snc lavalin

MagIndustries Corp., $0.49, symbol MAA on Toronto (Shares outstanding: 360.5 million; Market cap: $174.9 million), owns resource firms that aim to develop industrial projects in the Republic of Congo and the Democratic Republic of Congo. Both countries are located in Africa. Three of its business units, MagMinerals, MagForestry and MagMetals, are located in the Republic of Congo. The fourth, MagEnergy, is in the Democratic Republic of Congo. The company’s projects include a eucalyptus forest plantation and a proposed potash mine and plant. MagIndustries had revenue of $6.6 million in the three months ended September 30, 2009. That’s up sharply from $1.1 million a year earlier. Most of the company’s revenue comes from its 68,000-hectare eucalyptus forest plantation, which produces wood chips and sells them to the European market....

SNC-LAVALIN GROUP INC. $49 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.1 million; Market cap: $7.4 billion; Price-to-sales ratio: 1.1; SI Rating: Average) earned $0.68 a share in the three months ended September 30, 2009. That’s up 13.3% from $0.60 a year earlier. Higher profits from certain engineering and construction projects were the main reason for the gain. However, revenue fell 15.6%, to $1.4 billion from $1.7 billion. That’s mainly because of a slowdown in big new construction projects because of the weak economy. As well, overseas markets account for about 40% of SNC’s revenue. That makes it more vulnerable to the rising Canadian dollar. SNC-Lavalin is a hold.

SNC-LAVALIN GROUP INC. $49 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151 million; Market cap: $7.4 billion; Price-to-sales ratio: 1.0; SI Rating: Average) hopes to win a $255 million U.S. contract to install gas turbines in three Iraqi electrical-power plants....

TRANSALTA CORP., $22.73, Toronto symbol TA, received approval from competition regulators this week for its proposed takeover of Canadian Hydro Developers Inc. (Toronto symbol KHD). Canadian Hydro owns and operates 21 power-generating facilities in Alberta, B.C., Ontario and Quebec. These include 12 hydroelectric plants, eight wind farms and one biomass plant, which generates power by burning plant materials and wood waste from lumber mills. Last month, TransAlta launched a hostile takeover bid for Canadian Hydro. The offer is worth $4.55 a share, for a total of $654 million. (That’s equal to 79% of TransAlta’s 2008 cash flow of $828 million, or $4.16 a share.) Buying Canadian Hydro would lower TransAlta’s reliance on power from non-renewable sources, such as coal and natural gas. It would also help TransAlta comply with the tougher new environmental regulations that will likely come into effect over the next few years. So far, Canadian Hydro has resisted the bid, and is looking for a new buyer....

TECK RESOURCES LTD., $19.99, Toronto symbol TCK.B, will sell 101.3 million class B subordinate-voting shares (one vote per share) at $17.21 each to China Investment Corp., a sovereign wealth fund controlled by the Chinese government. Teck is selling these shares for 13.9% below the current market price. That’s because China Investment agreed to certain conditions, including holding onto these shares for at least a year and not selling them to one of Teck’s main rivals or customers. Despite the discount, Teck’s shares rose 8% on the news. That’s because Teck will put the $1.7 billion proceeds from the sale toward the $9.8-billion U.S. it borrowed to finance its $13.6-billion (Canadian) purchase of Fording Canadian Coal Trust last October....

TRANSCANADA CORP., $31.49, Toronto symbol TRP, will buy the 20.01% of the Keystone pipeline that it doesn’t already own from its partner, ConocoPhillips (New York symbol COP), for $550 million U.S. Keystone will pump crude oil from Alberta to refineries in Illinois. The first phase should start operating early next year. TransCanada plans to extend Keystone to the U.S. Gulf Coast by 2012. Aside from the purchase price, TransCanada will assume $200 million U.S. in related short-term debt. In all, Keystone will cost $12 billion U.S. to build. TransCanada and ConocoPhillips have spent $2.7 billion U.S. to date. To put these figures in context, TransCanada’s market cap is $19.4 billion (Canadian)....

SNC-LAVALIN GROUP INC. $43 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151 million; Market cap: $6.5 billion; Price-to-sales ratio: 1.0; SI Rating: Average) recently bought Newfoundland-based Spectrol Energy Services Inc. for an undisclosed sum. Spectrol sells engineering and technical services to oil and natural-gas producers off Canada’s east coast. SNC hopes the acquisition will let it take advantage of the recent jump in oil prices. However, 60% of SNC’s earnings already come from customers in the resource sector, and commodity prices are still well below last year’s peaks. As well, tight credit markets could make it difficult for these clients to borrow cash for new projects. SNC-Lavalin is a hold.

TORSTAR CORP. $5.32 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.9 million; Market cap: $419.7 million; Price-to-sales ratio: 0.3; SI Rating: Above Average) reported a first-quarter loss of $21.4 million, or $0.27 a share. However, that was largely caused by a $0.23-a-share charge related to employee layoffs and a change in Torstar’s senior management. The company lost $3 million, or $0.04 a share, a year earlier. Revenue fell 3.5%, to $339 million from $351.3 million. Torstar’s newspapers and web sites account for 70% of its revenue and 60% of its profits. This division lost $4.8 million in the latest quarter, compared with a profit of $12.4 million a year earlier. The recession and growing competition from the Internet have hurt its advertising revenue. However, profits at the Harlequin book-publishing division rose 19.1%, to $20.6 million from $17.3 million. As well, Torstar’s restructuring should lower its annual expenses by $37.9 million. Torstar is a buy....

SNC-LAVALIN GROUP INC. $31 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151 million; Market cap: $4.7 billion; Price-to-sales ratio: 0.6; SI Rating: Average) reported much higher earnings in 2008: $2.05 a share (or a total of $312.5 million), compared to $0.45 a share (or $69.1 million) in 2007. The gain was mostly because of a $267.3-million, pre-tax operating loss at the engineering firm’s electrical-power division that depressed SNC’s 2007 earnings. The loss was caused by delays in building a new power plant in Brampton, Ontario. SNC’s revenue rose 5.6%, to $7.1 billion from $6.7 billion. Its order backlog stands at $9.6 billion, down 9.4% from $10.6 billion a year earlier. Thanks to the improved earnings, SNC raised its quarterly dividend by 25%, to $0.15 a share from $0.12. The new annual rate of $0.60 yields 1.9%. SNC expects its 2009 earnings will grow to $2.25 a share, and the shares now trade at 13.8 times this estimate. However, SNC’s projection may be overly optimistic. Oil and mining companies account for 30% of SNC’s revenue, and many could cancel their contracts if resource prices remain low....

Finning and SNC-Lavalin sell equipment and services to clients in the resource industry. Both companies have seen their shares fall over the past few months in light of dropping oil and metals prices. Both also stand to gain from increasing government spending on infrastructure. We continue to have a high opinion of both, but we prefer Finning because of its lower p/e ratio and higher dividend yield. FINNING INTERNATIONAL INC. $11 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.5 million; Market cap: $1.9 billion; Price-to-sales ratio: 0.3; SI Rating: Above Average) sells, rents and repairs heavy equipment made by Caterpillar Inc. It has major customers in the mining, forest products and construction industries. Finning’s revenue rose 5.8% in 2008, to $6 billion from $5.7 billion in 2007. Finning’s clients ordered more heavy equipment in the first half of the year as a result of high commodity prices. Finning’s operations in the U.K. and South America account for roughly 45% of its sales, and the drop in the Canadian dollar in the last quarter of 2008 increased the contribution from these divisions....