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MORNING NEWS CALL Edition Friday, August 11, 2017

TOP NEWS • China should be neutral if N.Korea fires first on U.S. - Global Times China should remain neutral if North Korea launches an attack that threatens the United States, a Chinese state-run newspaper said, sounding a warning for Pyongyang over its plans to fire missiles near the U.S. Pacific territory of Guam. • Canada's posts smaller-than-expected quarterly profit Telus, one of Canada's biggest telecom companies, reported a smaller-than-expected profit, as higher costs and weak growth in its wireline unit offset gains from its national wireless business. • Canadian auto parts maker Magna's profit beats estimates Canadian auto parts maker reported better-than-expected quarterly revenue and profit, helped by higher de- mand, and raised its full-year sales forecast. • favours New York for Aramco listing despite risks -sources Saudi Arabia favours New York for the main foreign listing of state oil giant Aramco, even though some financial and legal advisers have recommended London as a less problematic and risky option, people familiar with the matter told Reuters. • Netflix says in discussions with Disney over Marvel, 'Star Wars' films Netflix is in "active discussions" with Walt Disney about keeping Marvel and "Star Wars" films after 2019 when new Disney and Pixar movies will stop appearing on the streaming service, a senior Netflix executive said on Thursday.

BEFORE THE BELL Stock futures pointed to a lower opening for Canada's main stock index as the escalating war of words between the United States and North Korea drove investors toward the yen, Swiss franc and gold. Global markets fell and U.S. stock index futures indicated a lower start for Wall Street ahead of July’s consumer price index data, which is likely to show an increase of 0.2 percent, lifting the year -on-year gain to 1.8 percent. The dollar was close to an eight-week low against the yen, while gold rose to trade near two-month highs. Oil prices fell after the International Energy Agency said market rebalancing was taking time despite strong demand growth because of weak OPEC compliance with output cuts.

STOCKS TO WATCH

Results • Telus Corp (T). The company reported a smaller-than-expected profit, as higher costs and weak growth in its wireline unit offset gains from its national wireless business. Telus's wireline business added 17,000 internet connections and 5,000 television accounts in the second quarter. Operating expenses before depreciation and amortization rose by C$120 million to C$2.08 billion, the company said. Vancouver-based Telus signed up 99,000 new postpaid wireless customers in the quarter compared with 61,000 a year earlier. Average monthly wireless bill for the company was C$66.87, up 3.9 percent from a year earlier, as customers streamed more videos online and utilized data-intensive services. Net income attributable to Telus shareholders fell to C$379 million, or 64 Canadian cents per share, from C$416 million, or 70 Canadian cents per share, a year earlier. On an adjusted basis, the company earned 68 Canadi- an cents per share, missing analysts' average expectations of 72 Canadian cents. Operating revenue rose to C$3.27 billion from C$3.15 billion, the company said. • Magna International Inc (MG). The Canadian auto parts maker reported better-than-expected quarterly revenue and profit, helped by higher demand, and raised its full-year sales forecast. Magna now expects 2017 sales at between $37.7 billion and $39.4 billion. The company in May forecast sales to range between $36.6 billion and $38.3 billion. Net income attributable to Magna rose marginal- ly to $561 million, or $1.48 per share, in the second quarter. Excluding items, the company earned $1.49 per share, 2 cents above analysts' average estimate. The Aurora, -based company's total sales rose 2.5 percent to $9.68 billion, ahead of the average analyst estimate of $9.47 billion.

In Other News MORNING NEWS CALL - CANADIAN EDITION August 11, 2017

• Canada Ltd (KML). British Columbia will not allow the company to begin work on public land for its Trans Mountain pipeline expansion until it "meaningfully" consults aboriginal communities, provincial officials said on Thursday. The $5.5 billion project through British Columbia, which secured federal government approval last year, would almost triple the capacity of the current Trans Mountain pipeline. British Columbia Environment Minister George Heyman told reporters in Vancouver it is unlikely that Kinder Mor- gan can begin work on public land by its September construction target. British Columbia will also seek to participate in court cases against federal approval of the project, Heyman said. • TransCanada Corp (TRP). Opponents of the Keystone XL pipeline vowed on Thursday to block construction of the controversial project if Nebraska regulators approve the proposed route later this year. The state's regulators wrapped up a final public hearing a day early on Thursday on TransCanada's proposed Keystone XL pipeline after four days of contentious exchanges between lawyers. Nebraska's Public Service Commission will make its final decision by Nov. 23. After the hearing, two dozen landowners and other pipeline opponents vowed non-violent civil disobedience if the commission rules in favor of TransCanada. The action, they said, would be similar to months-long protests in North Dakota led by the Standing Rock Sioux tribe against the Dakota Access pipeline.

COLUMN You have been warned. Risks mount for China steel, iron ore: Russell Anyone betting that the rally in China's steel and iron ore prices is going to continue unabated can't say they haven't been warned. The threat isn't explicit, but the signs are mounting that the authorities in Beijing are growing increasingly concerned about the strength in one of the economy's key sectors.

ANALYSTS' RECOMMENDATION • Aimia Inc (AIM). CIBC cuts price target to C$2.50 from C$3.25 to reflect the company’s significant risk to business model post the expiry of the Air Canada contract in 2020. • Canada Goose Holdings Inc (GOOS). Barclays raises target price to C$31 from C$30 saying that the company is pulling on growth levers, which could lead to outperformance in the financial year 2018. • Chorus Aviation Inc (CHR). Canaccord Genuity raises price target to C$9.25 from C$9.00 considering the company’s second- quarter results beat and upbeat commentary on the leasing opportunity. • Element Fleet Management Corp (EFN). CIBC cuts price target to C$10 from C$15 citing the company’s minimal growth in the core fleet business and further impairment charges in the non-core business.

ECONOMIC EVENTS No economic indicators are scheduled for release.

COMPANIES REPORTING RESULTS August 11: Acerus Pharmaceuticals Corporation (ASP). Expected Q2 loss of 1 cent per share Enerplus Corp (ERF). Expected Q2 earnings of 15 Canadian cents per share Magna International Inc (MG). Expected Q2 earnings of $1.47 per share McCoy Global Inc (MCB). Expected Q2 loss of 1 Canadian cents per share Novadaq Technologies Inc (NDQ). Expected Q2 loss of 22 cents per share Telus Corp (T). Expected Q2 earnings of 72 Canadian cents per share

August 14: Canadian Solar Inc (CSIQ). Expected Q2 earnings of Break even per share Diversified Royalty Corp (DIV). Expected Q2 earnings of 3 Canadian cents per share DREAM Unlimited Corp (DRM). Expected Q2 earnings of 14 Canadian cents per share Neptune Technologies & Bioressources Inc (NTB). Expected Q1 earnings of 1 Canadian cent per share Pengrowth Energy Corp (PGF). Expected Q2 loss of 14 Canadian cents per share Sphere 3D Corp (ANY). Expected Q2 loss of $1.50 per share

2 MORNING NEWS CALL - CANADIAN EDITION August 11, 2017

Stornoway Diamond Corp (SWY). Expected Q2 loss of 1 Canadian cent per share Westport Fuel Systems Inc (WPT). Expected Q2 loss of 14 cents per share

CORPORATE EVENTS 08:00 Magna International Inc (MG). Q2 earnings conference call 09:00 Algonquin Power & Utilities Corp (AQN). Q2 earnings conference call 10:00 Chartwell Retirement Residences (CSHun). Q2 earnings conference call 10:00 Inc (EMA). Q2 earnings conference call 10:00 Enerflex Ltd (EFX). Q2 earnings conference call 10:00 Equitable Group Inc (EQB). Q2 earnings conference call 10:00 Intertape Polymer Group Inc (ITP). Q2 earnings conference call 10:00 Morneau Shepell Inc (MSI). Q2 earnings conference call 10:00 Shawcor Ltd (SCL). Q2 earnings conference call 11:00 CES Energy Solutions Corp (CEU). Q2 earnings conference call 11:00 Enerplus Corp (ERF). Q2 earnings conference call 11:00 Ltd (IPL). Q2 earnings conference call 11:00 Telus Corp (T). Q2 earnings conference call 11:00 Corp (WPM). Q2 earnings conference call 12:00 Trican Well Service Ltd (TCW). Q2 earnings conference call

EXDIVIDENDS Enercare Inc (ECI). Amount C$0.08 Inc (ENB). Amount C$0.61 Genworth MI Canada Inc (MIC). Amount C$0.44 Inc (SJRb). Amount C$0.10

(All analysts' estimates are according to I/B/E/S)

3 MORNING NEWS CALL - CANADIAN EDITION August 11, 2017

PICTURE OF THE DAY

A crown is affixed to a wild goat as it is crowned King Puck and will be held on a platform above the town for three days in Killorglin, Ireland August 10, 2017. REUTERS/Clodagh Kilcoyne

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