SCOTIA WEALTH MANAGEMENT Midday Update January 25, 2021 Featured in this report Midday market performance update Canadian equities: U.S. equities: International equities: Market summary Market summary Market summary Companies in the news: T-CA Companies in the news: KMB, MRNA Company in the news: PHG Midday market performance update Intraday returns S&P 500 NASDAQ S&P/TSX Index Stoxx Europe 600 Nikkei 225 Shanghai Comp 3,831 13,586 17,820 405 28,822 3,624 -0.3% 0.3% -0.1% -0.8% 0.7% 0.5% Canada 10-year yield U.S. 10-year yield 0.81% 1.04% Low High Low High 0.23 1.43 0.31 1.68 CAD/USD USD (trade-weighted) $0.78 103.1 Low High Low High 0.68 0.79 102.18 117.03 Gold WTI (oil) $1855.07 $52.27 Low High Low High 1451.55 2075.47 27.66 53.94 Bar charts display current values relative to 52-week ranges. SCOTIA WEALTH MANAGEMENT Canadian equities Canadian equities, as measured by the S&P/TSX Composite Index, are S&P/TSX Composite Index Intraday (1:00 PM) Level Pts Chg % Chg trading slightly lower at midday. 17,820 -25.7 -0.1% 19,000 1,000 Six of the index’s eleven sectors are higher, with the Information 850 17,000 Technology sector seeing the largest gains. 700 15,000 550 400 13,000 S&P/TSX biggest movers 250 Last price %∆ 11,000 100 Jan Apr Jul Oct Jan Blackberry Ltd 23.38 30.6% 30.6% Aurinia Pharmaceuticals Inc 23.47 24.4% 24.4% Issues Tfi International Inc 79.37 21.9% 21.9% < Advancing 89 First Majestic Silver Corp 18.63 4.7% 4.7% < Declining 128 < Unchanged 4 Fairfax Financial Holdings Ltd 465.42 3.1% 3.1% Hudbay Minerals Inc 7.99 -7.0% 7.0% Index stats: < 1-yr return 1.4% Seven Generations Energy Ltd 6.50 -6.2% 6.2% < P/E 26.1x < Dividend yield 3.0% Vermilion Energy Inc 6.38 -5.8% 5.8% Air Canada 20.88 -5.5% 5.5% First Quantum Minerals Ltd 22.38 -4.9% 4.9% In corporate news: Telus Corp. (T-CA) < Telus filed its IPO for the Telus International division on January 8th, and has now disclosed the IPO terms, offering 33.33 million subordinate voting shares with an expected price between US$23-$25/share. With 223.73 million shares outstanding after the IPO, the pricing values the division at US$5.4 billion at the mid- point and implies a valuation of ~14x enterprise value based on FY2020 EBITDA of ~US$390 million. Following the IPO, TELUS and Baring Private Equity Asia are expected to hold approximately 66.6% and 31.5% of the voting power of Telus International, respectively. Telus International will trade under the ticker “TIXT”. Telus International is a provider of digital IT service solutions including digital consulting, risk management, process transformation, omnichannel solutions and back office support. TELUS is tentatively scheduled to report its Q4/20 results on February 12th. T-CA shares are trading higher at midday. 2 SCOTIA WEALTH MANAGEMENT U.S. equities U.S. equities, as measured by the S&P 500 Index, are trading lower at S&P500 Index Intraday (1:00 PM) Level Pts Chg % Chg midday as investors prepare for a busy week of earnings featuring reports 3,831 -10.5 -0.3% from the largest tech companies. 3,950 2,250 Six of the index’s eleven sectors are trading lower, with the Energy sector 3,700 3,450 1,750 down ~1.8%. 3,200 1,250 2,950 2,700 750 S&P 500 biggest movers 2,450 2,200 250 Last price %∆ Jan Apr Jul Oct Jan Iron Mountain Inc 32.80 8.8% 8.8% Kroger Co/The 36.15 7.7% 7.7% Issues < Advancing 179 Viacomcbs Inc 48.61 6.6% 6.6% < Declining 323 Clorox Co/The 213.83 5.7% 5.7% < Unchanged 2 J M Smucker Co/The 120.16 5.2% 5.2% Index stats: Expedia Group Inc 127.81 -6.4% 6.4% < 1-yr return 16.0% < P/E 30.6x Freeport-Mcmoran Inc 28.60 -6.2% 6.2% < Dividend yield 1.5% Technipfmc Plc 10.54 -6.0% 6.0% Westrock Co 43.90 -5.9% 5.9% L Brands Inc 42.60 -5.9% 5.9% In corporate news: Kimberly-Clark Corp. (KMB) < Kimberly-Clark, the American personal care company, reported better-than-expected Q4/20 results. Revenue of US$4.84 billion and adjusted EPS of US$1.69 beat Bloomberg consensus estimates of US$4.72 billion and US$1.61, respectively. Revenue growth was driven by the increased need for disposable care products due to the pandemic with the Consumer Tissues segment up 14% YoY and the Personal Care Segment up 5% YoY. Gross margins compressed due to increased input and manufacturing costs. Operating margins declined YoY due to higher spend on marketing and administrative costs. KMB announced a dividend increase of 6.5% to US$4.56 per share from US$4.28 and a new US$5 billion share repurchase program which represents 11% of KMB’s market cap. Management provided an outlook for FY2021, projecting revenues to grow 5.0%, at the midpoint. In addition, EPS was guided to US$7.88 per share, exceeding street expectations of US$7.79. KMB shares are trading higher at midday. Moderna Inc. (MRNA) < Moderna has announced it is working on a Covid-19 booster vaccine that will guard against the highly transmissible variant that has been identified in South Africa. Company researchers have tested the current vaccine against strains found in both the U.K. and South Africa and in a laboratory setting they appear to protect against the virus strains. As a precaution, Moderna will start testing a booster to help improve immune response. Moderna CEO, Stephane Bancel said, “out of an abundance of caution and leveraging the flexibility of our mRNA platform, we are advancing an emerging variant booster candidate against the variant first identified in the Republic of South Africa into the clinic to determine if it will be more effective to boost titers against this and potentially future variants”. MRNA shares are trading higher at midday. 3 SCOTIA WEALTH MANAGEMENT International equities European equities, as measured by the Stoxx Europe 600 Index, ended Stoxx Europe 600 Index (Market Closed) Level Pts Chg % Chg the session lower as investor continue to monitor the coronavirus 405 -3.4 -0.8% pandemic and potential increase in travel restrictions. 450 8,000 Seventeen of the index’s twenty sectors ended the day lower, with the 400 6,000 Banks sector finishing the session down ~2.9%. 350 4,000 300 2,000 Stoxx Europe 600 biggest movers 250 0 Last price %∆ Jan Apr Jul Oct Jan Nokia Oyj 3.83 12.9% 12.9% Issues Varta Ag 144.90 10.8% 10.8% < Advancing 149 Cd Projekt Sa 275.70 10.2% 10.2% < Declining 449 < Unchanged 2 Chr Hansen Holding A/S 561.60 6.1% 6.1% Hellofresh Se 72.50 5.9% 5.9% Index stats: < 1-yr return -4.4% Electricite De France Sa 10.45 -15.6% 15.6% < P/E 53.2x Dufry Ag 46.40 -11.1% 11.1% < Dividend yield 3.0% International Consolidated Airlines Group Sa 140.00 -7.7% 7.7% Itv Plc 99.30 -6.7% 6.7% Carnival Plc 1,185.00 -6.5% 6.5% In corporate news: Koninklijke Philips N.V. (PHG) < Koninklijke Philips reported Q4/20 earnings that beat on both the top and bottom lines. Revenue of €6.0 billion and adjusted EPS of €0.94 beat Bloomberg consensus estimates of €5.94 billion and €0.88, respectively. Revenue growth was mainly driven by an increase in the Connected Care segment, up 24% YoY, reflecting double digit growth in the Monitoring & Analytics and Sleep & Respiratory Care resulting from Covid-19. Additionally, the Personal Health segment increased 5% YoY and the Diagnosis & Treatment increased 1% YoY. During the quarter the company signed 25 new long-term strategic partnerships, including a 5-year technology and innovation partnership wit Rennes University Hospital. In 2021, Frans van Houten, CEO of Royal Philips, said the company plans “to deliver low-single-digit comparable sales growth, driven by solid growth in Diagnosis & Treatment and Personal Health, partly offset by lower Connected Care sales, and an Adjusted EBITA margin improvement of 60-80 basis points.” PHG shares are trading higher at midday. 4 SCOTIA WEALTH MANAGEMENT Disclaimer This report is provided to you for informational purposes only and is not intended to provide personal investment advice. This report does not include or constitute an investment recommendation and does not take into account the particular investment objectives, financial conditions, or specific needs of individual clients. Any statements regarding future prospects may not be realized. Before acting on this material, you should consider whether it is suitable for your particular circumstances and talk to your investment advisor. The author(s) of the report and the supervisors of the Global Portfolio Advisory Group may own securities of the companies included herein. Scotia Capital Inc. is what is referred to as an “integrated” investment firm since we provide a broad range of corporate finance, investment banking, institutional trading and retail client services and products. As a result, we recognize that there are inherent conflicts of interest in our business since we often represent both sides to a transaction, namely the buyer and the seller.