only adjusted earnings at ENB) into the assets that make up its reporting For the Period Ended F13 F14 Q3-F15 segments. (Amounts in C$)

Adjusted Cash Flows 4/5 Share price $48.54 $57.10 $42.20

With its major capital projects commencing operations in the coming years, we expect TRP’s operating cash flow to Shares (millions) 707 709 709 increase markedly, granting it significant capacity to fund future growth projects and to increase the dividend.

Market capitalization (millions) $34,318 $40,484 $29,920

The Balance Sheet 3/5 Net debt (millions) $28,267 $31,711 $36,701 Like most other regulated Canadian businesses, TRP is bene- fiting from the current low interest rate environment, with ample access to debt capital. Enterprise value (millions) $62,585 $72,195 $66,621

Adjusted EBITDA (TTM) $4,859 $5,521 $5,902 Business Operations 3/5

Results from TRP’s Alberta power assets has declined alongside spot power prices, but with a mostly gas-fired genera- Adjusted EPS (TTM) $2.24 $2.42 $2.56 tion fleet, we believe TRP is relatively well positioned to ride out new climate change initiatives. EV / EBITDA (TTM) 12.9x 13.1x 11.3x

Corporate Governance 2.5/5 P/E (TTM) 21.7x 23.6x 16.5x No significant issues noted.

Net debt-to-EBITDA (TTM) 5.8x 5.7x 6.2x

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Page 91 November 13, 2015 SELL VALEANT PHARMACEUTICALS INTL., INC. Current Price C$98.14/ US$73.76 Current Yield 0.0% TSX-VRX; NYSE-VRX

A MATTER OF FAITH Valeant failed to alleviate our overriding concerns: 1)The allegedly improper dealings with third party payors by Philidor—an entity controlled by Valeant; and 2) The improper accounting disclosure related to Valeant’s network of captive pharmacies in VRX’s financial statements. QUALITY RATING INTRINSIC VALUE Accounting & Disclosure 0/5 We maintain our SELL rating in light of the significant unquanti- VRX omitted material information about its network of pharmacies that seems to be directed by Valeant and allegedly fiable risks overhanging the company, including the ongoing engaging in highly questionable/illegal activities. We be- investigation by the US Attorney’s Office and what we believe lieve that VRX failed to comply with US GAAP disclosure to be likely investigation by the SEC and other regulatory requirements. agencies. An adverse outcome in any of these challenges could be materially negative for VRX. Cash Flow Sustainability 3/5

We believe that VRX’s cash flow is unsustainable in the long Period Ending TTM term, given an excessive reliance on acquisitions and price F13 F14 US $ Millions (except as noted) Q3-F15 increases, coupled with low R&D. In addition, potential challenges from tax authorities could lower VRX’s cash flow by 25%. Share price $117.16 $144.45 $114.33 Balance Sheet 0/5 VRX’s EV/F16 EBITDA is approximately 4x, compared to the average of 2x for the peer group. Shares outstanding (millions) 321.0 335.4 343.1 Business Operations 1/5

VRX has lost (for now) its premium multiple that enables Market capitalization $35,627 $47,887 $39,227 accretive acquisitions. In addition, the company’s ability to take price increases, which we estimate contributed 20% of its Cash EPS in Q3-F15 may be limited given the public scru- tiny. Further, VRX’s secretive network of pharmacies that Enterprise value (EV) $52,512 $62,941 $68,800 push VRX’s products and generate 7% of Cash EPS is at risk. Valeant is under investigation by the US Attorney offices and based on the allegations that have emerged and our own due diligence thus far, we believe there is a distinct Revenue $5,770 $8,263 $9,990 possibility that they may find wrongdoing. In addition, the scarcity and rising prices for attractive targets as well as rising borrowing costs may reduce the potential accretion from future acquisitions. Reported Cash EPS $6.24 $8.34 $10.06 Corporate Governance 0/5

If any of the allegations made about VRX/Philidor business Reported Organic Growth 0% 13% 17% practices are true, it indicates extremely poor system of internal controls, corporate oversight and improper governance. In addition, management’s compensation tied to rise in VRX’s share price may reinforce emphasis on the short EV-to-EBITDA 36.1x 37.3x 16.26x term gains at the expense of long-term value.

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Page 92 Updated November 12, 2015 BUY VERMILION ENERGY INC. Current Price C$41.16 / US$31.01 Intrinsic Value C$44.00 TSX-VET; NYSE-VET Current Yield 6.3% IRISH EYES ARE SMILI NG Vermilion’s core capital budget outside Ireland is set to decline by 10% to 15% in 2016 with non-Corrib volumes likely to be flat. Investors will finally receive a contribution from Corrib, which should ease cash flow pressures. We expect the company to generate ~$4.00 per share in cash flow next year at US$44 oil and US$2.95 gas, rising to ~$5.50 per share in 2017 at US$65 oil and US$3.25 gas. Ultimately, we believe investors are well served by looking through 2016 cash flows and paying the 8.0 times 2017 cash flow multiple implied at our current intrinsic value of $44 per share. BUY.

QUALITY RATING INTRINSIC VALUE

WTI Oil Price HH Gas Price USD/CAD XR Intrinsic Accounting & Disclosure 3.5/5 Commodity Case 2016 / 2019 2016 / 2019 2016 / 2019 Value

$65 Oil - Base Case 40 / 65 2.75 / 3.75 0.76 / 0.86 44.00 A key feature of accounting under IFRS is the treatment of the Australian Petroleum Resource Rent Tax, which moves $75 Oil Case 44 / 75 2.95 / 4.00 0.77 / 0.89 53.00 from being a periodic royalty expense under C-GAAP to $85 Oil Case 55 / 85 3.25 / 4.25 0.81 / 0.93 61.50 conventional tax treatment on the income statement and balance sheet. Our intrinsic value for Vermilion is $44.00 per share at long-run prices of US$65 for WTI oil and US$3.75 for NYMEX gas.

2015 Adjusted Cash Flows 3/5 Company Profile 2013 2014 9 mos Price 62.35 57.00 42.97 At the current strip, we expect Vermilion to generate funds Shares (millions incl. exch.) 102.1 107.3 110.8 flow of $4.25 to $4.55 per share next year, rising to $6+ per share in 2017 assuming a return to US$65 oil. Market cap. ($ millions) 6,367 6,116 4,761.8 Revenue ($ millions) 1,206 1,312 656 The Balance Sheet 3/5 CFPS 6.90 7.38 2.52 Price to YTD CFPS 9.0x 7.7x 12.8x Early in Q2, Vermillion extended its credit facility to $2.0B ROE (annualized) 20.9% 14.4% -5.0% with a maturity of May 2019. At quarter end, Vermilion had Dividends per share roughly $774MM of borrowing capacity available. We ex- 2.40 2.58 1.94 pect net debt to remain below 2.6x EBITDA in 2016, well Production (boe/d) 41,005 49,573 52,854 under the company's 4.0x Debt-to-EBITDA covenant. CFO* per boe 47.11 43.77 19.32 Business Operations 3/5 Net debt to EV 9% 15% 22% Net debt to CFO* 0.9x 1.4x 3.6x

Despite having relatively far flung assets, Vermilion's steady 2015 Cash Flow and Dividends 2013 2014 track record across its operating segments lends credibility 9 mos to the company's diversified strategy. Reported CFO* 705.0 792.0 279.5 Capital expenditures (551.4) (687.7) (380.5) Corporate Governance 2.5/5 Available cash (shortfall) 153.7 104.3 (101.0) Dividends declared 242.6 272.7 211.6 We are wary of strategy creep given the company's many % of CFO* 34% 34% 76% jurisdictions, which makes management's decision to enter % of available cash 158% 262% N/A the U.S. and Germany worth keeping tabs on. * CFO is cash from operations after working capital, cash interest expense and asset retirement expenditures

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Page 93 Updated July 27, 2015 SELL WASTE CONNECTIONS INC. Current Price US$47.06 Intrinsic Value US$43.65 NYSE-WCN Current Yield 1.1%

AN UPHILL BATTLE

We believe RSG’s regional footprint is well positioned to benefit from key economic trends such as lower crude oil prices and increased U.S. homebuilding activity.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 5/5 We value WCN at $43.65 per share, which implies a 9.2x multiple of our 2018E EBITDA.

WCN’s disclosure practices are best-in-class, based on its detailed segment disclosures and conservative financial Period Ending guidance. F13 F14 Q2-F15 US$ Millions

Adjusted Cash Flows 2/5 Share price $43.63 $43.99 $47.12

The decline in crude oil prices is expected to materially reduce FCF from WCN’s E&P segment, undermining its rela- Shares outstanding (millions) 123.6 124.0 123.4 tive FCF per share growth prospects.

Market capitalization $5,393 $5,454 $5,815 The Balance Sheet 5/5

Net debt $2,097 $1,994 $2,010 WCN has the best debt service metrics and leverage ratios in the sector, suggesting ample access to low-cost debt capital. Enterprise value (EV) $7,490 $7,448 $7,825

Business Operations 2/5 Revenue (TTM) $1,929 $2,079 $2,110

WCN’s E&P segment accounted for over 20% of its 2014 EBITDA (TTM) $657 $717 $716 EBITDA. With oil prices currently below most estimates of a break-even point, WCN’s prospects for growth have waned considerably. Adjusted EPS (TTM) $1.79 $2.04 $2.04 Corporate Governance 3/5 Net debt-to-EBITDA (TTM) 3.2x 2.8x 2.8x

Although we believe share buybacks are value destructive currently (absent a oil price recovery), this initiative could EV-to-EBITDA (TTM) 11.4x 10.4x 10.9x prove rewarding if the E&P segment rises again.

Torpedo Risky Neutral Better Best Quality Scale

5 10 15 20 25

Intrinsic Value Scale

-50% -25% 0 25% 50%

DARRYL MCCOUBREY [email protected] 416-866-8783

Page 94 Updated July 24, 2015 BUY WASTE MANAGEMENT INC. Current Price US$50.09 Intrinsic Value US$53.00 NYSE-WM Current Yield 3.1%

SHEDDING TONS, BOOSTING MARGINS

While WM’s exposure to index-linked contracts and recycling weighs on its investment appeal, we continue to believe the current share price is an attractive entry point against a backdrop of continued pricing discipline and improving FCF conversion.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 3.5/5 We’ve reduced our WM value estimate to $53.00 per share, from $56.75 per share previously, which implies an 8.9x multiple of our 2018E EBITDA. WM’s score is negatively impacted by its segment disclosures, which complicates the process of identifying regions Period Ending F13 F14 Q2-F15 which will drive future financial performance. US$ Millions

Adjusted Cash Flows 3/5 Share price $44.87 $51.32 $46.35

WM boasts the second best FCF per share growth profile in the sector, based on our estimates. However, our FCF per Shares outstanding (millions) 464.8 459.2 452.3 share forecast assumes WM is able to replace FCF previously generated by its Wheelabrator segment. Market capitalization $20,856 $23,566 $20,962 The Balance Sheet 3/5

Net debt $11,981 $9,682 $10,446 WM’s debt service ratios suggest its balance sheet has room to carry more leverage—a capability that will likely be acted upon if an appealing acquisition is transacted. Enterprise value (EV) $32,837 $33,248 $31,408

Business Operations 3/5 Revenue (TTM) $13,983 $13,996 $13,394

WM’s comparatively large recycling segment combined EBITDA (TTM) $3,427 $3,313 $3,193 with its plan to aggressively pursue acquisitions in the near- term heighten its relative risk profile. Adjusted EPS (TTM) $2.15 $2.30 $2.43 Corporate Governance 3/5 Net debt-to-EBITDA (TTM) 3.5x 2.9x 3.3x

As the largest industry player, WM’s intense focus on pricing discipline heading into 2015 bodes well for all sector partici- EV-to-EBITDA (TTM) 9.6x 10.0x 9.8x pants.

Torpedo Risky Neutral Better Best Quality Scale

5 10 15 20 25

Intrinsic Value Scale

-50% -25% 0 25% 50%

DARRYL MCCOUBREY [email protected] 416-866-8783

Page 95 Updated November 3, 2015 SELL YAMANA GOLD INC. Current Price C$2.90 / US$2.20 Intrinsic Value US$1.90 TSX-YRI; NYSE-AUY Current Yield 2.7%

LIVIN’ ON THE HEDGE Yamana expects to meet its 2015 guidance and estimates cash costs in Q4 to be lower, however, our estimates show that due to lower by-product credits caused by expiring hedges, cash costs in Q4 will remain flat or higher than Q3. Yamana will no longer benefit from favorable copper hedges for the remainder of the year. Our analysis of the streaming agreement with Sandstorm Gold that closed in Q4 reveals that this was a complicated and creative deal and is accretive at spot prices of silver and copper. We value Yamana at $1.90 per share at a long-term price of $1,100 gold and maintain our SELL recommendation.

QUALITY RATING INTRINSIC VALUE

Accounting & Disclosure 2/5 Long-term gold price Intrinsic value estimate

US$1,100 per ounce US$1.90 per share Currency hedges mask per-ounce cost inflation, but you won’t find a breakdown in Yamana’s disclosure. The com- +/- US$100 per ounce +/- US$1.25 per share pany includes silver in co-product costs — unlike peers. Our valuation gives the company full value for Cerro Moro, Suyai, Adjusted Cash Flows 3/5 and its Kirkland Lake properties.

At $1,100 gold, we estimate Yamana will generate $180 Fiscal year ends December 31 F15 million of free cash flow before growth this year. But with F13 F14 US$ millions, except as noted 9 mos many of its mines showing signs of deterioration, we question the sustainability of these cash flows. Closing price, end of period 8.62 4.02 1.70 The Balance Sheet 3/5 Shares outstanding, millions 753 823 947 Yamana’s net debt has ballooned to $1.7 billion after acquiring Osisko with Agnico, last year. As a result, its financial leverage is catching up with debt-laden Barrick. Market cap 6,493 3,308 1,610

Business Operations 3/5 Gold production, 000s oz 1,198 1,401 930

Yamana has below-average costs, though these are due Revenue 1,843 1,835 1,362 to copper credits. Mercedes was built ahead of schedule, but various setbacks at new mines reveal mis-execution. CFPS 0.87 0.64 0.21 Corporate Governance 3/5

Cash flow per ounce 545 378 218 Yamana’s CEO is one of the highest paid executives in the sector, despite his stock’s underperformance after a mas- sively dilutive three-way merger in 2007. The recent bid for Price to cash flow 9.9x 6.3x 8.1x Osisko represents a return to the deal-making Yamana of yesteryear. Net debt to EV 13% 36% 52%

Torpedo Risky Neutral Better Best Quality Scale

5 10 15 20 25

Intrinsic Value Scale

-50% -25% 0 25% 50%

SID SUBRAMANI [email protected] 416-866-8783

Page 96

Head of Research

Sam La Bell, MA, MBA [email protected]

Consumer Staples & Consumer Discretionary Energy & Special Situations

Kathleen Wong, CPA, CA, CFA Sam La Bell, MA, MBA [email protected] [email protected]

Alex Wang Nima Billou, MBA, CFA [email protected] [email protected]

Industrials & Utilities Financial Services

Darryl McCoubrey, CPA, CA Mike Rizvanovic, CFA [email protected] [email protected]

Varun Mehrotra, MBA Sherry Ye [email protected] [email protected]

Nasiba Akhmedova

[email protected]

Precious Metals Telecommunications & Technology

Sid Subramani, P. Eng, MBA Desmond Lau, CPA, CA, CFA [email protected] [email protected]

Pawel Rajszel, CFA

[email protected]

Special Situations & Accounting

Anthony Scilipoti, FCPA, FCA, CPA (Illinois) Kevin Dusseldorp, CPA, CA [email protected] [email protected]

Dimitry Khmelnitsky, CPA, CA Howard Leung, CPA, CA [email protected] [email protected]

Taso Georgopoulos, CPA, CA, CFA Amy Ding, CPA, CA [email protected] [email protected]

Client Support Business Development

Elina Stolyar, BA, LL.B [email protected]

Stuart Rolfe, B.A.Sc. [email protected]

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Veritas Investment Research Corporation ("Veritas") its directors, officers, employees and their immediate families are prohibited from trading any position in the securities profiled in a report thirty (30) days before and five (5) days after the publication date where the report involves coverage initiation or a change of opinion. Veri- tas has not offered any consulting, financial advisory, investment banking or underwriting services to the companies mentioned. Veritas does not accept research fees from the companies profiled herein. The information contained in this report has been obtained from sources believed reliable however the accuracy and/or completeness of the information is not guaranteed by Veritas, nor does Veritas assume any responsibility or liability whatsoever. All opinions expressed are subject to change without notification. This report is for information purposes only and does not constitute and should in no way be construed as a solicitation to buy or sell any of the securities mentioned herein. The contents of this research report do not, in any way, purport to include any manner of legal advice or opinion. The intention of this report is to provide a forthright discussion of business, accounting and financial reporting issues, as well as generally accepted accounting principles and the limits of their usefulness to investors. As such, please do not infer from this report that the accounting policies of any company mentioned herein are not allowed within the broad range of generally accepted accounting principles, or that the policies employed by that company were not approved by its auditor(s). This report may not be reproduced in whole or in part without the express prior written consent of Veritas. Veritas is a 100% employee owned firm. ©2015 Veritas Investment Research Corporation.