teck resources

TECK RESOURCES LTD. $12 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 576.2 million; Market cap: $6.9 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.5%; TSINetwork Rating: Average; www.teck.com) has postponed its plan to develop its 100%-owned Frontier oil sands project in Alberta due to weak crude prices. The company had planned to start construction in 2019 and complete it in 2021. However, it now feels commercial production will begin in 2026. If Teck decides to build Frontier, it will cost $20.6 billion. Meanwhile, the company continues to work on its 20.0%-owned Fort Hills oil sands project; Suncor Energy (Toronto symbol SU) owns 40.8% of Fort Hills, while France’s Total SA holds the remaining 39.2%. Teck’s share of Fort Hills’ development costs is $2.94 billion. This project should begin operating in late 2017, and its reserves should last 50 years....

BANK OF NOVA SCOTIA, $64.37, Toronto symbol BNS, is paying an undisclosed sum to Citigroup (New York symbol C) for its retail-banking operations in Panama and Costa Rica, including 27 branches. The bank expects to close the deal in the next few months. The move will nearly triple its customer base in these two countries, from 137,000 to 387,000. It will also make Bank of Nova Scotia the second-largest credit card provider in both nations, with 18% of the market in Panama and 15% in Costa Rica. The bank entered Panama in 1974 and Costa Rica in 1995. This long history cuts the risk of expanding in these countries....

TECK RESOURCES LTD. $12 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 576.2 million; Market cap: $6.9 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.5%; TSINetwork Rating: Average; www.teck.com) has postponed its plan to develop its 100%-owned Frontier oil sands project in Alberta due to weak crude prices. The company had planned to start construction in 2019 and complete it in 2021. However, it now feels commercial production will begin in 2026. If Teck decides to build Frontier, it will cost $20.6 billion. Meanwhile, the company continues to work on its 20.0%-owned Fort Hills oil sands project; Suncor Energy (Toronto symbol SU) owns 40.8% of Fort Hills, while France’s Total SA holds the remaining 39.2%. Teck’s share of Fort Hills’ development costs is $2.94 billion. This project should begin operating in late 2017, and its reserves should last 50 years....

POTASH CORP. OF SASKATCHEWAN, $38.61, Toronto symbol POT, has offered to buy German fertilizer producer K+S AG for $8 billion U.S. That’s equal to 31% of its $32.2-billion (Canadian) market cap. The company sells most of its products to customers in the U.S. and Asia, so a takeover would greatly expand its presence in Europe. It would also gain access to K+S’s new Legacy potash mine in Saskatchewan, which will open in 2016. Merging Legacy’s operations with its five existing mines in Saskatchewan would give Potash Corp. an opportunity to cut costs. K+S will probably reject the offer, so Potash Corp. may have to raise its bid....

CANADIAN PACIFIC RAILWAY LTD. $208.00 (Toronto symbol CP; Shares outstanding: 164.0 million; Market cap: $34.0 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.cpr.ca) fell recently in response to Teck Resources’ decision to shut down its six Western Canadian coal mines for about three weeks in the third quarter of 2015. The company is closing the mines because China’s slowing economic growth has hurt sales to steelmakers, while Australia’s rising coal production has depressed prices. CP has an exclusive contract to ship coal from five of Teck’s southeastern B.C. mines to the Port of Vancouver. In the first quarter of 2015, coal shipments from Teck and other miners accounted for 10% of the railroad’s revenue. The company is aggressively cutting costs and improving efficiency. Its plans include speeding up trains and reducing the amount of time they spend at terminals. These moves should help CP offset the lost revenue....

CAE INC., $14.85, Toronto symbol CAE, earned $64.1 million, or $0.24 a share, in its fiscal 2015 fourth quarter, which ended March 31, 2015. That’s up 6.8% from $60.0 million, or $0.23, a year earlier. The latest earnings matched the consensus forecast. Revenue rose 9.7%, to a record $631.6 million from $575.7 million, beating the consensus estimate of $627.2 million. CAE gets 58% of its revenue by selling flight simulators and pilot-training services to airlines, and this business’s revenue rose 13.6% during the quarter. CAE sold 10 simulators during the period, bringing the full-year total to 41; it sold a record 48 simulators in fiscal 2014....

SUNCOR ENERGY INC. $36 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $54.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.1%; TSINetwork Rating: Average; www.suncor.com) has started work on its Fort Hills oil sands project in northern Alberta. Suncor owns 40.8% of Fort Hills; France’s Total SA holds 39.2%, while Teck Resources owns the remaining 20.0%. This $13.5-billion project (Suncor’s share is $5.5 billion) should start up in late 2017, and its reserves should last 50 years.

The company produced 602,400 barrels a day in the first quarter of 2015, up 10.5% from 545,300 a year earlier. That’s mainly because shut downs for maintenance hurt last year’s output.

However, lower oil prices cut Suncor’s earnings by 90.2%, to $175 million, or $0.12 a share, from $1.8 billion, or $1.22. Cash flow per share fell 48.0%, to $1.02 from $1.96.

...

SUNCOR ENERGY INC. $36 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $54.0 billion; Price-to-sales ratio: 1.4; Dividend yield: 3.1%; TSINetwork Rating: Average; www.suncor.com) has started work on its Fort Hills oil sands project in northern Alberta. Suncor owns 40.8% of Fort Hills; France’s Total SA holds 39.2%, while Teck Resources owns the remaining 20.0%. This $13.5-billion project (Suncor’s share is $5.5 billion) should start up in late 2017, and its reserves should last 50 years. The company produced 602,400 barrels a day in the first quarter of 2015, up 10.5% from 545,300 a year earlier. That’s mainly because shut downs for maintenance hurt last year’s output. However, lower oil prices cut Suncor’s earnings by 90.2%, to $175 million, or $0.12 a share, from $1.8 billion, or $1.22. Cash flow per share fell 48.0%, to $1.02 from $1.96....

CANADIAN PACIFIC RAILWAY LTD., $240.18, Toronto symbol CP, gained 3% this week after reporting record first-quarter revenue and earnings. The company earned $375 million in the three months ended March 31, 2015, up 49.4% from $251 million a year earlier. Per-share earnings jumped 59.2%, to $2.26 from $1.42, on fewer shares outstanding. These results exclude unusual items, such as a foreign-exchange loss on CP’s U.S. dollar-denominated debt and severance costs stemming from a recent restructuring. On that basis, the latest earnings beat the consensus estimate of $2.19. Revenue rose 10.3%, to $1.67 billion from $1.51 billion, matching the consensus forecast....

TRANSCANADA CORP., $56.42, Toronto symbol TRP, has announced a new deal with Magellan Midstream Partners (New York symbol MMP). The two firms have formed a 50/50 partnership to build a pipeline connecting their oil-storage facilities in Houston, Texas. This will give TransCanada’s oil-shipping clients access to more refineries in the Houston area. The company’s share of the $50-million cost is $25 million. To put that in context, TransCanada earned $511 million, or $0.72 a share, in the three months ended December 31, 2014. The partners expect to complete this project in mid-2016....