Monday, October 4, 2021 - BEFORE THE OPEN
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Monday, October 4, 2021
STOCKS
Source: FactSet (5pm EDT)
BEFORE THE OPEN
Source: Thomson Reuters
Futures linked to Canada's main stock index fell after worries over rising
inflation and China's property sector weighed on global equities. Gold eased off
a more-than one-week high as U.S. Treasury yields firmed and the U.S. dollar
recouped some losses but bullion held above key technical support of $1,750,
buoyed by concern in wider markets about inflation. Oil was steady ahead of a
meeting by OPEC which may determine whether a recent rally in prices amid a
recovery from the COVID-19 pandemic will be sustained. COMMODITIES & CURRENCIES
Source: FactSet (5pm EDT)
STOCKS IN THE NEWS
Source: Thomson Reuters
Delta Air Lines (DAL):
The airline said on Sunday that its ticket sales had stabilized and started to
improve, putting it on course to deliver third-quarter revenue within its original
forecast for a 30%-35% drop versus corresponding 2019 levels. This is an
improvement from its projection last month when it adjusted the forecast to the
lower end of that range after a resurgence in COVID-19 cases.
Johnson & Johnson (JNJ):
The company is planning to ask U.S. federal regulators this week to authorize a
booster shot of its COVID-19 vaccine, the New York Times reported, citing
officials familiar with the company's plans. The U.S. Food and Drug GLOBAL INDICES
Administration scheduled last week an Oct. 15 meeting of its expert advisory Source: FactSet (5pm EDT)
committee to discuss whether to grant emergency use authorization for a
booster shot of J&J's vaccine.
Sun Life Financial Inc. (SLF):
The financial services firm said on Sunday it has agreed to buy oral healthcare
company DentaQuest for $2.47 billion. The transaction will be financed using
cash and debt, Sun Life said in a statement, adding that the deal is expected to
close in the first half of 2022. The acquisition would be immediately accretive, TSX SECTORS
adding about C$0.17 to underlying earnings per share and 42 basis points to Source: FactSet (5pm EDT)
underlying return on equity in 2022 on an annualized basis. Sun Life also said
that private equity firm Centerbridge, which is also a minority shareholder in
DentaQuest, will sell its stake in the company.
THINGS TO KNOW
Source: Bloomberg Finance L.P.
While almost nobody on Wall Street or in Washington expects the U.S. to default
this month, the lack of progress on the issue in Congress is starting to make
nerves fray. The return of demand for oil and gas due to usual seasonal factors
just as economies reopen has sent energy prices sharply higher. Shares in China
Evergrande Group and its property management unit were halted as it was
announced Guangdong-based Hopson Development would buy a controlling
stake in the company’s property services business.
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
Golden Star Resources Ltd.* (GSC: $3.00)
Restructuring of Bogoso-Prestea sale consideration
• Golden Star announced this morning that it has concluded negotiations with Future Global Resources (FGR) to restructure
the consideration for the purchase of the Bogoso-Prestea mine
• The conclusion of negotiations represents a full and final settlement of all existing and future claims, and a mutual release
between Golden Star and FGR
• The previous deferred consideration of $15 million that was due on July 16, 2021, ~$4.6 million in a working capital adjustment
that was due July 31, 2021, and $15 million due July 31, 2023, have been replaced with an NSR royalty on the mine
• When cumulative production from the Prestea underground mine exceeds 100 koz gold, a 1.0% NSR royalty to Golden Star
will commence
Trulieve Cannabis Corp.* (TRUL: $34.46), Net Change: $0.74, Change: 2.15%
Announces closing of Harvest acquisition
• Trulieve announced the close of its previously announced acquisition of Harvest (HARV-CSE | Not Rated), the largest M&A
transaction announced and consummated to date in the cannabis sector
• Trulieve issued ~51 million shares, or 0.117 for each Harvest share outstanding, implying ~C$1.75 billion in share consideration
• Following the close of the deal, Trulieve now has operations including ~150 dispensaries and ~3 million square feet of
cultivation and production space spanning 11 states, cementing its position as the most profitable US MSO, with Q2/21 pro
forma ~$318 million in revenue and ~$123 million in adjusted EBITDA, both well ahead of peers
Canaccord Genuity Corp acted as Financial Advisor to Trulieve Cannabis Corp. in connection with its acquisition of Harvest Health and
Recreation.
US EQUITIES OF INTEREST
Listed Alphabetically by Symbol
BTRS Holdings* (BTRS: $10.96), Net Change: $0.32, Change: 3.01%
Management meetings underscore steady buildout of competitive moat in AR automation; insider buys encouraging
• Earlier this month, CEO Flint Lane acquired 100K shares of the company worth more than $1M and in addition, CIO Joe Eng
and CFO Mark Shifke also acquired ~48K and ~30K shares, respectively
• It is also important to note that Mr. Lane is also the founder of the company and with ~17% ownership, the majority of his
personal wealth is tied to the company
• Billtrust generates ~20% of its revenue from its Print business and it is essentially printing and mailing customer invoices and
optimizing the time and costs associated with billing customers via mail
• Q2 net revenue increased 23.2% to $31.6M, Software and Payments grew 27%, Services grew 37% and Print grew 1%
Five9* (FIVN: $167.26), Net Change: $7.52, Change: 4.71%
Merger termination
• Five9 and Zoom announced that they have mutually agreed to terminate their merger due to Five9 not receiving requisite
voter approval from its shareholders
• As a result, Five9 will now continue to operate as a standalone publicly traded company
• As part of its merger process, Five9 released its own internal projections for revenue growth over the next five years, which
differed dramatically from the trajectory implied by its publicly issued guidance and commentary
• Despite the merger agreement’s termination, Zoom and Five9 will continue their partnership, which includes support for
integrations between their respective UCaaS and CCaAS solutions and joint go-to-market efforts
Monday, October 4, 2021
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.
2INDUSTRY UPDATE
Digital Assets
Bitcoin remains volatile over summer months
• The price of bitcoin remained volatile following the new all-time high above $64K that was set in April, with bitcoin's halving
price cycle pattern repeating itself for a third time as the world's leading cryptocurrency fell more than 50% in just 35 days
• Elon Musk's tweets, the Colonial Pipeline cyberattacks, and several negative headlines from China all contributed to the
volatility, and while BTC briefly rebounded back above $50K in early September, it has since retreated toward ~$43K, down
~33% from its all-time high but still up more than 300% over the past year
• SEC Chair Gary Gensler has made several public comments on the topic of crypto regulation, and while digital assets don't
appear to be at the top of the SEC's priority list, Gensler noted he is a believer in blockchain technology and regulators seem
to be focused on investor protection from fraud and scams
Ethereum sees robust transaction activity amid network upgrade
• Ethereum's recent price cycle lagged bitcoin's by several weeks, but followed a similar pattern, with robust transaction volume
and smart contract activity fueling positive sentiment amid the broader digital asset bull market and leading ETH to make a
new all-time high above $4,300 in mid-May
• A sharp sell-off sent Ethereum back below $2,000 just one week later, and after a brief recovery above $4,000 in early
September, ETH has settled back into the middle of this range at ~$3,000, up more than ~700% over the past year
NFTs become a status symbol as prices soar
• Beeple's $69M NFT sale in March 2021 brought NFTs into the mainstream, and while the buzz seemed to fade during May
and June, it came roaring back later in the summer
• Transaction volume on leading NFT marketplace OpenSea surpassed $3.4B in August vs. just ~$150M in March, and collections
like CryptoPunks saw prices skyrocket, with the cheapest Punks selling for over $100K and some with rare traits going for
more than $5M
• These NFTs have seemingly become a status symbol, with many people replacing their social media avatars with the latest
NFT purchase, and large and engaged communities have formed online around these collections
DeFi & stablecoins see continued adoption
• Decentralized finance (DeFi) saw rapid adoption beginning last summer, and while the pace of growth has slowed over recent
months, the Total Value Locked (TVL) in DeFi protocols reached a record $88B at the end of August
• Stablecoin demand has also remained strong as one of their most common use cases, serving as an onramp to the broader
digital asset ecosystem, helped the total market capitalization of stablecoins surpass $100B
Investment vehicles & public company roundup
• Grayscale continues to lead the industry with product breadth and integrity, remaining focused on ETF opportunities
Source: Canaccord Genuity Research
Diagnostics and Tools
Progression of COVID diagnostics
• Testing for COVID-19 has evolved nicely since the onset of the pandemic and symptomatic testing moved to active disease
diagnosis, then to screening and ultimately could shift to community/outbreak surveillance
• Hospital-based testing transitioned to centralized testing (e.g., public health, regional, research), then moved to point of care
and could eventually result in widespread home or point of use testing
COVID diagnostics by technology
• PCR testing is generally slow and is highly invasive (nasopharyngeal swabs or anterior nasal swabs), but it has strong sensitivity
• Antigen testing is fast (improving ease of access for home testing), can be performed frequently and has improving sensitivity
(over 90% in some cases)
• 53% of COVID molecular tests in development today are based on CRISPR, isothermal amplification and sequencing
Monday, October 4, 2021
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.
3Oil
Market
• WTI (November) is little changed at $75.88, Brent (December) is up 0.1% to $79.39 and crude is in a bit of a holding pattern
after WTI capped its sixth-straight week of gains on Friday
• Despite the recent run-up in prices and some press speculation last week that the group could be considering some form of
output increase, the general sense is that the cartel will hold to its schedule of raising its output cap by 400K bpd in November,
though analysts note this may not be enough to keep pace with rising global demand
OPEC+ – Reuters/Platts
• Sources suggest OPEC and its non-cartel allies are likely to keep to their plan of lifting output restrictions by 400K bpd in
November despite consumer pressure after the recent rise in prices
• This also comes after OPEC sources suggested last week that there may be some in the group considering some form of
increase
• It adds that JP Morgan argued Friday that the group has very little incentive to divert from its schedule, considering declining
refinery runs and weakening physical market indicators in China
• Mike Muller, the head of Vitol Asia, argued this weekend that OPEC+'s plan to add 400K bpd to output in November won't be
enough to satisfy rising global demand and help build inventories in Asia, where more supply will be needed in Q4
• Muller added while US rig counts in the Permian are going up, it may not be enough to have a major impact on production in
the coming months
United States – Bloomberg
• Iran has indicated the US should release at least $10B of frozen Iranian funds if it wants Tehran to return to the table for
further talks on bringing it back into the 2015 nuclear deal
• The US has yet to publicly comment on the demand and that it's unclear whether this represents a hard precondition to
restarting the talks in Vienna
• Billions of dollars in oil remittances were frozen in overseas accounts after President Trump withdrew from the nuclear deal
and reimposed sanctions on Iran in 2018
Oman – Platts
• Omani oil minister al-Rumhi said that Cyclone Shaheen was likely to have little impact on the country's oil industry, with oil
fields far from the track of the storm
• However, that loadings might be cancelled for several hours due to high winds and the country's Sohar port was closed Sunday
due to the adverse weather
Source: FactSet
Monday, October 4, 2021
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
A long insider journey
Source: INK Research
As of: Friday, October 4, 2021
Company Highlight: Journey Energy (JOY)
• The share price of Alberta junior oil & gas producer Journey Energy (JOY) is off about 90% over the past 10 years, as the stock
is up 740% over the past 12 months as rising oil & gas prices have helped the firm pay back debt
• Despite the rise, a director has been buying shares over the summer, which has helped Journey keep a spot in our latest INK
Edge Top 30 Energy Stock Report
• In fact, the company aims to exit 2021 with net debt of between $63 and $65 million which it hopes will leave it with a net-
debt to trailing 12-month cash flow ratio of about 1.8
• However, we believe investors are not giving Journey the benefit of the doubt as the stock is trading at a trailing price-to-cash
flow ratio of about 1.3
• The low valuation is in place despite the firm's trailing 12-month cash flow improving to $1.18 per share (as of June 30, 2021)
compared to a loss a year earlier
• In Q2, the firm produced 7,709 barrels of oil equivalent per day (47% liquids) from its two core areas of central and southern
Alberta
• A year ago, the company commissioned a 4-megawatt power station, supplied from production at its Countess property south
of Calgary
• While the company has understandably been focusing on its financial health, it is also setting a meaningful target to reduce
its direct emissions intensity by 20% from 2019 levels by 2023
• From August 13 to September 2, Journey Energy (JOY) Director Craig Henry Hansen (ZAR) spent $197,687 buying shares in
the public market
• The 170,000 shares were bought at an average price of $1.16 and he now holds 205,000 shares representing about 0.4% of
all shares outstanding
Journey Energy (JOY)
Source: INK Research
Monday, October 4, 2021
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
Monday, October 4, 2021
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
Monday, October 4, 2021
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
CANADA
Company Ticker Exchange Period Time Est.EPS
Blackrock Silver Corp BRC TSXV - - -
Constantine Metal Resources Ltd. CEM TSXV - - -
Personas Social Inc. PRSN TSXV - - -
Sarama Resources Ltd. SWA TSXV - - -
USA
Company Ticker Exchange Period Time Est.EPS
Duckhorn Portfolio Inc. NAPA NASDAQ Q3 2021 AC 0.01
Pharavis NV PHVS NASDAQ Q3 2021 - -0.53
Comtech Telecommunications Corp. CMTL NASDAQ Q3 2021 AC 0.24
Tsakos Energy Navigation Ltd. TNP NYSE Q2 2021 BO -1.25
Steris STE NYSE Q3 2021 BO 1.82
Navios Maritime Acquisition Corp. NNA NYSE Q3 2021 BO 0.57
Monday, October 4, 2021
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)U.S. Futures Fall; Supply Crunch Buoys Commodities: Markets Wrap
2)Why Brexit Britain Is Isolated, Vulnerable and Running on Fumes
3)Evergrande Shares Halted Amid Report of Unit Stake Sale
4)Jamie Dimon Defends His Pay in Axios Sitdown After New Award
5)Here Are the Biggest Revelations From the Pandora Papers Leak
6)Credit Suisse’s Zurich Offices Raided in Greensill Probe
7)Romanian Billionaire Petrescu Dies in Plane Crash Near Milan
8)U.S. Trade Chief to Engage With China on Trade-Deal Shortfalls
9)The March Back to Office Heads in Sharply Different Directions
10)Hopson to Buy 51% of Evergrande Management Unit: Cailian
THE LAST DROP: “Do not wait to strike till the iron is hot, but make it hot by striking.”
- William Butler Yeats
Monday, October 4, 2021
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).
Quest®: Canaccord Genuity’s proprietary online valuation and analytical tool which combines consensus market figures with the Quest® Discounted Cash Flow (DCF)
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
borders. As the third-party data are updated, the triAngle Score generated by Quest®, and the Default Quest® value per share may change. The default variables may
also be adjusted by the user to produce alternative values, any of which could occur. Additional information about the Quest® methodology is available on request.
Canaccord Genuity Quest® Disclosures
Quest® is at this stage registered in the UK and in the USA, and common law trade mark rights are asserted in other jurisdictions. Quest® is non-independent research
and is a marketing communication under the FCA Conduct of Business rules. All rights reserved. Quest®, CITN®, Companies in the News™, CFROC®, and triAngle™ are
all trademarks of Canaccord Genuity Limited. E&OE. © Canaccord Genuity Limited. For important information and company-specific Quest® disclosures please see
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Please note that analyst data and Quest® data may differ due to different sources and calculation methods. The Quest® platform may be found at the following website
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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.
Monday, October 4, 2021
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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