Monthly review April 2020

Basic materials Sector

Cascades Among the List of the 50 Top Business Moves for the Planet

To mark the 50th anniversary of Earth Day, Cascades [TSX: CAS] has been honored by being listed as one of the 50 best corporate decisions for the planet by the organizations Earth Day Canada and Earth Day Initiative. This certification was won thanks to the strategic alignment of the paper company which recycles residual materials through its material recycling processes.

In fact, 83% of the raw materials used to manufacture Cascades paper products comes from recovery and more than 77% of residual materials are recycled. In addition, the Canadian company has distinguished itself in recent months by its significant involvement in containing the spread of COVID-19. By supplying recycled plastic necessary for the manufacture of medical visors, the company uses its expertise in recycled fiber as well as its production chain to contribute to the fight against the virus.

While Cascades struggles to keep its products on the shelves of Canadian businesses, these strategic actions demonstrate significant leadership in terms of social and ecological responsibility.

 

Industrial Sector

Wall Street expects Waste Connections (WCN) earnings growth

The market expects Waste Connections (WCN) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended March 2020. The earnings report, which is expected to be released on May 6, 2020, might help the stock move higher if these key numbers are better than expectations. This solid waste services provider is expected to post quarterly earnings of $0.63 per share in its upcoming report, which represents a year-over-year change of +1.6%. Revenues are expected to be $1.35 billion, up 8.8% from the year-ago quarter.

 

Consumer Cyclical Sector

Reitman may be unable to continue as a going concern

Reitmans was already in a weakened state before the virus. The company’s net loss for the quarter ending February 1 was 51.7 million $CAN  compared with a net loss of 8.9 million $CAN in the same quarter a year earlier. Sales rose 1% and gross profit declined.The shares have lost 72% this year and 92% since the beginning of last year.

“The company is actively seeking additional financing and is also exploring various alternatives,” the Montreal-based clothier said in a May 1 statement. “If the company is unable to obtain such financing in the limited time period required, it may be unable to continue as a going concern.”

 

Energy Sector

The COVID-19 and oil crises persist in the energy sector. Is this a new impetus towards green energies?

In April, energy demand in countries in total containment decreased on average by 25% according to the latest report published by the International Energy Agency (IEA). If the crisis continues, annual energy demand will drop by 6% compared to 2019, the sharpest decline observed in the last sixty years.

Some believe that states should take advantage of the opportunity to boost green energy. Thirty or so states met on April 27 and 28 by videoconference during the Petersberg dialogue in favor of a green revival.

Others, however, believe that the tight budgets of post-COVID-19 governments will block the momentum of renewable energy. Donald Trump promised on April 21 to help the oil and gas sector and secure jobs. The Canadian government has injected $ 1.7 billion for oil companies in Alberta, Saskatchewan and British Columbia.

 

Technology Sector

Shopify, a record in times of crisis?

While many businesses are shut down or find themselves having to change the way they operate in a very short time, Shopify finds itself generating the equivalent of Black Friday traffic on a daily basis. In fact, thousands of companies register on the platform in order to be able to sell their products. Shopify saw its share increased from $ 388 on April 1 to $ 632 on April 30, an increase of more than 60%.

 

Communication Services

As the global economy shuts down with the coronavirus crisis, companies in the telecommunications industry continue to grow. Some companies, such as Bell, are experiencing unprecedented profit growth. Compared to an annual growth of 4.2% that the company has known for the last 5 years, it outperforms itself with an increase of 9.2% for this year.

We learn that the competition office in the telecommunications field allows the purchase of group V by the Bell Media subsidiary, allowing the company to own programs such as “Occupation Double”.

The company continues to take steps to ensure the health and safety of its customers in a way that respects the selfless image it has given itself with campaigns such as Bell Let’s Talk. It announces that it has purchased 1.5 million N95 masks, which will be transferred to the authorities for distribution in the most affected areas. Investors will be able to find out the company’s first quarter results on May 7.

 

Consumer Defensive Sector

Dollarama manages to avoid Covid-19 crash

Dollarama (TSX:DOL) succeeded in avoiding the market crash. The company has shown a robust business with high growth prospects. The stock price remains constant and is just 8% down since the beginning of the year. It trades at 24.3 times trailing annual earnings.
This could be explained with the fact that almost all the Dollarama stores remained open for essential services in Canada. The cheap price of the products is an advantage in such a period and the last quarter should be one the best for the company. The sales are exploding but the stock doesn’t really reflect this growth, which makes it an interesting company to monitor. However, if you look at the company’s long-term debt at 3.4 billion $, the company could blow the market if it can get over this burden.

 

Utilities Sector 

Long overdue financial assistance from Canadian oil producers

Prime Minister Justin Trudeau announced on April 17 that his government plans to spend $ 1.7 billion in Alberta, Saskatchewan and British Columbia to clean up “orphan wells”.
Industry groups and environmentalists have hailed a multi-billion dollar federal bailout for the oil and gas sector, but they expected more from the federal government.
To date, Canadian Association of Petroleum Producers CEO Tim McMillan has been awaiting further details on the enhanced support for the Canadian petroleum industry which he has described as crucial as companies attempt to weather the current crisis .

Alberta Premier Jason Kenney welcomed the money to clean up orphaned and abandoned wells. According to him, the energy sector is facing its greatest challenge of all time, and “we must be sure that the industry can access the capital it needs to survive and prosper in the years to come”, he continues. He recalls that a decade ago, Alberta’s economic power, powered by the energy sector, helped provide the rest of Canada with “the urgent support it needs.”

“The billion dollar partnership to combat inactive sinks is in line with Alberta’s commitment to ensuring that our resources are developed in an environmentally sustainable manner,” he said in a statement.
Alberta has more than 3,400 orphan wells left by bankrupt businesses, most of which are located on the properties of rural landowners. There are 94,000 other inactive wells in the province that could also become orphan wells if the companies that own them go bankrupt.

Greenpeace Canada spokesperson Keith Stewart said he believes the money should be tied to regulatory changes in Alberta “to make sure the province puts in place a polluter pays program so that the public doesn’t not find yourself with these responsibilities in the future. ”

Ottawa is also planning an additional $ 750 million to help reduce emissions of methane, a potent greenhouse gas that escapes from energy facilities. Trudeau said the money would support 10,000 jobs across the country.
Provincial leaders thanked Ottawa for the funding, but argued that more should be done. Among the Conservatives, after urging the Trudeau government to act quickly, he was disappointed with the pace with which this program was deployed.

Inactive, abandoned or orphaned?

When an oil well no longer produces oil or gas for 6 to 12 months, it is declared inactive. There are 95,000 in Alberta. The companies responsible for these suspended wells must plug it and padlock the exterior installations, but not all of them do so. The compliance rate was so low that 5 years ago the Energy Regulatory Agency pledged to increase its inspections in order to put delinquent companies back on track by April 1, 2020.

If the company decides that it will not use for production since then, the then becomes abandoned. It is then permanently blocked. Currently, 69,000 wells are in this situation. Then the soil must be reclaimed by performing tests to determine if the soil has been contaminated. Once the rehabilitation work is completed, the energy regulatory agency issues a certificate, but it does not necessarily carry out a field inspection. To date, 124,000 drilling sites are considered reclaimed in Alberta. This process takes as long to set up as companies want. In fact, Alberta does not impose a time limit for companies to complete the abandonment and reclamation process. Generally, companies are responsible for assuming the financial costs associated with these manipulations, but when they go bankrupt and no more entity can assume financial and legal responsibility the well is then declared as an orphan.

The abandonment and reclamation process is then transferred to the Alberta Orphan Well Association, an association funded by industry and government loans. 3,400 wells are currently declared orphans, a number that is constantly growing. The Orphan Well Association estimates that it can disinfect and rehabilitate a well for an average of $ 70,000, but a group of citizen researchers the Alberta Liabilities Disclosure Project suggests that the cost is much closer to $ 230,000 , a difference that numbers

 

Bibliographie :

Cascades. (22 avril 2020). Cascades figure au palmarès des 50 meilleures décisions corporatives pour la planète. Tiré de : https://www.cascades.com/fr/nouvelles/cascades-figure-palmares-50-meilleures-decisions-corporatives-planete

Cascades. (3 avril 2020). Cascades collabore avec des partenaires à la fabrication de visières médicales. Tiré de : https://www.cascades.com/fr/nouvelles/cascades-collabore-partenaires-fabrication-visieres-medicales

NASDAQ. (29 avril 2020). Waste Connections (WCN) Reports Next Week: Wall Street Expects Earnings Growth. Tiré de : https://www.nasdaq.com/articles/waste-connections-wcn-reports-next-week%3A-wall-street-expects-earnings-growth-2020-04-29

Esteban Duarte. (2 mai 2020). Reitmans Seeks New Money, Warns on its Future as Losses Grow. Tirée de : https://www.bloomberg.com/news/articles/2020-05-02/reitmans-seeks-new-money-warns-on-its-future-as-losses-grow?srnd=premium-canada

Garric, A. (2020, Avril 29). Climat : l’Allemagne, la Chine et une trentaine de pays appellent à une relance verte. Récupéré sur lemonde.fr: https://www.lemonde.fr/planete/article/2020/04/29/climat-l-allemagne-la-chine-et-une-trentaine-de-pays-appellent-a-une-relance-verte_6038121_3244.html

Marquis, M. (2020, Avril 18). Le fédéral vient en aide au secteur énergétique à coup de milliards. Récupéré sur lapresse.ca: https://www.lapresse.ca/affaires/economie/202004/17/01-5269909-le-federal-vient-en-aide-au-secteur-energetique-a-coup-de-milliards.php

Michel, J. (2020, Avril 22). Le secteur américain de l’énergie secoué par les prix du pétrole. Récupéré sur ledevoir: https://www.ledevoir.com/economie/577435/le-secteur-americain-de-l-energie-secoue-par-les-prix-du-petrole

Les Echos. (2020). Commerce en ligne : le succès de Shopify, l’anti-Amazon. Tiré de : https://www.lesechos.fr/industrie-services/conso-distribution/commerce-en-ligne-le-succes-de-shopify-lanti-amazon-1197818

https://finance.yahoo.com/news/bell-acquires-1-5-million-120000296.html

https://finance.yahoo.com/news/bce-inc-tse-bce-earnings-102916665.html

https://finance.yahoo.com/news/bces-bell-media-gets-regulatory-151003341.html

Le siècle digital. (2020). Shopify : son action décolle autant que son trafic en cette période de confinement. Tiré de : https://siecledigital.fr/2020/04/20/shopify-son-action-decolle-autant-que-son-trafic-en-cette-periode-de-confinement/

Vishesh Raisinghani. (24 avril 2020). 2 Smoking-Hot Growth Stocks to Buy Today. Tiré de: https://ca.finance.yahoo.com/news/2-smoking-hot-growth-stocks-210020173.html

https://ici.radio-canada.ca/nouvelle/1694867/justin-trudeau-petrole-gaz-energie-aide-ottawa

https://lactualite.com/actualites/un-plan-federal-daide-au-secteur-petrolier-sattarde-au-nettoyage-des-puits/

 

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