Tuesday, February 22, 2022 - BEFORE THE OPEN - Leishman Catling & Associates
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Tuesday, February 22, 2022
STOCKS
Source: FactSet (5pm EDT)
BEFORE THE OPEN
Source: Thomson Reuters
Futures of Canada’s main stock index and Wall Street’s major indexes fell as an
escalated tensions between Russia and Ukraine rattled investors and prompted
a shift to shelter in assets such as government debt and gold. Meanwhile, most
European stocks recouped some losses, but remained under pressure. In Asian
stock markets, Japan's Nikkei slumped to a fourth day of losses and China stocks
ended lower. Oil hit its highest since 2014 on supply concerns. In currency
markets, the euro recovered to trade moderately higher after earlier falling to a COMMODITIES & CURRENCIES
Source: FactSet (5pm EDT)
one-week low, with the single currency hitting its most volatile since November
2020. Meanwhile, the U.S. dollar edged lower against a basket of currencies as
investors await further developments in the crisis.
STOCKS IN THE NEWS
Source: Thomson Reuters
Brookfield Asset Management Inc. (BAM):
The company is in talks to buy the payments business of UAE's biggest lender
First Abu Dhabi Bank PJSC, Bloomberg News reported. The unit, called Magnati,
could be valued at over $1 billion in the deal, the report said, citing people
familiar with the matter. Separately, Australia's top power producer AGL Energy
on Monday rejected an unsolicited $3.54 billion takeover overture from tech
billionaire Mike Cannon-Brookes and Canada's Brookfield Asset Management, GLOBAL INDICES
sticking to its own spin-off tune. Source: FactSet (5pm EDT)
Carnival Corp. (CCL):
Carnival Cruise Line plans to make masks optional for its guests from March 1
after the U.S. Centers for Disease Control and Prevention (CDC) eased its
warnings for cruise ships, the company said in a statement late on Friday. The
company said masks would be recommended but not required. Carnival also said
it plans to be offer more flexibility in pre-cruise testing requirements.
McDonald's Corp. (MCD): TSX SECTORS
Source: FactSet (5pm EDT)
The company on Sunday said Carl Icahn has nominated two members to its board
of directors in an escalating fight over the treatment of pigs by the burger chain's
suppliers. The billionaire activist investor, who stated that he holds 200 shares
in the company, nominated Leslie Samuelrich and Maisie Ganzler to stand for
election at the 2022 annual meeting, the company said in a statement, adding
that it would evaluate the nominees as it would any other board candidates.
THINGS TO KNOW
Source: Bloomberg Finance L.P.
Russian President Vladimir Putin officially recognized two self-proclaimed
republics in eastern Ukraine and ordered what he called “peacekeeping forces”
to go into the regions, a dramatic escalation which drew condemnation from
Western leaders. Energy prices are surging on the latest developments, with a
barrel of Brent crude trading above $99 this morning.
NOT FOR DISTRIBUTION TO THE UNITED STATES. This publication is a general market commentary and is provided for informational purposes only. The author(s) is not a Research Analyst and this
communication is not the product of Canaccord Genuity Corp.’s Research Department. It should not be construed as a research report or investment advice.
For important information, please see the Important Disclosures beginning on page 10 of this document.
CANADIAN EQUITIES OF INTEREST
Listed Alphabetically by Symbol
Cronos Group Inc.* (CRON: $4.49), Net Change: -$0.29, Change: -6.07%
Q3/21 review: Cronos books US$236M of retroactive impairments; rightsizing still a work in progress
• After several months of delays, Cronos reported its Q3/21 financial results that included US$236.1M of retroactive non-cash
goodwill/intangible/fixed asset impairments in its US reporting entity
• For the quarter, Cronos reported net revenues of US$20.4M, representing a QoQ increase of ~30.8%
• The company’s US CBD business saw a modest decline of ~4% QoQ to US$2.2M, while its Canadian/International revenues
increased by ~36% to US$18.3M on the back of new SKU launches
• Below the top line, Cronos reported an eighth consecutive quarter of negative gross margins (at ~4%), which came in at a loss
of (US$0.7M), albeit improved from a loss of (US$15.8M) in the prior quarter
Dundee Precious Metals Inc.* (DPM: $7.97), Net Change: -$0.39, Change: -4.67%
Q4 results + 3-year guidance
• Dundee Precious Metals Inc. is a multi-mine precious metals producer with two operating mines in Bulgaria, a promising gold
project in Serbia, and a smelter in Namibia
• DPM released its full financial results for 2021 and provided detailed guidance for the 2022-2024 period and operating results
and sales volumes for Q4 were previously announced on January 10
• Given the company's strong expected free cash flow generation, DPM has announced a 33% increase to its quarterly dividend,
to US$0.04/sh
• The new dividend implies an annual yield of 2.3% at the current share price
European Residential REIT.* (ERE.UN: $4.55), Net Change: $0.29, Change: 6.81%
Impressive internal growth
• For Q4/21, European Residential REIT (ERES) reported funds from operations (FFO) per unit of €0.041, up 17.1% year-over-
year, and in line with consensus
• On February 17, 2022, the board approved a 9% distribution increase from an annualized rate of €0.11 per unit to €0.12 per
unit
• ERES has increased its distribution at an 11% CAGR from 2019-2022, and the payout ratio has trended down of late and
management indicated the payout ratio is expected to be in the range of 80-90% going forward
• Driven by a 3.8% increase in same-property average-monthly-rent for the residential portfolio, revenue was up 7.1% from
Q4/20 to Q4/21, leading to an 8.0% increase in same property NOI
Lundin Mining Corporation.* (LUN: $11.66), Net Change: -$0.41, Change: -3.40%
Q4 recap: Value emerging from the project pipeline
• LUN released a series of updates last night, including full Q4/21 results, a dividend announcement (regular + special) and a
notice that founder and Chair Lukas Lundin intends to step down at the AGM in May (no successor has been named at this
time)
• The Board announced a C$0.11/sh performance dividend for H2/21, in addition to the regular C$0.09/sh base quarterly
dividend
• Management indicated on the call that study work on an expansion has substantially advanced, and that the trade-off studies
have resulted in a 32mtpa scenario going forward (vs. 24mtpa currently)
• The expansion study is expected to be released in H2 of this year, and is expected to at least partially incorporate the new
'Sauva' discovery
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
2
US EQUITIES OF INTERST
Listed Alphabetically by Symbol
Agios Pharmaceuticals * (AGIO: $29.42), Net Change: -$0.04, Change: -0.14%
US Pricing
• Agios is a clinical-stage biopharmaceutical company in the field of cellular metabolism, developing drugs against cancer and
rare genetic disorders
• Agios provided US pricing for PYRUKYND (mitapivat) in this morning’s investor event, $334,880, and suggested gradual
revenues as reimbursement is established in 2022
• AnemiaID offers a broad panel of free genetic testing for patients with a suspected hereditary anemia, and surveys from Agios
show that healthcare providers intend to order AnemiaID for ~85% of appropriate patients
• Agios anticipates that the proportion of patients diagnosed will rise from ~30% to ~70% in the next 2-5 years with the
availability of an approved treatment on the market
Atara Biotherapeutics.* (ATRA: $13.12), Net Change: -$0.56, Change: -4.09%
ATA2271 voluntarily paused on fatal serious adverse event, limited read-through to ATA3271 or ATA3219
• MSK has voluntarily paused enrollment for the autologous mesothelin CAR T ATA2271 study due to a fatal serious adverse
event
• Importantly, the change only affects new enrollment; patients who were already enrolled in the study will continue to receive
drug
• The fatal SAE on ATA2271 occurred at the highest dose to date, 6.0 x 10E6 cells/kg, the first ATA2271 patient at this dose level
• Importantly, no dose-limiting toxicities have been observed among n=6 patients in total on the two lower-dose cohorts (1.0
x 10E6 cells/kg, 3.0 x 10E6 cells/kg)
Calyxt.* (CLXT: $1.20), Net Change: -$0.21, Change: -14.89%
Offering supports BioFactory and PlantSpring development efforts
• On Thursday CLXT announced the pricing for its offering of 3.88 million shares of common stock, pre-funded warrants that
may purchase up to 3.88 million shares of common stock, and common warrants that may purchase up to 7.76 million shares
of common stock
• Canaccord Genuity acted as sole bookrunner, with the transaction generating gross proceeds of approximately $10.9 million
• As a reminder, CLXT announced its move into synthetic biology last October, with its PlantSpring technology platform and
BioFactory production system
• CLXT’s PlantSpring technology platform is the culmination of the company’s deep expertise in plant metabolism, its
technologies, tools, systems, and its increasingly advanced AI and machine learning capabilities
T2 Biosystems.* (TTOO: $0.46), Net Change: $0.06, Change: 15.93%
International strategy paying dividends
• Total revenue of $7.0 million (+55% y/y) and product revenue of $4.0 million (+43%) were essentially in-line with the
company's preannouncement
• The increase was driven by increased sepsis test panel sales to hospitals and BARDA contract activities and offset by decreased
COVID test panel sales. TTOO achieved its target placements for 2021 (32 overall) by executing contracts for 17 T2Dx
instruments in 4Q21
• TTOO indicated that utilization of its sepsis instruments increased 37% y/y to $118,000 per instrument (on its legacy U.S.
install base)
• The company now operates in 20 sales territories, compared to only two in 2020
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
3INDUSTRY UPDATE
Oil
Market – NY Times
• WTI (April) is up 3.7% to $93.50 and Brent (May) is up 2.2% to $95.10 and WTI is higher after this weekend's Ukraine events,
notably Russian President Putin's decision to recognize and order troops into two breakaway regions of eastern Ukraine
• The White House said that President Biden will impose economic sanctions on the separatist regions, followed by a further
Western response to be announced later today
• However, some analysts have played down the global energy impact, with UBS noting that they say the severe risk case of
fighting and a prolonged interruption of Russian energy exports still represents a tail risk at this stage
• However, the Iran nuclear deal is also in focus, with reports indicating that a deal may be near
• Analysts have estimated that a deal could lift supply by an initial 1.3M bpd if a deal is reached
Russia and Ukraine – Bloomberg/NY Times
• Oil prices surged to the highest in more than seven years amid rising concerns over armed conflict in Ukraine
• Invasion could lead to an interruption of Russian oil shipments to parts of Europe, followed by a decline in purchases of
Russian energy by the West
• Russia produces around 10% of global oil supplies, and if there are further hostilities, the US and other industrialized countries
could possibly consider releasing millions of barrels from strategic reserves
• The US and EU have started to ready sanctions against Russia and the separatist regions of Ukraine
• President Biden issued an executive order prohibiting US investment, trade, and financing to the separatist regions of Ukraine,
while White House officials have said that additional sanctions against Russia will be coming later today
• The UK is also set to impose sanctions on Russia as soon as today, while the EU's foreign policy chief Borrell said that foreign
ministers would meet today to make a decision on sanctions
• The Eu's response would likely start with individuals involved in the recognition of the two Ukrainian regions, though a broader
set of sanctions and the rules that would trigger those is expected to take longer and could require a meeting of leaders
OPEC+ – Bloomberg
• Several OPEC+ members see no need to increase output despite oil nearing $100 a barrel
• Iraqi and Nigerian officials said the group's strategy of raising production is enough to balance the market, and that the group
has no need to be more aggressive
• Iraq's Energy Minister Jabbar said that at its March meeting (2-Mar), OPEC+ will be factoring in growth from non-OPEC+
members such as Brazil and Canada, and that it doesn't want to see an increase in commercial inventories around the world
• Jabbar also said that it would be unfair for any OPEC+ state to raise output beyond its quota, despite many members struggling
to reach there
• Recall recent suggestions that Saudi Arabia and UAE may need to raise output beyond their own quotas as tight excess supply
across a number of other OPEC+ members could limit further output
Iran – Reuters/NY Times
• Iranian President Raisi said yesterday that efforts to revive the 2015 nuclear deal cannot succeed unless Washington lifts
major sanctions, and that to reach an agreement, guarantees are necessary for negotiations and nuclear issues
• The comments came as reports indicated that a US and Iran deal is taking shape, while sources said a deal could be reached
before the end of this week
• Analysts say a deal could pull global oil prices lower
• Iran has as much as 80M barrels in storage, with some on tankers near Asian markets ready to sell at short notice
• Iran could also increase domestic production by 1.2M bpd within eight months
Source: FactSet
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
4MORNING INK REPORT
Insiders buy after Brazilian gold miner produces feasibility study
Source: INK Research
As of: Friday, February 18, 2022
Company Highlight: G Mining Ventures (GMIN)
• On Thursday's Real Vision Daily Briefing Jared Dillian made the case for gold as he believes bullion has broken out of a
prolonged consolidation period
• With that in mind, today we highlight G Mining Ventures (GMIN)
• The company came into existence on the Venture Exchange in October 2020 formed out of an agreement with the investment
arm of G Mining Services Inc. and members of the Gignac family
• The company's general strategy is to buy advanced-stage projects, ideally towards the end of the feasibility study period in
the mining life cycle, and build the projects into production
• We are seeing the business strategy play out with its October 2021 acquisition of the Tocantinzinho (TZ) Gold Project From
Eldorado Gold (Mixed; ELD) for US$115 million
• TZ is a permitted open-pit type deposit containing 2 million ounces of proven or probable gold reserves located in northern
Brazil
• Following the deal, Eldorado became a 19.9% shareholder of GMIN
• On February 9, GMIN announced the results of a new feasibility study for the project that included an after-tax NPV at 5% of
US$622 million at U$1,600/oz gold price
• The mine is expected to have a 10.5-year life with average annual gold production of 174,700 ounces at all-in sustaining costs
of US$681/oz
• Insiders have been buying since the news as the stock continues to trade under its 52-week high of $1.40 set a year ago
• Following the acquisition of the Tocantinzinho Gold Project, G Mining Ventures (GMIN) insiders have spent a combined
$587,438 picking up shares in the public market
• Since the release of the new feasibility study on February 9, four insiders have bought a total of 240,000 common shares
(180,000 on a direct ownership basis) at an average price of $0.83
• The largest buyer was Director Norman MacDonald (AAV) who, on February 11, bought 120,000 common shares on a direct
ownership basis at $0.83
• G Mining Ventures has above median ownership (direct & indirect holdings) by Officers and Directors compared to other
small-cap stocks in the Basic Materials sector according to SEDI filings as of February 17, 2022
G Mining Ventures (GMIN)
Source: INK Research
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
5MARKET MOVERS
Source: FactSet
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
6ASSET CLASS PERFORMANCE
Source: FactSet
*All numbers presented on the table below are based on total return
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
7MACRO-EVENT SCHEDULE
Source: Bloomberg Finance L.P.
EARNINGS
Source: Yahoo Finance
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
8MOST READ NEWS
Source: Bloomberg Finance L.P.
1) EU Proposes Sanctions as Putin Backs Separatists: Ukraine Update
2) Stocks, Futures Drop on Ukraine Shock; Oil Rallies: Markets Wrap
3) U.K. Imposes Sanctions on Five Russian Banks Over Ukraine
4) Nord Stream 2 Is Put on Hold as Germany Rebukes Putin on Ukraine
5) A Niche Corner of Wall Street Is Making Billions on Inflation
6) Wall Street Firms Approach SocGen to Manage Russia Transactions
7) Putin Orders Forces to Breakaway Ukraine Areas in Escalation
8) HSBC Says It’s Under Investigation in U.S. Over WhatsApp Use
9) Beijing Said to Back Hong Kong Lockdown as Covid Crisis Worsens
10) Niel Buys Paris Home for Over $226 Million From Qatar Prince
THE LAST DROP: “Life is either a daring adventure or nothing at all.”
- Helen Keller
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
9Appendix: Important Disclosures
While this product is drawn from sources believed to be reliable, the accuracy and completeness of the information contained herein is not guaranteed. Any reference
to a research report or a recommendation is not a solicitation to purchase or sell any security and it does not consider the individual investment objectives, financial
situation, suitability or risk tolerance of any person or corporation. Accordingly, investors should obtain advice based on their own specific circumstances before making
any investment decision. Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp. Member – Canadian Investor Protection Fund (CIPF) and the
Investment Industry Regulatory Organization of Canada (IIROC).
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Valuation Model.
Quest® triAngle is Canaccord Genuity’s proprietary 15-factor, stock-picking tool, which systematically measures Value, Quality and Momentum and presents the results
in a simple, easy to understand score. It takes a multi-pronged approach to Value, Quality and Momentum using five factors for each component, which adds more
consistency of performance unlike a reliance on one single measure. It uses a mix of historic and forecast data, and combines absolute valuation data with comparisons
relative to history. The triAngle is designed to generate stock ideas and provide a consistent framework for analysis of portfolio holdings.
Quest® Methodology
Quest® is an analytical tool that involves use of a set of proprietary quantitative algorithms and value calculations to derive a number of corporate performance and
valuation metrics, including assigning a Default Quest® value per share and generating a triAngle Score, which is a relative ranking based on a number of operational
and valuation metrics. These algorithms and value calculations are consistently applied to all the companies included in the Quest® database. Third-party data (including
consensus earnings estimates) are systematically translated into a number of default variables and incorporated into the algorithms. The source financial statement,
pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics
of firm performance. These adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national
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* Canaccord Genuity and its affiliated companies may have a Corporate Finance or other relationship with the company and may trade in any of the Designated
Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors
have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage contained
in the Morning Coffee.
Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)
The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, independent and objective views about any
and all the Designated Investments and Relevant Issuers discussed herein.
Canaccord Genuity (Australia) Limited is the Australian affiliate of global capital markets group Canaccord Genuity Group Inc. (CF : TSX). The recommendations and
opinions expressed in this research report accurately reflect the Analyst’s personal, independent and objective views about any and all the designated investments and
relevant issuers discussed herein.
Tuesday, February 22, 2022
Unless otherwise noted, the above commentary is derived from research published by Canaccord Genuity Corp and/or Canaccord Genuity LLC. For more information, please contact your investment
advisor. For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx.
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