BMO Nesbitt Burns - Research Highlights - March 5

Friday, March 5, 2010

*Click on title to view Comments **Click here to view Calendar of Events

Large Cap Stocks

TD Bank Q1/10 Earnings: A Strong Start to 2010 J. Reucassel

Bonavista Energy Trust Q4/09 Results: Glauc and Load G. Tait

Canadian Natural Res. Q4/09: Starting to Allocate the ‘Wall of Cash’ R. Ollenberger

Canadian Western Bank Q1/10 Results: Another Strong Quarter J. Reucassel

Fort Chicago Energy Partners

4Q EPU Beat; 2010 Sees Power Pressure C. Kirst

Groupe Aeroplan Follow-Up on Downgrade to Market Perform C. Proulx

Ritchie Bros. Auctioneers Target Price Increased to $18; Underperform Rating Maintained B. Powell

Small Cap Stocks

Calfrac Well Services Q4/09 Results Above Expectations: Bright Future Justifies Above-Average Valuation

M. Mazar

Cascades Inc. Q4/09 Results Above Expectations S. Atkinson

Evertz Technologies Ltd. Target Price Lowered to $19; Q3/10 Results B. Piccioni

ShawCor Target Price Lowered to $34; Outperform Rating Maintained; Thesis Remains Intact

B. Powell

Total Energy Services Does It Really Matter?: Q4/09 Results Below Expectations but Well Positioned Going Forward

M. Mazar

Constellation Software Q4/09 Results: Better Revenues, Softer Margins T. Moschopoulos

Newalta Q4/09 Results: Industry Outlook Improves G. Tait

Corporate Debt Canadian Natural Resources Ltd.

2009 Proves to Be the Year of the Balance Sheet Boost J. Parker

TD Bank Strong Q1/10 Earnings; Credit Continues to Be a Drag G. Lazarevski

Industry/Macro Comments

Energy - Oil & Gas Crude Thoughts: Weekly Commodity Commentary North American Energy Team

Energy - Oil & Gas: Refiners Facing Reality; Refiners Report Disappointing Q4/09 J. Byrne

Financials Federal Budget Good News for Canadian Financials J. Reucassel/ H. Brown

Quantitative Analysis Market Elements M. Steele

Economic Research A.M. Notes Economics

Disclosure Statements To view important Disclosure Statements go to http://research-ca.bmocapitalmarkets.com/Company_Disclosure_Public.asp

http://research-ca.bmocapitalmarkets.com/Company_Disclosure_Public.asp

Friday, March 5, 2010

Back to Index

Earnings & Conference Calls Algonquin Power & Utilities Corp. (AQN) EPS Q4/09 BMO EPS ($0.01) vs. ($0.29) last year; First Call Mean $0.00

416-644-3418 or 877-974-0446; Replay: 877-289-8525 (Passcode: 4224434#); Webcast: www.AlgonquinPower.com

10:00 am

Capital Power Income L.P. (CPA.UN) EPU Q4/09 BMO EPU ($0.13) vs. ($0.91) last year; First Call Mean ($0.15)

416-340-8018 or 866-223-7781; Replay: 800-408-3053 (Passcode: 1237034); Webcast: www.capitalpowerincome.ca

1:00 pm

Celtic Exploration (CLT) CFPS Q4/09 BMO CFPS $0.91 vs. $0.78 last year

Trican Well Services (TCW) EPS Q4/09 BMO EPS ($0.01) vs. $0.31 last year; First Call Mean $0.01

866-223-7781 or 416-340-8018; Replay: 800-408-3053 (Passcode: 8014660#); Webcast: www.trican.ca

11:00 am

Union Drilling (UDRL) EPS Q4/09 BMO EPS (US$0.15) vs. US$0.19 last year; First Call Mean (US$0.17)

480-629-9722; Replay: 303-590-3030 (Passcode: 4209011#); Webcast: www.uniondrilling.com

10:00 am

SNC-Lavalin (SNC) EPS Q4/09 BMO Consolidated EPS$0.45 vs. $0.49 last year; First Call Mean $0.53

647-427-7450/514-807-9895 or 888-231-8191; Replay: 800-642-1687 (Passcode: 54084670); Webcast: www.snclavalin.com/investors.php?lang=fr&action=quarterly&year=2009

2:00 pm

Today's Events & Marketing

Keith Bachman (Enterprise Hardware & Imaging Analyst)

Marketing in Europe

David Radclyffe & David Cotterell (Metals and Mining Analysts) Marketing in Vancouver

Edward Sterck (Metals & Mining Analyst) Marketing in Toronto

Economics/Industry Data

Time Data Period BMO Capital Markets Estimate

Previous Period

Consensus

8:30 am U.S. Unemployment Rate Feb. (e) 9.9% 9.7% 9.8%

Upcoming Events & Marketing

Edward Sterck (Metals & Mining Analyst) Marketing in Toronto Mar. 5-8

Karen Short (Food Retailing Analyst) Marketing in Vancouver Mar. 8

Jeffrey Logsdon (Entertainment & Gaming Analyst) Marketing in Texas Mar. 8-10

David Radclyffe & David Cotterell (Metals and Mining Analysts) Marketing in Toronto Mar. 8-9

BOK Financial (BOKF) Company presentation in the Mid-Atlantic Mar. 8-9

BMO Capital Markets Calendar of Events

Page 2 March 5, 2010 (Back to Index)

Carl Kirst (North American Pipeline Analyst) Marketing in Montreal Mar. 9

Gerdau Ameristeel (GNA) Company presentation in Toronto. Mario Longhi (President, CEO & Director) and Mauricio Werneck (Treasurer).

Mar. 9

Edward Sterck (Metals & Mining Analyst) Marketing in Montreal Mar. 9

Brookfield Properties (BPO) Company presentation in Montreal. Steve Douglas (President), Bryan Davis (CFO) and Melissa Coley (Investor Relations).

Mar. 9

Hewlett-Packard (HPQ) Company presentation in Los Angeles. Jim Burns (Investor Relations). Mar. 9-10

UDR (UDR) Company presentation in Montreal & Toronto. Thomas W. Toomey (President & CEO) and H. Andrew Cantor (VP, Investor Relations).

Mar. 9-10

David Radclyffe & David Cotterell (Metals and Mining Analysts) Marketing in Montreal Mar. 10

Edward Sterck (Metals & Mining Analyst) Marketing in Vancouver Mar. 10

Wajax Income Fund (WJX.UN) Company presentation in Toronto & Montreal. Neil Manning (CEO) and John Hamilton (CFO).

Mar. 10-11

Stephen Atkinson (Paper & Forest Products Analyst) Marketing in Chicago Mar. 11

Peter Rhamey (Telecommunications Analyst) Marketing in Connecticut Mar. 11

Edward Sterck (Metals & Mining Analyst) Marketing in Boston and New York Mar. 11-12

David Radclyffe & David Cotterell (Metals and Mining Analysts) Marketing in Boston and New York Mar. 11-12

Gymboree (GYMB) Company presentation in Denver. Jeff Harris (CFO) and Blair Lambert (COO). Mar. 12

Signature Bank (SBNY) Company presentation in New York. Joseph DePaolo (CEO), Eric Howell (CFO) and George Klett (EVP, Real Estate Lending).

Mar. 15

Ken Zaslow (Food & Agribusiness Analyst) Marketing on the West Coast Mar. 15-16

Randy Ollenberger (Oil & Gas Producers & Integrated Oils Analyst)

Marketing in Boston Mar. 15-16

Mike Mazar (Oil & Gas Services Analyst) Marketing in Boston Mar. 16

Tim Long (Communications Equipment Analyst) Marketing in Vancouver Mar. 16



Jeff Silber (Staffing & Education Analyst) Marketing in Denver Mar. 16

Alan Laws (Oil Services Analyst) Marketing in the Mid-West Mar. 16-17

Oshkosh (OSK) Company presentation in Boston. Andy Hove (President, OSK Defense Segment) and Patrick Davidson (Director of Investor Relations).

Mar. 16-17

Andrew Kaip (Precious Metals & Mining Analyst) Marketing in Europe Mar. 16-19

Karen Short (Food Retailing Analyst) Marketing in Chicago Mar. 17

Tony Robson (Metals & Mining Analyst) Marketing in Vancouver Mar. 17-18

Tim Long (Communications Equipment Analyst) Marketing in San Francisco Mar. 17-18

Randy Ollenberger (Oil & Gas Producers & Integrated Oils Analyst)

Marketing in Boston & New York Mar. 17-19

Paul Adornato & Richard Anderson (U.S. REITs Analysts) Marketing in Chicago Mar. 18

Jim Byrne (Integrated Oils & Refiners Analyst) Marketing in Montreal Mar. 18

Charles Brady (Diversified Industrials Research) Marketing in New York Mar. 18

Wayne Hood (Broadline Retailing Analyst) Marketing in Minneapolis Mar. 19

Dan McSpirit (Energy & Power Analyst) Marketing in New York Mar. 19

Home Capital Group (HCG) Company presentation in Vancouver Mar. 22

Redback Mining (RBI) Company presentation in Europe. Rick Clark (CEO) and Simon Jackson (VP, Corporate Development).

Mar. 22-26

Atul Shah (Diversified Financials Analyst) Marketing in Vancouver Mar. 23

TimberWest Forest (TWF.UN) Company presentation in Toronto & Montreal. Paul McElligott (President & CEO) and Bev Park (Executive VP & CFO; President & COO – Couverdon Real Estate).

Mar. 23-24

The Cooper Cos. (COO) Company presentation in the Pacific Northwest & San Francisco. Robert Weiss (President & CEO) and Kim Duncan (Director, IR).

Mar. 23-24

CMS Energy (CMS) Company presentation in Houson, Austin and Dallas. Tom Webb (CFO), Laura Mountcastle (VP & Treasurer) and Phil McAndrews (Investor Relations).

Mar. 24-25



Bert Powell (Special Situations Analyst) Marketing in Vancouver Mar. 25

Christopher Brown (Oil & Gas International Producers Analyst)

Marketing in Europe Mar. 25-26

Peter Sklar (Auto Parts & Special Situations Analyst)

Marketing in Vancouver Mar. 26

Linamar (LNR) Company presentation in Montreal. Linda Hasenfratz (CEO) and Mark Stoddart (Chief Technology Officer & Executive VP, Marketing).

Mar. 26

Artis REIT (AX.UN) Company presentation in Chicago. Armin Martens (President & CEO) and Jim Green (CFO).

Mar. 31

Dan Salmon (Marketing Services & Advertising Agencies Analyst)

Marketing in Chicago Mar. 31-Apr. 1

Wayne Hood (Broadline Retailing Analyst) Marketing in New York Apr. 5-6

If you are interested in any of the above events, please contact your BMO Capital Markets Institutional Equity/Fixed Income salesperson, or the following: Toronto Events: Laura Heuff 416-359-5816 Montreal Events: Marjorie Heppell at 514-286-7231 Western Canada Events: Jennifer Crombie 604-443-1452 U.S. Events: Angela Dong 212-702-1969 Europe Events: Hannah Pead 44-207-246- 5418 Sources: BMO Capital Markets; Thomson StreetEvents (www.streetevents.com)

This report was prepared by an analyst(s) employ d as a research analyst(s) under FINRA rules. For disclosure statements, including

Back to Index

TD Bank (TD-TSX; TD-NYSE) Stock Rating: OutperformIndustry Rating: Market Perform

Member of: Top 15 Large Cap Stock Selections Top 15 Income Stock Selections Top 15 Quantitative Stock Selections

March 5, 2010 Research Comment Toronto, Ontario

John Reucassel, CFA (416) 359-4379 [email protected] Assoc: John Fong, CFA, FSA

Price (4-Mar) $69.71 52-Week High $70.00 Target Price $80.00 52-Week Low $34.31 Q1/10 Earnings: A Strong Start to 2010

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Toronto-Dominion Bank (TD)Price: High,Low,Close Earnings/Share

30

40

50

60

70

80

Event

Release of first-quarter cash EPS of $1.57.

Impact Positive. Q1/10 results driven lower PCLs, better trading, and cost containment.

Overall, TD reported good growth in relatively high multiple businesses:

Canadian P&C and wealth management.

ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 6 to 9.

Forecasts We increased our 2010E and 2011E cash EPS to $5.70 and $6.55 from $5.25

and $6.10, respectively. The higher forecasts reflect lower PCL estimates in

both 2010 and 2011 as well as benefits from strong volume growth. Results in

U.S. retail are expected to remain modest.

Valuation We increased the target price to $80 from $74, reflecting higher 2010 and 2011

cash EPS estimates. The target multiple is 12.2x 2011E cash EPS.

Recommendation TD remains Outperform rated. Management’s outlook for 2010 was more

upbeat than at the end of Q4/09, reflecting some more confidence on credit and

strong results from the Canadian P&C and wealth management businesses.

Given the uncertainty on capital rules, we do not believe that any dividend

increases, buybacks, or major acquisitions are currently contemplated. However,

we would not be surprised if the bank continued to look for medium-sized U.S.

acquisitions once capital rules and any new tax or fees in the U.S. have been

finalized. Hopefully, economic conditions will also have improved and provide

a better picture of long term profitability in the U.S. operations. In the

meantime, Canada should continue to generate attractive earnings results.

0

50

100Volume (mln)

0

50

100

2005 2006 2007 2008 200950

100

150TD Relative to S&P/TSX Comp

Last Data Point: March 3, 2010

50

100

150

(FY-Oct.) 2008A 2009A 2010E 2011E EPS - cash $5.39 $4.19 $5.70 $6.55P/E 12.2x 10.6x EPS - GAAP $5.00 $3.61 $5.14 $5.99P/E 13.6x 11.6x Cash ROE 16.2% 14.2% 14.8% 15.8% Specific Prov. ($mm)$1,063 $2,016 $2,172 $1,285 Dividend $2.36 $2.44 $2.44 $2.44 T

ier One Capital 9.8% 11.3% 11.6% 12.3%

Quarterly EPS - cash Q1 Q2 Q3 Q4 2008A $1.42 $1.24 $1.34 $1.38 2009A $0.96 $0.82 $1.16 $1.25 2010E $1.57a $1.37 $1.37 $1.39 Dividend $2.44 Yield 3.5% Book Value $41.86 Price/Book 1.7x Shares O/S (mm) 862.0 Mkt. Cap ($mm) $60,090 Float O/S (mm) 862.0 Float Cap ($mm) $60,090 Wkly Vol (000s) 19,047 Wkly $ Vol (mm) $1,049.5 Net Debt ($mm) na Next Rep. Date 27-May (E)

Notes: All values in C$; EPS fd; CEPS add back amort. of intang. & goodwill; 2006 EPS ex. gain on AMTD & other Major Shareholders: Widely held First Call Mean Estimates: TORONTO-DOMINION BANK (C$) 2010E: $5.48; 2011E: $6.50

Changes Annual EPS Annual EPS Quarterly EPS Target 2010E $5.25 to $5.70 2010E $4.69 to $5.14 Q2/10E $1.29 to $1.37 $74.00 to $80.00 2011E $6.10 to $6.55 2011E $5.55 to $5.99 Q3/10E $1.34 to $1.37 Q4/10E $1.37 to $1.39


Back to Index

Bonavista Energy Trust (BNP.UN-TSX) Stock Rating: OutperformIndustry Rating: Market Perform

March 5, 2010 Research Comment Calgary, Alberta

Gordon Tait, CFA (403) 515-1501 [email protected]

Q4/09 Results: Glauc and Load Price (4-Mar) $24.57 52-Week High $24.85 Target Price $26.00 52-Week Low $12.25

Bonavista Energy Trust (BNP.UN)Price: High,Low,CloseEvent

Bonavista reported Q4/09 results.

10

15

20

25

30

35

40

10

15

20

25

30

35

40

Impact Slightly Positive. Operating cash flow totalled $135.5 million ($0.93/unit),

compared with our forecast of $119.8 million ($0.82/unit) and the First Call

Mean estimate of $0.88/unit.


Forecasts We have increased our CFPU estimates to $3.36 from $3.16 in 2010 and to

$3.70 from $3.55 in 2011. Our cash distribution per unit estimates are

unchanged at $1.92 in both years.

Valuation Our $26 target price is based on 9.2x 2010E debt-adjusted cash flow, compared

with the peer group average of 8.7x.

Recommendation Bonavista’s Q4 results were generally better than expected. The trust’s most

recent Glauconite wells are performing better than previously drilled wells and

are costing less. In addition to the 245 identified Glauconite drilling locations,

we believe Bonavista has opportunities for horizontal Cardium oil development

on up to 150 net sections of its Cardium lands in its Central Alberta core area.

Bonavista is a low-cost operator and has consistently demonstrated above-

average recycle ratios. The trust has 1.3 million net acres of undeveloped land

and the recently closed acquisition of Hoadley lands has increased its drilling

inventory to 860 locations. We believe this should provide BNP with years

worth of development opportunities to replenish reserves and to maintain/grow

its production profile. Based on our total return outlook, we rate Bonavista

Energy Trust Outperform.

0

10

20Volume (mln)

0

10

20

2005 2006 2007 2008 200950

100

150BNP.UN Relative to S&P/TSX Comp TRI


50

100

150

(FY-Dec.) 2008A 2009A 2010E 2011E CDPU $3.60 $2.00 $1.92 $1.92 P/CDPU 12.8x 12.8x CFPU $5.64 $3.46 $3.36 $3.70P/CFPU 7.3x 6.6x Oil & Liq (b/d) 24,079 23,484 24,000 25,000 Nat. Gas (MMcf/d) 174.7 190.9 231.0 240.0 Boe/d (6:1) 53,190 55,299 62,500 65,000 E

V/EBITDA 5.6x 7.8x 9.1x 8.0x

Quarterly CDPU Q1 Q2 Q3 Q4 2008A $0.90 $0.90 $0.90 $0.90 2009A $0.56 $0.48 $0.48 $0.48 2010E $0.48 $0.48 $0.48 $0.48 Annual Dist. $1.92 Yield 7.8% Book Value $11.80 Price/Book 2.1x Units O/S (mm) 146.1 Mkt. Cap ($mm) $3,590 Float O/S (mm) 124.6 Float Cap ($mm) $3,061 Wkly Vol (000s) 1,726 Wkly $ Vol (mm) $33.9 Net Debt ($mm) $869.8 Next Rep. Date May (E)

Notes: All values in C$; Units O/S incl. exchangeable shares; Net debt incl. convertible debentures Major Unitholders: Management & Directors (15%) First Call Mean Estimates: BONAVISTA ENERGY TRUST (C$/DI) 2009E: $2.01; 2010E: $1.92; 2011E: $1.92

Changes Annual CFPS 2010E $3.16 to $3.36 2011E $3.55 to $3.70


Back to Index

Canadian Natural Res. (CNQ-TSX; CNQ-NYSE) Stock Rating: OutperformIndustry Rating: Market Perform

M ember of: Top 15 Large Cap Stock Selections


Randy Ollenberger (403) 515-1502 [email protected] Assoc: Jared Dziuba

Q4/09: Starting to Allocate the ‘Wall of Cash’ Price (4-Mar) $71.96 52-Week High $79.00 Target Price $90.00 52-Week Low $37.80


Event Canadian Natural reported strong fourth-quarter financial results, driven by

lower operating costs and strong realized pricing. Reported cash flow per share

from operations was $3.14 versus our estimate of $2.78 and consensus of $2.91.

Production averaged 574,857 boe/d compared to our estimate of 576,700 boe/d

and consensus of 577,000 boe/d. The company also announced a 43% increase

in its quarterly dividend to $0.15/share, as well as a share repurchase program of

up to 2.5% of shares, and plans to split the shares on a two-for-one basis.

20

40

60

80

100

120

Canadian Natural Res. (CNQ)Price: High,Low,Close

20

40

60

80

100

120

Impact

Mixed.

Forecasts We are revising our financial estimates to reflect year-end results and updated

guidance. We are lowering our 2010 cash flow estimate to $11.11 from $11.64,

and our 2011 estimate to $12.74 from $12.87, primarily reflecting guidance for

higher cash taxes. Our outlook assumes production of 611,686 boe/d in 2010

and 649,872 boe/d in 2011.

Valuation We believe Canadian Natural shares are attractive at current levels given the

combination of strong organic growth and free cash flow. We estimate that the

company can deliver production growth of 6% in 2010 and 2011 while

generating free cash flow of more than $3.3 billion, which suggests ample room

for further increases in dividends, share buybacks or potential acquisitions to

enhance shareholder value. Our $90 target price implies a 2011E cash flow

multiple of 7.1x and a 13% discount to our 2010 net asset value estimate of

$103.19.

Recommendation

Canadian Natural is rated Outperform.

0

50

100Volume (mln)

0

50

100

2005 2006 2007 2008 20090

100

200CNQ Relative to S&P/TSX Comp


0

100

200

(FY-Dec.) 2008A 2009A 2010E 2011E CFPS $12.00 $11.04 $11.11 $12.74P/CFPS 6.5x 5.6x EPS $6.46 $5.11 $5.14 $6.06P/E 14.0x 11.9x NAV $90.02 $100.24 $103.19 $114.10 EV/EBITDA 3.9x 9.9x 6.5x 5.6x ROCE (%) 13% 9% 10% 12% D

/CF 1.8x 1.7x 1.6x 1.2x

Quarterly CFPS Q1 Q2 Q3 Q4 2008A $2.99 $3.24 $3.12 $2.65 2009A $2.64 $2.51 $2.77 $3.13 2010E $2.69 $2.51 $2.91 $3.00 Dividend $0.60 Yield 0.8% Book Value $35.82 Price/Book 2.0x Shares O/S (mm) 542.3 Mkt. Cap ($mm) $39,024 Float O/S (mm) 520.8 Float Cap ($mm) $37,479 Wkly Vol (000s) 21,656 Wkly $ Vol (mm) $1,297.9 Net Debt ($mm) $10,172.0 Next Rep. Date May (E)

Notes: All values in C$; EPS (Diluted), CFPS (Diluted Disc.) Major Shareholders: Fidelity (6.8%), Capital World Investors (5.0%)First Call Mean Estimates: CANADIAN NATURAL RESOURCES (C$/CF) 2009E: na; 2010E: na; 2011E: na

Changes Annual EPS Annual CFPS Quarterly CFPS 2010E $4.91 to $5.14 2010E $11.64 to $11.11 Q1/10E $2.91 to $2.69 2011E $5.26 to $6.06 2011E $12.87 to $12.74 Q2/10E $2.65 to $2.51 Q3/10E $3.13 to $2.91 Q4/10E $2.95 to $3.00


Back to Index

Canadian Western Bank (CWB-TSX) Stock Rating: OutperformIndustry Rating: Market Perform


John Reucassel, CFA (416) 359-4379 [email protected] Assoc: John Fong, CFA, FSA

Price (4-Mar) $22.00 52-Week High $24.00 Target Price $27.00 52-Week Low $7.52

Q1/10 Results: Another Strong Quarter

0.6

0.8

1.0

1.2

1.4

1.6

1.8

5

10

15

20

25

30

35

Canadian Western Bank (CWB)Price: High,Low,Close Earnings/Share


Event CWB reported Q1/10 EPS of $0.52. Excluding some one-time items, EPS were

$0.44, higher than our estimate of $0.38 and consensus of $0.39, reflecting

stronger spreads improvement and cost controls.

Impact Positive. Spreads widened sooner than we expected but loan growth remains

modest given the soft business conditions.

Forecasts We increased our 2010E and 2011E cash EPS to $1.80 and $2.05 from $1.65

and $1.90, respectively, reflecting higher spreads from Q1/10 and continued

growth in non-interest income.

Valuation We are increasing our target price to $27 from $25, which represents 13.2x our

2011 cash EPS forecast. CWB continues to operate in a part of Canada that

should generate above-average economic growth and this should be positive for

the bank’s long-term valuation.

Recommendation CWB is rated Outperform. CWB reported another good quarter based on rising

spreads. We expect organic loan growth to improve later in 2010 and 2011 as

business conditions improve. CWB continues to attract new sources of revenue

from other lines of business (i.e., insurance, trust & management services),

which should provide another leg to earnings growth over the next few years.

0

10

20Volume (mln)

0

10

20

2005 2006 2007 2008 20090

100

200CWB Relative to S&P/TSX Comp


0

100

200

(FY-Oct.) 2008A 2009A 2010E 2011E EPS - cash $1.58 $1.47 $1.80 $2.05P/E 12.2x 10.7x EPS - GAAP $1.58 $1.47 $1.80 $2.05P/E 12.2x 10.7x Cash ROE 15.9% 13.2% 14.0% 14.3% Specific Prov. ($mm) $12 $14 $15 $13 Dividend $0.42 $0.44 $0.44 $0.44 T

ier One Capital 8.9% 11.3% 11.5% 11.5%

Quarterly EPS - cash Q1 Q2 Q3 Q4 2008A $0.40 $0.39 $0.41 $0.38 2009A $0.40 $0.30 $0.38 $0.39 2010E $0.52a $0.41 $0.43 $0.44 Dividend $0.44 Yield 2.0% Book Value $12.67 Price/Book 1.7x Shares O/S (mm) 64.0 Mkt. Cap ($mm) $1,407 Float O/S (mm) 64.0 Float Cap ($mm) $1,407 Wkly Vol (000s) 1,134 Wkly $ Vol (mm) $18.9 Net Debt ($mm) na Next Rep. Date 03-Jun (E)

Notes: All values in C$; EPS are fully diluted Major Shareholders: Widely held First Call Mean Estimates: CANADIAN WESTERN BANK (C$) 2010E: $1.62; 2011E: $1.90

Changes Annual EPS Annual EPS Quarterly EPS Target 2010E $1.65 to $1.80 2010E $1.65 to $1.80 Q2/10E $0.39 to $0.41 $25.00 to $27.00 2011E $1.90 to $2.05 2011E $1.90 to $2.05 Q3/10E $0.44 to $0.43 Q4/10E $0.45 to $0.44

Please r cluding the Analyst's Certification.

Back to Index

Fort Chicago Energy Partners (FCE.UN-TSX) Stock Rating: Market PerformI ndustry Rating: Market Perform

March 4, 2010

North American Pipelines

Carl Kirst, CFABMO Capital Markets Corp.

[email protected]

Danilo Juvane, CFA713-546-9741

[email protected]

4Q EPU Beat; 2010 Sees Power Pressure Securities Info Price (3-Mar) $10.48 Target Price $11 52-Wk High/Low $11/$7 Distribution $1.00Mkt Cap (mm) $1,462 Yield 9.5%Units O/S (mm) 139.5 Float O/S (mm) 139.4Options O/S (mm) na ADVol (25-day, 000s) 371

Price Performance

Event FCE reported 4Q09 clean EPU of $0.14 vs. our $0.10 and $0.12 consensus. CFPU

of $0.40 was also ahead of our $0.33, while distributable cash of $0.25 was slightly

below our $0.28 expected. The earnings delta was mainly due to a $0.04 beat in

NGLs (net of taxes). Of note was a $78.1mm charge due to a California regulatory

decision which rendered FCE’s Ripon and San Gabriel plants less economic.

While the upfront charge is non-cash, the impact will reduce ongoing annual cash

flows by $3-$4mm (the more important capacity revenues were unaffected) and

makes the prospects of extending PPA contracts beyond 2016/2018 expiration

more challenging. Other take-aways: 1) FCE slightly improved 2010 distributable

cash guidance to $0.85-$1.30 (we’re at $1.34 on the strength of frac spreads); 2) the

Glen Park hydro acquisition (1Q10 close) will add $5-$6mm of annualized

EBITDA in 2010, increasing thereafter as NY power prices recover; 3) Prairie

Rose gathering pipe began flowing associated Bakken gas into Alliance/Aux Sable

last month; 4) the pipeline extension from the recently-acquired Septimus plant to

Alliance will be in service 2Q10; and 5) FCE reiterated its intent to convert to a

corporation before year end, maintaining its $1.00 distribution turned dividend.

0.4

0.5

0.6

0.7

0.8

0.9

Fort Chicago Energy (FCE.UN)Price: High,Low,Close Earnings/Share

6

8

10

12

14

efer to pages 4 to 6 for Important Disclosures, in

Impact Mixed. 4Q operations positive, but CA power decision will drag going forward.

Forecasts We’re reducing our 2010/2011 EPU forecast to $0.53 and $0.67 on lower powersales and a larger 2H10 maintenance outage at Aux Sable than previously modeled.

Valuation Our C$11 target is unchanged based on a blend of 4 methods yielding $10-$12.

Recommendation We maintain our MARKET PERFORM, although we do see the current 9.5% yield as solid.

Changes Annual EPU Annual OCF Quarterly EPU 2010E $0.59 to $0.53 2010E $1.51 to $1.43 Q1/10E $0.10 to $0.03 Q3/10E $0.19 to $0.17 2011E $0.71 to $0.67 2011E $1.66 to $1.59 Q2/10E $0.19 to $0.13 Q4/10E $0.10 to $0.20

0

10

20Volume (mln)

0

10

20

2005 2006 2007 2008 200950

100

150FCE.UN Relative to S&P/TSX Comp


50

100

150

Valuation/Financial Data

(FY-Dec.) 2008A 2009A 2010E 2011E EPU Pro Forma $0.54 $0.61 $0.53 $0.67 P/EPU 19.8x 15.6x EPU GAAP $0.46 $0.28 $0.53 $0.67

OCF $1.68 $1.62 $1.43 $1.59 P/OCF 7.3x 6.6x EBITDA ($mm) $328 $274 $352 $388 EV/EBITDA 9.3x 8.4x Rev. ($mm) $701 $649 $688 $749 EV/Rev 4.7x 4.3x

Quarterly EPU 1Q 2Q 3Q 4Q 2009A $0.10 $0.15 $0.23 $0.14 2010E $0.03 $0.13 $0.17 $0.20

Balance Sheet Data (09/30/09) Net Debt ($mm) $1,796 TotalDebt/EBITDA 5.2x Total Debt ($mm) $1,828 EBITDA/IntExp 3.5x Net Debt/Cap. na Price/Book 1.9x Notes: All values in C$. Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global Insight, Reuters, and Thomson Financial.


Back to Index

Groupe Aeroplan (AER-TSX) Stock Rating: Market Perform

March 5, 2010 Research Comment Montreal, Quebec

Claude Proulx, CFA (514) 286-3501 [email protected] Assoc: Dean Ciura

Follow-Up on Downgrade to Market Perform Price (4-Mar) $11.01 52-Week High $12.44 Target Price $11.50 52-Week Low $6.70


Event Aeroplan (AER) reported weaker-than-expected Q4/09 results and held a

conference call.

0.0

0.5

1.0

1.5

2.0

2.5

Groupe Aeroplan Inc. (AER)Price: High,Low,Close Earnings/Share

5

10

15

20

25

Impact Mixed. Although consolidated adjusted EBITDA was below expectations, some

of the reasons behind the miss are one-time in nature. Excluding $11 million of

one-time SG&A expenses, AER generated about $80 million of adjusted

EBITDA, down from $85 million last year, $13 million below our estimate and

$2 to $4 million below consensus. Management is guiding for modest growth in

adjusted EBITDA from its existing programs, excluding the launch costs of the

Italian program. Adjusted EBITDA should also grow from the contribution of

recently acquired Carlson Marketing.

Forecasts Based on this additional information, we are increasing our adjusted EBITDA

for 2010 and 2011 to $333 million and $361 million, respectively, up from $327

million and $348 million, which translates into adjusted EPS of $1.11 and $1.22

for 2010 and 2011, respectively.

Valuation Based on our new forecasts, Aeroplan looks well valued, trading at a small

discount to Canada’s best media companies based on 2010E EV/EBITDA.

Recommendation We lowered our rating to Market Perform on March 4 given the stock’s

appreciation over the last eight months and continued concern toward Air

Canada’s financial situation in the medium-to-long term. Our revised target

price of $11.50 assumes that AER will be valued at roughly 7x our 2011

EBITDA forecast, 12 months from now.

0

20

40Volume (mln)

0

20

40

2005 2006 2007 2008 200950

100

150AER Relative to S&P/TSX Comp


50

100

150

(FY-Dec.) 2008A 2009A 2010E 2011E Adj. EPS $1.41 $0.91 $1.11 $1.22P/Adj. EPS 9.9x 9.1x CFPS $1.43 $0.97 $1.14 $1.12P/CFPS 9.6x 9.9x Gr. Billngs $1,421 $1,363 $1,991 $2,090 EV ($mm) $2,618 $2,438 Adj. EBITDA $319 $282 $333 $361 EV/EBITDA 7.9x 6.8x Quarterly Adj. EPS Q1 Q2 Q3 Q4 2008A $0.35 $0.31 $0.32 $0.43 2009A $0.22 $0.26 $0.23 $0.20 2010E $0.25 $0.26 $0.29 $0.31 Dividend $0.50 Yield 4.5% Book Value $9.66 Price/Book 1.1x Shares O/S (mm) 199.4 Mkt. Cap ($mm) $2,195 Float O/S (mm) 199.4 Float Cap ($mm) $2,195 Wkly Vol (000s) 3,315 Wkly $ Vol (mm) $30.0 Net Debt ($mm) $551.6 Next Rep. Date May (E)

Notes: All values in C$; We exclude $400 million of cash from EV for future redemption Major Shareholders: Widely held First Call Mean Estimates: GROUPE AEROPLAN INC (C$) 2009E: $0.97; 2010E: $1.13; 2011E: $1.23

Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E $1.11 to $1.11 2010E $1.17 to $1.14 Q1/10E $0.27 to $0.25 $11.00 to $11.50 2011E $1.18 to $1.22 2011E $1.27 to $1.12 Q2/10E $0.30 to $0.26 Q3/10E $0.30 to $0.29

Q4/10E $0.34 to $0.31


Back to Index

Ritchie Bros. Auctioneers(RBA-NYSE; RBA-TSX) Stock Rating: UnderperformIndustry Rating: Outperform


Bert Powell, CFA (416) 359-5301 [email protected] Assoc: Luigi Di Pede, CFA


Target Price Increased to $18; Underperform Rating Maintained


0.3

0.4

0.5

0.6

0.7

0.8

0.9

Ritchie Bros. Auctioneers (RBA)Price: High,Low,Close(US$) Earnings/Share(US$)

5

10

15

20

25

30

Event Ritchie Bros. reported Q4/09 adjusted EPS of $0.20 versus our expectation of

$0.19 and the Mean estimate of $0.20. Gross Auction Proceeds (GAP) were

$891.1 million, up 4.4% year over year and consistent with previously

announced GAP results. The Auction Revenue Rate (ARR) was 10.90%, above

our forecast of 10.25%.

Impact

Neutral.

Forecasts For 2010, we forecast GAP of $3.70 billion, Auction Revenues of $389.8

million and EPS of $0.70. For 2011, we forecast GAP of $4.07 billion, Auction

Revenues of $425.7 million and EPS of $0.87.

Valuation Our US$18.00 target price is based on 23.8x our 2011E EPS estimate of $0.87

discounted back one year at 15.0%.

Recommendation We continue to believe GAP growth will continue to be below management

expectations. We expect that consignors could continue to abstain from the

market, and this phenomenon will persist through 2010. Improving equipment

prices may entice some consignors to auction, but we expect that there will still

be a contingent that will sit tight in anticipation of a recovery. We have revised

our estimates to reflect a lower GAP growth profile and higher operating

expenses. We have revised our target price to US$18, but continue to rate the

stock Underperform.

0

20

40Volume (mln)

0

20

40

2005 2006 2007 2008 20090

200

400RBA Relative to S&P 500


0

200

400

(FY-Dec.) 2008A 2009A 2010E 2011E EPS $0.82 $0.88 $0.70 $0.87P/E 30.8x 24.8x CFPS $1.15 $1.23 $1.14 $1.34P/CFPS 18.9x 16.1x Rev. ($mm) $355 $377 $390 $426 EV ($mm) $2,572 $2,392 $2,414 $2,365 EBITDA ($mm) $160 $163 $159 $186 E

V/EBITDA 16.1x 14.7x 15.2x 12.7x

Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.16 $0.37 $0.11 $0.18 2009A $0.18 $0.37 $0.12 $0.20 2010E $0.11 $0.34 $0.07 $0.18 Dividend $0.40 Yield 1.9% Book Value $5.12 Price/Book 4.2x Shares O/S (mm) 106.0 Mkt. Cap (US$mm) $2,286 Float O/S (mm) 99.5 Float Cap (US$mm) $2,146 Wkly Vol (000s) 3,066 Wkly $ Vol (USmm) $69.1 Net Debt ($mm) $99.9 Next Rep. Date 20-May (E)

Notes: *Calculations on as reported basis; All values in US$ Major Shareholders: D. Ritchie (8.0%), C. Cmolik (6.5%), Mgmt and directors (1.0%) First Call Mean Estimates: RITCHIE BROS AUCTIONEERS INC (US$) 2009E: $0.86; 2010E: $0.93; 2011E: $1.04


Q4/10E $0.23 to $0.18


Back to Index

Calfrac Well Services (CFW-TSX) Stock Rating: OutperformIndustry Rating: Market Perform


Michael Mazar, CFA (403) 515-1538 [email protected] Assoc: Jason A. Zhang

Q4/09 Results Above Expectations: Bright Future Justifies Above-Average Valuation



0

10

20

30

40

50

Calfrac Well Services (CFW)Price: High,Low,Close

0

10

20

30

40

50

Event Calfrac reported Q4/09 diluted EPS of $0.02, above our estimate for a loss per

share of $0.04 and consensus for breakeven.

Impact

Slightly Positive.

Forecasts We are raising our financial and operating forecasts in light of the better-than-

expected quarterly results, the continuing trend toward increased frac intensity

in North America and further evidence of a recovery in the North American

pressure pumping market. We are increasing our 2010 EPS estimates to $0.60

from $0.38 and our 2011 estimate to $1.29 from $0.77.

Valuation Following the increases to our financial estimates, Calfrac’s shares now offer

compelling value, at 10.2x 2010E and 7.8x 2011E EBITDA. While these are

slight premiums compared to its Oilfield Services peer group, we believe this is

warranted in light of the company’s high level of exposure to the supportive

secular trend toward more horizontal and directional drilling and increasing frac

intensity in the North American shale gas plays, coupled with a resurgent crude

oil-directed market in Canada. We expect increased activity levels and

improved pricing in 2010 to drive earnings growth and help “back-fill” the

premium valuation. Recommendation

We are maintaining our Outperform rating and, commensurate with our revised

earnings forecast, increasing our target price to $30 from $28, based on 8.8x

2011E EBITDA.

0

5

10Volume (mln)

0

5

10

2005 2006 2007 2008 20090

100

200CFW Relative to S&P/TSX Comp


0

100

200

(FY-Dec.) 2008A 2009A 2010E 2011E EPS $0.47 -$0.28 $0.60 $1.29P/E 43.5x 20.1x CFPS $2.14 $1.42 $2.54 $3.41P/CFPS 10.2x 7.6x Total Debt ($mm) $160 $267 $232 $129 ROCE (%) 4% 1% 5% 10% LT Liab. (%) 24% 35% 30% 16% EV/EBITDA 6.1x 15.2x 10.2x 7.8x Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.38 -$0.41 $0.30 $0.21 2009A $0.15 -$0.39 -$0.07 $0.02 2010E $0.29 -$0.20 $0.20 $0.31 Dividend $0.10 Yield 0.4% Book Value $10.72 Price/Book 2.4x Shares O/S (mm) 42.9 Mkt. Cap ($mm) $1,115 Float O/S (mm) 35.6 Float Cap ($mm) $926 Wkly Vol (000s) 632 Wkly $ Vol (mm) $9.5 Net Debt ($mm) $242.3 Next Rep. Date May (E)

Notes: All values in C$ Major Shareholders: Matco (17.0%) First Call Mean Estimates: CALFRAC WELL SERVICES LTD (C$) 2009E: -$0.16; 2010E: $0.67; 2011E: $1.49

Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E $0.38 to $0.60 2010E $2.23 to $2.54 Q1/10E $0.27 to $0.29 $28.00 to $30.00 2011E $0.77 to $1.29 2011E $2.59 to $3.41 Q2/10E -$0.24 to -$0.20 Q3/10E $0.12 to $0.20 Q4/10E $0.23 to $0.31


Back to Index

Cascades Inc. (CAS-TSX) Stock Rating: OutperformIndustry Rating: Outperform

March 4, 2010 Research Comment Montreal, Quebec

Stephen Atkinson (514) 286-7309 [email protected] Assoc: Joe Licursi, CMA


Q4/09 Results Above Expectations

-0.5

0.0

0.5

1.0

1.5

Cascades Inc. (CAS)Price: High,Low,Close Earnings/Share


Event On February 26, Cascades reported Q4/09 EPS from continuing operations of

$0.27 compared to the First Call Mean of $0.18 and our forecast of $0.16.

Adjusted EBITDA was $110 million compared to our estimate of $99 million.

The outperformance was in Boxboard, at $33 million, mainly due to $8 million

in cost reductions and $2 million in exchange gains. 0

5

10

15

Impact

Positive.

Forecasts Our Q1/10 EPS forecast is $0.15. The run-up in wastepaper costs will squeeze

profits in the near term. However, the US$40/ton increase in January has held

and we assume a US$30/tonne increase in April. This augurs well for the latter

half of the year. Our linerboard price forecasts are US$545/ton in 2010 and

US$570/ton in 2011. We have assumed partial (50%) success of the US$60/ton

linerboard price increase but recognize that if current tight conditions remain,

the full increase will go through. Export markets are strong and comprise about

16% of U.S. linerboard production.

Valuation The stock is one of the most inexpensive we follow. Our target price of $13.50

represents 5x 2011E EV/EBITDA.

Recommendation Liquidity is $540 million mostly comprised of available line of credit. We

expect Cascades to generate about $300 million in free cash flow over the next

two years. Our rating is Outperform.

0

10

20Volume (mln)

0

10

20

2005 2006 2007 2008 20090

100

200CAS Relative to S&P/TSX Comp


0

100

200

(FY-Dec.) 2008A 2009A 2010E 2011E EPS -$0.02 $1.12 $1.07 $1.40P/E 7.7x 5.9x CFPS $1.57 $3.09 $3.18 $3.47P/CFPS 2.6x 2.4x EV/EBITDA 8.6x 5.0x 4.7x 4.1x ROE nm 9% 8% 9% Gross Margin 8% 12% 11% 12% FCF -$83 $166 $145 $148 Quarterly EPS Q1 Q2 Q3 Q4 2008A -$0.09 -$0.11 $0.06 $0.12 2009A $0.21 $0.28 $0.36 $0.27 2010E $0.15 $0.22 $0.32 $0.37 Dividend $0.16 Yield 2.0% Book Value $13.41 Price/Book 0.6x Shares O/S (mm) 97.5 Mkt. Cap ($mm) $798 Float O/S (mm) 72.6 Float Cap ($mm) $595 Wkly Vol (000s) 1,605 Wkly $ Vol (mm) $8.9 Net Debt ($mm) $1,533.0 Next Rep. Date April (E)

Notes: All values in C$ Major Shareholders: Bernard Lemaire (13.91%); Laurent Lemaire (11.5%) First Call Mean Estimates: CASCADES INCORPORATED (C$) 2010E: $0.76; 2011E: $1.08

Changes Annual EPS Annual CFPS Quarterly EPS 2010E $1.03 to $1.07 2010E $3.25 to $3.18 Q2/10E $0.28 to $0.22 2011E $1.36 to $1.40 2011E $3.57 to $3.47 Q4/10E $0.29 to $0.37


Back to Index

Evertz Technologies (ET-TSX) Stock Rating: OutperformIndustry Rating: Market Perform

M ember of: Top 15 Small Cap Stock Selections


Brian Piccioni, CFA (416) 359-5761 [email protected] Assoc: Rami Nasser


Target Price Lowered to $19; Q3/10 Results

0.4

0.6

0.8

1.0

1.2

1.4

Evertz Technologies Ltd. (ET)Price: High,Low,Close Earnings/Share


Event Fiscal Q3/10 revenues were $66.2 million (down 17% year over year and down

9% sequentially) versus our estimate of $79.6 million and the First Call Mean of

$74.1 million.

0

10

20

30

40

Impact

Negative.

Forecasts We now forecast Q4/10 revenue of $65.7 million versus $80.4 million

previously. We forecast Q4/10 Operating EPS of $0.24 (GAAP $0.21) versus

$0.29 (GAAP $0.28) previously. Our 2010 revenue forecast is now $277 million

versus $305 million previously. Our 2010 Operating EPS forecast is now $1.01

(GAAP $0.84) versus $1.13 (GAAP $0.99) previously.

Valuation Evertz is trading at a modest 13.9x trailing operating EPS and a similar multiple

to our next four-quarter Operating EPS forecast. A $19 target price is 17.1x our

next four-quarter operating EPS forecast. Our prior $22 target price was based

on a 17.7x Operating EPS multiple.

Recommendation We are maintaining our Outperform rating on Evertz and lowering our target

price to $19 from $22.

0

2

4Volume (mln)

0

2

4

2006 2007 2008 20090

200

400ET Relative to S&P/TSX Comp


0

200

400

(FY-Apr.) 2008A 2009A 2010E 2011E EPS $1.20 $1.37 $1.01 $1.17P/E 14.4x 12.5x CFPS $1.11 $1.22 $1.20 $1.11P/CFPS 12.2x 13.1x Rev. ($mm) $273 $316 $277 $304 Gross Margin 59% 61% 59% 61% R&D % of Sales 5% 7% 8% 8% E

BT Margin 46% 44% 38% 41%

Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.32 $0.33 $0.27 $0.28 2009A $0.30 $0.43 $0.34 $0.30 2010E $0.29a $0.27a $0.22a $0.24 Dividend $0.32 Yield 2.2% Book Value $4.06 Price/Book 3.6x Shares O/S (mm) 73.2 Mkt. Cap ($mm) $1,068 Float O/S (mm) 24.8 Float Cap ($mm) $362 Wkly Vol (000s) 87 Wkly $ Vol (mm) $1.3 Net Debt ($mm) -$132.0 Next Rep. Date June (E)

Notes: All values in C$ Major Shareholders: Douglas Debruin (33.5%), Romolo Margarelli (33.5%) First Call Mean Estimates: EVERTZ TECHNOLOGIES LTD (C$) 2010E: $0.97; 2011E: $1.21

Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E $1.13 to $1.01 2010E $1.11 to $1.20 Q4/10E $0.29 to $0.24 $22.00 to $19.00 2011E $1.39 to $1.17 2011E $1.26 to $1.11


Back to Index

ShawCor (SCL.A-TSX) Stock Rating: OutperformIndustry Rating: Outperform

M ember of: Top 15 Quantitative Stock Selections


Bert Powell, CFA (416) 359-5301 [email protected] Assoc: Luigi Di Pede, CFA

Target Price Lowered to $34; Outperform Rating Maintained; Thesis Remains Intact


ShawCor Ltd. (SCL.A)Price: High,Low,Close

Event ShawCor reported Q4/09 headline EPS of $0.44 versus our expectation and the

Mean estimate of $0.41. Revenues of $260.9 million were below our

expectation of $282.0 million. Backlog improved 71.1% sequentially to $410.5

million and portends to a strong H2/10. 10

15

20

25

30

35

40

10

15

20

25

30

35

40


Impact

Neutral.

Forecasts For 2010, we forecast revenues of $1.21 billion, EBITDA of $265.5 million and

EPS of $2.09. For 2011, we forecast revenues of $1.42 billion, EBITDA of

$309.6 million and EPS of $2.45.

Valuation Our $34 target price represents 7.7x EV/EBITDA and 16.0x P/E, based on our

2011E forecasts discounted back one year at 15.0%.

Recommendation Our thesis on ShawCor remains intact. We expect continued investment in

pipeline infrastructure as energy demand grows, and depleted resources are

replaced with production from more remote, challenging and diffuse locations.

The backlog has improved significantly over Q3/09, but timing is expected to

benefit the second half of 2010, which implies a slow start to 2010.

Management indicated that activity levels are healthy, and that there is the

potential for the timetable on projects that were further out in the future to be

moved up. ShawCor’s balance sheet remains very strong and management

indicated that acquisition targets are more attractively valued than in the recent

past. We continue to like ShawCor’s prospects and are maintaining our

Outperform rating, but have reduced our target price to $34 from $35.

0

10

20Volume (mln)

0

10

20

2005 2006 2007 2008 200950

100

150SCL.A Relative to S&P/TSX Comp


50

100

150

(FY-Dec.) 2008A 2009A 2010E 2011E EPS $2.09 $1.87 $2.09 $2.45P/E 13.1x 11.1x CFPS na $2.65 $2.96 $3.42P/CFPS 9.2x 8.0x Rev. ($mm) $1,380 $1,184 $1,210 $1,419 EV ($mm) $1,881 $1,741 $1,665 $1,509 EBITDA ($mm) $266 $254 $266 $310 E

V/EBITDA 7.1x 6.9x 6.3x 4.9x

Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.36 $0.46 $0.46 $0.81 2009A $0.45 $0.49 $0.47 $0.46 2010E $0.35 $0.45 $0.64 $0.66 Dividend $0.28 Yield 1.0% Book Value $11.12 Price/Book 2.5x Shares O/S (mm) 70.5 Mkt. Cap ($mm) $1,924 Float O/S (mm) 49.4 Float Cap ($mm) $1,348 Wkly Vol (000s) 676 Wkly $ Vol (mm) $16.2 Net Debt ($mm) -$197.7 Next Rep. Date 20-May (E)

Notes: All values in C$; Subordinate Voting Major Shareholders: Mackenzie Financial (12.2%), Columbia Wanger (7.0%), Bluewater Investment (5.2%) First Call Mean Estimates: SHAWCOR LTD (C$) 2009E: $1.83; 2010E: $2.10; 2011E: $2.39


Q4/10E $0.66 to $0.66


Back to Index

Total Energy Services (TOT-TSX) Stock Rating: OutperformIndustry Rating: Market Perform


Michael Mazar, CFA (403) 515-1538 [email protected] Assoc: Jason A. Zhang

Does It Really Matter?: Q4/09 Results Below Expectations but Well Positioned Going Forward



0.6

0.8

1.0

1.2

1.4

Total Energy Services Inc. (TOT)Price: High,Low,Close Earnings/Share

0

5

10

15

20

Event

Total reported Q4/09 EPS of $0.07, below our estimate and consensus of $0.12.

Impact Slightly Positive. While the Q4/09 financial results were below expectations, we

see this as largely irrelevant given the dramatic improvement in the Canadian

energy services space in the more than two months since Q4/09 ended and the

fact that Total increased the size of its Rentals division by roughly 80%

subsequent to the quarter and has gained a leading position in Cardium play in

its contract drilling segment since the end of Q4/09. Therefore, the Q4/09

results do not adequately reflect the potential of the company as it is positioned

today.

Forecasts We are increasing our 2010 and 2011 EPS estimates to $0.62 and $0.89 from

$0.34 and $0.50, respectively.

Valuation Despite the 10% increase in Total’s shares since early February, we continue to

believe that the company’s shares are attractively valued, at 5.7x 2010E

EBITDA and 4.7x 2011E EBITDA, which are modest discounts to its small-cap

Canadian energy services peers. We expect the discount to narrow as the

benefits of the DC Energy acquisition in the Rentals business and the

company’s increased exposure to the Cardium oil play begin to show up in the

earnings numbers.

Recommendation We are maintaining our Outperform rating and increasing our target price to

$10.50 from $9.00. Our revised target is based on 5.4x 2011E EBITDA.

0

5Volume (mln)

0

5

2005 2006 2007 2008 20090

100

200TOT Relative to S&P/TSX Comp


0

100

200

(FY-Dec.) 2008A 2009A 2010E 2011E EPS $0.86 $0.42 $0.62 $0.89P/E 14.2x 9.9x CFPS $1.44 $0.87 $1.66 $2.11P/CFPS 5.3x 4.2x Total Debt ($mm) $13.3 $43.7 $49.9 $0.1 ROCE (%) 15% 8% 10% 14% LT Liab. (%) 21% 18% 19% -5% EV/EBITDA 2.8x 6.0x 5.7x 4.7x Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.33 $0.03 $0.21 $0.30 2009A $0.29 -$0.02 $0.08 $0.07 2010E $0.32 -$0.04 $0.16 $0.18 Dividend $0.12 Yield 1.4% Book Value $5.35 Price/Book 1.6x Shares O/S (mm) 29.1 Mkt. Cap ($mm) $256 Float O/S (mm) 29.1 Float Cap ($mm) $256 Wkly Vol (000s) 415 Wkly $ Vol (mm) $2.3 Net Debt ($mm) $35.0 Next Rep. Date May (E)

Notes: All values in C$ Major Shareholders: Mackenzie Financial (14.2%), Acuity (10.1%) First Call Mean Estimates: TOTAL ENERGY SERVICES INC (C$) 2009E: $0.44; 2010E: $0.90; 2011E: $1.17

Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E $0.34 to $0.62 2010E $0.95 to $1.66 Q1/10E $0.21 to $0.32 $9.00 to $10.50 2011E $0.50 to $0.89 2011E $1.21 to $2.11 Q2/10E -$0.03 to -$0.04 Q3/10E $0.07 to $0.16 Q4/10E $0.09 to $0.18


Back to Index

Constellation Software (CSU-TSX) Stock Rating: Market PerformIndustry Rating: Market Perform


Thanos Moschopoulos, CFA (416) 359-5428 [email protected]

Q4/09 Results: Better Revenues, Softer Margins Price (4-Mar) $41.49 52-Week High $41.49 Target Price $45.00 52-Week Low $24.97


Event Constellation reported Q4/09 results. Revenues of $131.9 million (+34% y/y)

exceeded consensus of $117.9 million, as the revenue contribution from

Continental PTS was greater than expected. Organic growth, ex PTS, was 3%

y/y. Adjusted EBITDA was $22.2 million, slightly below consensus of $22.9

million, while adjusted EPS were $0.69, or $0.76 ex a forex loss and a one-time

gain, versus the consensus of $0.80.

2.4

2.6

2.8

3.0

3.2

15

20

25

30

35

40

45

Constellation Software Inc. (CSU)Price: High,Low,Close Earnings/Share(US$)

Impact Mixed. Currency had an impact on the quarter, leading to slightly weaker-than-

expected margins. However, going forward we expect much of the Canadian

dollar’s impact to be offset by an improving macro climate and potential

accretion from new acquisitions (such as Gladstone).

Forecasts We have raised our revenue forecasts and reduced our margin assumptions. We

have raised our FY2011 earnings estimates, while FY2010 is largely unchanged.

Valuation We are raising our target price to $45, reflecting 8.8x 2010E EV/EBITDA (7.0x

2011E EV/EBITDA).

Recommendation We are maintaining our Market Perform recommendation. Our recommendation

is largely a relative call; while we believe there is modest room for upside from

the stock’s current levels, in our view Constellation’s organic growth may lag

the sector in a broader macro recovery. Further, while we expect that MAJES

and PTS will ultimately prove to be good acquisitions, the challenge of

modeling these businesses (due to contingent losses associated with long-term

contracts) reduces the level of confidence we have in our 2010/11 forecasts.

0

1

2Volume (mln)

0

1

2

2006 2007 2008 20090

200

400CSU Relative to S&P/TSX Comp


0

200

400

(FY-Dec.) 2008A 2009A 2010E 2011E EPS $2.57 $2.95 $3.44 $3.98P/E 11.6x 10.0x CFPS $2.96 $3.90 $3.39 $4.00P/CFPS 11.7x 9.9x Rev. ($mm) $330.5 $437.9 $538.9 $555.9 EV ($mm) $524 $866 $786 $712 EBITDA ($mm) $64 $88 $96 $110 E

V/EBITDA 8.2x 9.8x 8.2x 6.5x

Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.52 $0.57 $0.58 $0.90 2009A $0.79 $0.77 $0.69 $0.69 2010E $0.80 $0.84 $0.88 $0.93 Dividend $0.26 Yield 0.7% Book Value $5.10 Price/Book 7.8x Shares O/S (mm) 21.2 Mkt. Cap ($mm) $879 Float O/S (mm) 7.2 Float Cap ($mm) $299 Wkly Vol (000s) 22 Wkly $ Vol (mm) $0.7 Net Debt ($mm) $9.9 Next Rep. Date 03-Jun (E)

Notes: Share price, mkt cap, float and $ volume in C$, all other in US$ Major Shareholders: OCP Holdings (34.4%); Birch Hill Equity Partners (16.2%); Management and Directors (16.0%) First Call Mean Estimates: CONSTELLATION SOFTWARE INC (US$) 2009E: $3.08; 2010E: $3.49; 2011E: $3.82

Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E $3.42 to $3.44 2010E $3.60 to $3.39 Q1/10E $0.79 to $0.80 $40.00 to $45.00 2011E $3.82 to $3.98 2011E $3.89 to $4.00 Q2/10E $0.83 to $0.84 Q3/10E $0.87 to $0.88 Q4/10E $0.92 to $0.93


Back to Index

Newalta Corporation (NAL-TSX) Stock Rating: Market Perform


Gordon Tait, CFA (403) 515-1501 [email protected]

Q4/09 Results: Industry Outlook Improves Price (4-Mar) $8.72 52-Week High $9.99 Target Price $10.50 52-Week Low $2.27

Newalta Inc (NAL)

Price: High,Low,CloseEvent

Newalta reported Q4/09 results.

0

10

20

30

0

10

20

30

Impact Slightly Positive. Operating cash flow totalled $19.2 million ($0.41/share), 5%

above our $18.3 million ($0.39/share) estimate.


Forecasts Primarily due to our outlook for higher levels of oil and gas industry activity

and higher commodity prices, we are increasing our per share cash flow from

operations (CFPS) estimates to $1.88 from $1.80 in 2010 and to $2.05 from

$1.95 in 2011.

Valuation

Our target price of $10.50 is based on 7.1x 2010E EV/EBITDA.

Recommendation Newalta’s Q4/09 results came in generally within our expectations as revenue

and operating expenses both exceeded our forecasts by a similar amount. While

landfill processing volumes in Ontario will likely remain soft, the company’s

financial outlook has improved. First, crude oil and lead prices have recovered

from their respective lows and drilling activity in Western Canada continues to

show improvement. Second, we expect continued growth in the company’s

heavy oil/SAGD onsite service. Third, cost reductions should give Newalta

more operating leverage if business conditions improve. Based on our total

return outlook, we continue to rate Newalta Market Perform.

0

5

10Volume (mln)

0

5

10

2005 2006 2007 2008 20090

100

200NAL Relative to S&P/TSX Comp TRI


0

100

200

(FY-Dec.) 2008A 2009A 2010E 2011E EPS $1.40 $0.07 $0.81 $0.98P/E 10.8x 8.9x CFPS $2.29 $1.40 $1.88 $2.05P/CFPS 4.6x 4.3x CF Payout % 95% 13% 11% 10% EV ($mm) $748 $568 $737 $738 EBITDA ($mm) $126 $80 $116 $124 E

V/EBITDA 5.9x 7.1x 6.4x 5.9x

Quarterly Div. Q1 Q2 Q3 Q4 2008A $0.56 $0.56 $0.56 $0.56 2009A $0.05 $0.05 $0.05 $0.05 2010E $0.05 $0.05 $0.05 $0.05 Dividend $0.20 Yield 2.3% Book Value $11.14 Price/Book 0.8x Shares O/S (mm) 48.5 Mkt. Cap ($mm) $423 Float O/S (mm) 48.5 Float Cap ($mm) $423 Wkly Vol (000s) 745 Wkly $ Vol (mm) $4.2 Net Debt ($mm) $303.1 Next Rep. Date May (E)

Notes: Net debt and units O/S are Q4/09 Major Shareholders: Widely held First Call Mean Estimates: NEWALTA CORP (C$) 2009E: $0.12; 2010E: $0.60; 2011E: $0.79

Changes Annual EPS Annual CFPS Target 2010E $0.78 to $0.81 2010E $1.80 to $1.88 $9.50 to $10.50 2011E $0.93 to $0.98 2011E $1.95 to $2.05

This report was prepared by an analyst(s) employ arch analyst(s) under FINRA rules. For disclosure statements, including

Back to Index

Canadian Natural Resources Ltd.

March 5, 2010 Research Comment Corporate Debt – Oil & Gas Producers Jason Parker, CFA (416) 359-5410 [email protected] Assoc: Ewa Bzorek, CA

2009 Proves to Be the Year of the Balance Sheet Boost

ed by BMO Nesbitt Burns Inc., and who is (are) not registered as a resethe Analyst's Certification, please refer to pages 6 to 7.

Event: Canadian Natural Resources (CNQ) reported Q4/09 results.

Impact: Positive.

Key Points: CNQ reported Q4/09 adjusted net earnings from

operations of $667 million, down from $697 million in Q4/08 due

to reduced natural gas sales volumes, higher royalty and production

expenses, and increased DD&A costs, partially offset by improved

realized pricing and higher crude oil sales volumes. We view

CNQ’s Q4/09 and 2009 results as positive from a corporate debt

perspective. The company’s balance sheet continued to improve,

with debt leverage down to 33.2% and total balance sheet debt

declining by $3.4 billion to $9.7 billion. Unfortunately, the

company experienced operational problems at Horizon related to

both equipment and ore composition, which curtailed production

levels and will linger through Q1/10.

Credit and Spread Implications

Near Term: Credit fundamentals should improve further in the

near term, as management said the first priority for expected 2010

free cash flows is to pay down debt. However, the company does

plan to file an NCIB for 2.5% of its shares.

Medium Term: Successful implementation of the additional stages

of Horizon and incremental production from the company’s current

major projects (e.g., Pelican Lake, Primrose East expansion, Olowi)

will boost output and hence cash flows over the medium term,

allowing for further balance strength.

Recommendation

We believe CNQ’s spreads are appropriately valued within the short

end of the Oil and Gas sector, somewhere between Suncor and

EnCana. Spreads should tighten closer to EnCana once Horizon

begins to consistently function at capacity. We do not currently

recommend any Oil and Gas issuer in the middle part of the curve.

Canadian Natural Resources Ltd. 2, 3, 5 Yr Indicative Spreads

0

60

120

180

240

300

360

420

480

540

Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

2 Yr

3 Yr 5 Yr

Source: BMO Capital Markets Relative Value

Sector Value: Although CNQ plans to direct free cash flows in

2010 primarily toward debt reduction, we nonetheless remain

cautious on firms involved in the oil sands, particularly those with

projects that have yet to undergo significant ramp-ups toward full

capacity. In this context, we prefer the stronger current balance

sheet of EnCana.

Credit Curve: At 40 basis points, we observe CNQ’s 2s-5s curve

is reasonably steep, suggesting there is some value in the

company’s 5-year spreads.

DBRS S&P Moody’s

BBB (High) BBB Baa2

Stable Stable Stable

This report was prepared by an analyst(s) employ arch analyst(s) under FINRA rules. For disclosure statements, including

Back to Index

TD Bank

March 5, 2010 Research Comment Corporate Debt – Banks George Lazarevski, CFA (416) 359-7488 [email protected] Assoc: Gaurav Dhiman

Strong Q1/10 Earnings; Credit Continues to Be a Drag

ed by BMO Nesbitt Burns Inc., and who is (are) not registered as a resethe Analyst's Certification, please refer to pages 7 to 8.

Event: TD Bank released Q1/10 results.

Impact: Neutral.

Key Points: This was a strong quarter for TD Bank. The Canadian

P&C division reported record earnings, despite loan loss provisions

remaining elevated, and Wholesale continued to outperform.

Trading revenues remained elevated this quarter, at $549 million,

down only 2% from the prior quarter. We do not believe these

levels are sustainable and we expect trading revenues to begin to

level off over the next couple of quarters. The U.S. retail segment

came in above our expectations due to lower loan loss provisions

partially offset by a decline in the net interest margin. Asset quality

was in line with management’s expectations, with loan loss

provisions and new impaired formations remaining elevated.

Capital was right in line with our expectations, with a Tier 1 ratio of

11.5% and a Tangible Common Equity ratio of 9.9%.

Credit and Spread Implications

Near Term: TD has one of the lowest Canadian dollar maturities in

2010 of the large Canadian banks, which should bode well for

credit spreads.

Medium Term: We expect TD credit to continue to trade at a

premium compared to its peers over the medium term.

Recommendation

TD Bank remains one of our preferred credits among Canadian

large bank alternatives due to its strong domestic franchise and

robust capital position. We do not believe the earnings in the

Wholesale segment are sustainable and should begin to level off in

the near term. Credit quality continues to be a challenge,

particularly in the U.S. segment, which saw impaired loan

formations tick up again this quarter. Loan loss provisions have

likely peaked in the Canadian segment but are likely to remain

elevated in the U.S. segment throughout 2010.

Toronto Dominion Bank Subordinated Debt Indicative Spreads

0

50

100

150

200

250

300

350

400

450

500

Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

bps

10 Yr

5 Yr2 Yr

Source: BMO Capital Markets Relative Value

Sector Value: TD Bank trades the tightest among large Canadian

bank alternatives and we believe it will maintain this premium due

to its strong domestic franchise and the expectation for new

issuance levels to remain below historical levels.

Credit Curve: Given the steepness of the credit curve, we

recommend that investors extend the term in TD bank credit.

DBRS S&P Moody’s

AA AA- Aaa

Stable Stable Negative

This report was prepared in part by an analyst(s) employed by a Canadian affiliate, BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 13 to 16.

Back to Index

Energy - Oil & Gas

March 5, 2010 Research Comment BMO Capital Markets Energy Team

Crude Thoughts: Weekly Commodity Commentary

Summary

Crude oil prices moved higher this week but

again stalled out just above the US$80/bbl

mark. Crude prices continue to be more

influenced by the U.S. dollar than petroleum

market fundamentals while the commodity

market holds out hope that economic indicators

will start to justify the bullishness. So far, that

has failed to materialize. In the meantime,

product inventories remain at record levels and

crude oil inventories are steadily building. If

there is no improvement in underlying market

fundamentals soon, crude oil prices could

come under enough downward pressure to

push them toward the bottom end of the

US$70-80 trading range. We are maintaining our Outperform rating for

the U.S. Oilfield Services, Market Perform rating for the Integrated Oils, Oil & Gas Producers and Canadian Oilfield Services, and Underperform rating for the Independent Refiners. Our top oil and gas recommendations include Baytex, Canadian Natural, Crescent Point, Crew, Hess, Occidental, Pacific Rubiales, PetroBakken, Suncor and Talisman.

Weekly Inventory Reports: The U.S. Energy Information Administration

(EIA) reported that U.S. crude oil inventories increased by 4 million barrels

last week, much higher than the expected build of 1.4 million barrels. U.S.

gasoline stocks increased by 800,000 barrels, slightly higher than the build of

600,000 barrels that was expected, partly due to weaker demand. U.S.

distillate inventories fell by 800,000 barrels, generally in line with the

expected draw of 900,000 barrels. On the natural gas side, the EIA reported a

withdrawal of 116 Bcf, below expectations for a draw of 126 Bcf. This week's

withdrawal is below the five-year average of 124 Bcf but above last year’s

draw of 101 Bcf. U.S. working gas is at 1,737 Bcf, 1.2% above the five-year

average of 1,716 Bcf but now 3.9% below last year's level of 1,808 Bcf.

Chart/Table of the week: U.S. petroleum product inventories remain at

record levels, despite refinery utilization rates that are below breakeven levels.

Chart 7 and Table 5 show U.S. petroleum product balances. Product

inventories are 8% above last year and 10% above the five-year average.

Anybody Want Some Products?: U.S. refinery utilization has been stuck in

the low-80% range since the end of the 2009 summer driving season. Despite

the low run-rates, petroleum product inventories have remained at record

levels due to weak end-use demand. Adding in the surplus in Europe and

volume reported to be in floating storage and the outlook becomes even

bleaker. We think these inventories will keep a lid on any upward rally in

crude oil prices, at least one that is being driven by underlying supply and

demand fundamentals. Rising demand for end-use products will likely first be

met from inventories before refiners start buying more crude oil to

manufacture even more petroleum products. This dynamic should keep

petroleum product prices (and by extension crude oil prices) in check for the

next couple of quarters.

Please see pages 13 to 16 for analyst coverage.

Randy Ollenberger (403) 515-1502 Alan Laws, CFA (303) 436-1125 Gordon Tait, CFA (403) 515-1501BMO Nesbitt Burns Inc. (Canada) BMO Capital Markets Corp. (U.S.) BMO Nesbitt Burns Inc. (Canada)

Jim Byrne, P.Eng., CFA (403) 515-1557 Mike Mazar, CFA (403) 515-1538 Dan McSpirit (303) 436-1117BMO Nesbitt Burns Inc. (Canada) BMO Nesbitt Burns Inc. (Canada) BMO Capital Markets Corp. (U.S.)

Mark Leggett, CFA (403) 515-1508 Christopher Brown, P.Eng. (403) 515-1574BMO Nesbitt Burns Inc. (Canada) BMO Nesbitt Burns Inc. (Canada)

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 16 to 17.

Back to Index

Energy - Oil & Gas: Refiners

Industry Rating: Underperform

March 5, 2010 Research Comment Calgary, Alberta Jim Byrne, P.Eng., CFA (403) 515-1557 [email protected] Assoc: Graham Cooke, CFA

Facing Reality; Refiners Report Disappointing Q4/09

Despite tepid optimism from the refining industry, market conditions remain

weak. Gasoline and Distillate inventories remain at or near record highs and

year-to-date refined product demand is roughly 9% below the glory days of

2007. With so much capacity no longer needed, refining utilization rates are

at the lowest levels in over a decade, limiting the industry’s pricing power.

To make matters worse, crude quality differentials remain narrow relative to

historical levels, reducing the impact of recent capital spending projects aimed

at lowering feedstock costs.

Summary

With surplus refining capacity and narrow

quality differentials, Q4/09 was a very

difficult quarter for the independent refiners.

Reported margins averaged just $3.86/bbl,

considerably below our estimated cash

breakeven level of $5.79/bbl.

The Refining sector reported Q4/09 losses

across the entire sector with a median decline

of 187% year over year and 283% quarter

over quarter.

We have lowered our 2010 and 2011

estimates by roughly 34% and 8%,

respectively, due to the weakness in Q4/09

and our negative outlook.

With our negative outlook and the sector’s

inability to improve the situation, we believe a

revaluation is unlikely to occur. As a result,

we continue to rate the Independent Refiners

Underperform.

With surplus refining capacity and narrow quality differentials, Q4/09 was a

very difficult quarter for the independent refiners. Reported margins averaged

just $3.86/bbl, considerably below our estimated cash breakeven level of

$5.79/bbl. At these levels, we expect the industry to be capable of treading

water for another year; however, we expect some of the weaker facilities to

either shut down or permanently reduce capacity.

The Independent Refining sector reported Q4/09 losses across the board with

a median decline of 187% year over year and 283% quarter over quarter.

Despite the decline, our expectations were not low enough, as Q4/09 earnings

were roughly 26% below our quarterly estimates. However, the market was

less optimistic, as Q4/09 results were roughly 8% below consensus. We have

lowered our 2010 and 2011 estimates by roughly 34% and 8%, respectively,

due to fourth-quarter results short of already lowered expectations and our

negative outlook.

With our negative outlook and the sector’s inability to improve the situation,

we believe a revaluation is unlikely to occur. As a result, we continue to rate

the Independent Refiners Underperform.

Back to Index

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 3 to 4.

Financials

Industry Rating: Banks – Market Perform Life Insurance – Outperform

March 5, 2010 Research Comment Toronto, Ontario John Reucassel, CFA/Hugh Brown, CFA (416) 359-4379/4303 [email protected] Assoc: John Fong, CFA, FSA

Federal Budget Good News for Canadian Financials

We believe yesterday’s Federal Budget represents some good news for Canada’s financial institutions, particularly the banks. On numerous occasions, the government highlights how well Canada’s financial sector is performing and its objective of making Canada a global financial sector leader. This is in stark contrast to historical experience where there has been an uneasy relationship between the Federal Government and the large banks (the insurers have historically had an easier relationship with the Federal Government). Included among a number of financial sector initiatives is the commitment to establish a national securities regulator (other measures deal with negative billing, loan prepayment penalties, reduced cheque hold periods, a new code for credit and debit cards, etc.).

From a high-level standpoint, the two biggest positives for Canada’s banks and other financial institutions is the commitment to maintain and improve Canada’s relative strength within the G7 and to reduce corporate taxation. Relative to its other G-7 peers, Canada’s fiscal situation is much stronger and recent economic developments support a widening gap between Canada and its G-7 peers.

In addition, contrary to our earlier fears, (see Jan 28, 2010 report “Tax Tailwind Coming to an End), the Conservative government is following through on its commitment to reduce the federal corporate rate from 19.0% in 2009 to 15.0% in 2012. Together with a reduced provincial corporate tax rates, the overall Canadian corporate tax rate is expected to decline from 31.6% in 2009 (and 42.3% in 2000) to close to 25.0% in 2012, making Canada the lowest tax jurisdiction in the G7 (Japan and U.S. near 39%, France and Italy near 34%, Germany at 30% and the U.K. at 28%). Moreover, our view would be that these other jurisdictions are likely to see higher tax rates over the next few years, which should widen the gap relative to Canada.

For Canada’s banks, the reduced tax burden should increase their bottom line by over $1 billion, or 5% by 2012, and increase industry return on equity (ROE) by about 1%. In other countries, banks are facing an increased tax burden as payback for the recent pain they have inflicted on taxpayers and to create a fund to cover future bailouts. The global competitive position of Canadian banks has never been stronger.

The impact on the Canadian lifecos is more muted at a 1–2% benefit to earnings by 2012. The more muted impact reflects the much larger non-Canadian operations at the lifecos and effective tax rates that are already lower than bank tax rates.

Overall, a relatively positive earnings season for the Canadian banks and the prospect of continued tax reduction in Canada (where they earn most of their profits) provides a relatively strong backdrop for Canadian bank share prices relative to their global peers.

This report was prepared in part by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 7 to 8.

Back to Index

Market Elements March 5, 2010 Research Comment Quantitative/Technical Research Mark Steele (416) 359-4641 [email protected] Assoc: Tiberiu Stoichita

Stocks spent the session digesting the strong gains of the week.

Treasuries were little changed; Greek yields suffered a bout of profit taking.

The U.S. dollar rebounded against most crosses; commodity currencies ended mixed.

Commodities suffered a bout of profit taking; base metals, which enjoyed the sharpest advance recently, led the declines.

Relative Strength Filter Highlights: The Upward Bias.

53 companies are slated to report earnings today – see link

Stock Benchmarks Fixed Income/Currency Commodities Most Active* (Canada/U.S.) Symbo l Leve l C hg(%)SPTSX Comp 11824.97 –0.2

SPTSX 60 693.37 –0.2

SPTSX Cmpl 755.19 –0.5

SPTSX SC 589.56 –0.4

SPTSX Incm 128.01 –0.9

S&P500 1122.97 0.4

NASDAQ 2292.31 0.5

RUS2000 H 652.47 0.6

Phil Bank 47.43 0.1

S&P Glb1200 1296.45 –0.1

Nikkei 225 10362 1.1

VIX 18.72 –0.6

Symbo l Level C hgCDN3M 0.18 0.00

CDN2Y 1.47 0.00

CDN10Y 3.42 –0.00

US3M 0.14 0.00

US2Y 0.81 0.00

US10Y 3.62 0.00

US30Y 4.59 0.00

DXY 80.57 0.74%

JPY/$ 89.28 0.92%

$/EUR 1.358 –0.84%

$/CAD 0.970 0.14%

$/AUD 0.900 –0.62%

Symbo l Level C hg(%)DJ AIG 133.94 –1.4

WTI Oil 80.21 –0.8

NM X Gas 4.58 –3.8

AECO Gas 4.33 –1.1

Gold 1132 –0.7

P latinum 1572 –0.4

Silver 17.15 –0.3

CM X Cu 3.36 –1.7

LM E A l 1.01 0.4

LM E Ni 10.12 –2.4

LM E Zn 1.02 –2.6

CM E Lum 258 –0.4

Symbo l Level C hg(%) Vo l (m)LUN 4.64 –2.2 7.6

EQN 3.59 –1.4 6.2

SU 31.63 –0.2 5.2

RY 57.21 0.5 4.4

YRI 11.53 –5.3 4.3

VT 10.05 –1.3 4.1

ABX 41.45 –1.2 3.6

NOVL 6.08 –1.2 48

BAC 16.37 0.2 30

C 3.40 0.9 23

F 12.69 0.8 19

PFE 17.32 0.1 18

S&P Global 1200 S&P/TSX Composite Daily Sector Return (%) Daily Stock Return (%) Daily Sector Return (%) Daily Stock Return (%)

-1.0 -0.5 0.0 0.5

Global 1200

Financials

Info Tech

Cons Disc

Cons Stap

Industrials

Energy

Telecom Sv

Materials

Hlth Care

Utilities

-2.0 -1.0 0.0 1.0 2.0

Hlth Care

Financials

Cons Stap

Utilities

S&P/TSX

Industrials

Cons Disc

Energy

Telecom

Info Tech

Materials

15 to 12

12 to 10

10 to 7

7 to 5

5 to 2

2 to 0

0 to –2

–2 to –5

–5 to –7

–7 to –10

SXC

PRE, GNA, FNX

YRI, HBM, EGU, CLC-U

AER

15 to 12

12 to 10

10 to 7

7 to 5

5 to 2

2 to 0

0 to –2

–2 to –5

–5 to –7

–7 to –10

ANF US

FDO US, AIG US

SDR LN, MBI US, AKS US

YRI CN

AER CN

* Most active list includes stocks in the S&P/TSX Composite Index (Canada) and the S&P 1500 Supercomposite Index (U.S.). Source: BMO Capital Markets, Bloomberg

http://research-ca.bmocapitalmarkets.com/RSFilterApp/v18/RelativeStrengthFilter.application?datafile=http://research-ca.bmocapitalmarkets.com/RSFilterApp/Groups/Xml/bea233e8-380f-42bd-9309-62c781c2e2ee.xml&customfile=true�

Market Elements


Market Movers ET: announced results

after hours SXC: results beat

expectations PIF-U: posted results above

forecasts (after close) RBA: results in line

Hardware Software/Health Care Telecom/Utilities Consumer Discretionary Consumer Staples IndustrialsSymbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hgCSCO H 24.95 0.4 ABT 6.06 –1.3 BA-U 25.33 0.1 M G.A 60.50 0.8 PJC.A 9.74 0.2 BBD.B H 6.04 0.8ALU-N 3.28 0.9 OTC 49.60 –0.2 BCE 29.93 –0.9 LNR 17.21 –1.7 SC 44.29 0.1 CAE 8.96 V –0.4RCM 20.55 0.1 M N 3.90 –0.3 M BT 32.07 0.3 BLD 2.40 0.8 ATD.B 20.03 1.2 RBA 22.29 V 0.3RIM 72.16 –1.2 GIB.A 15.45 1.2 T 35.46 –0.2 DII.B 31.75 0.7 EM P.A 49.21 0.4 SNC 50.15 –1.0SW 8.90 0.0 SXC H 60.34 14.8 RCI.B 33.87 –0.8 GIL 25.68 1.4 L 36.61 –0.2 TIH 29.53 –0.8EXF 6.10 3.4 CSU H 41.49 2.4 EM A 23.75 –1.0 AER 11.01 –7.4 LIQ-U 16.34 V –3.8 ATA 6.96 –0.6AAH 33.26 –0.7 M DA 41.13 –1.1 BRC-U 21.01 0.8 THI 31.92 –0.3 M RU.A H 41.80 2.2 FTT 17.68 –0.6WIN 2.97 0.7 DSG 6.31 –1.4 KEY-U 25.16 –1.4 CJR.B 19.00 2.2 WN 68.25 –0.2 RUS 18.64 –0.9CDV 3.41 0.9 CRY 3.20 3.2 FTS 28.50 0.6 SJR.B 20.47 –0.3 BCB 7.13 –0.7 WTE-U 15.85 –0.3DELL 13.67 –0.3 CLC-U L 12.22 V –6.6 PIF-U 17.75 –0.6 ACM .A 34.97 0.1 VT 9.92 –1.3 BIN 18.04 –0.1ET 14.59 –1.1 M DS 8.55 –0.9 IPL-U 12.01 0.8 CRW-U 1.14 –3.4 AG-U 3.15 2.3 TFI 9.69 –2.1FLEX 7.21 0.8 PTI 2.64 –0.8 FCE-U 10.49 0.1 YLO-U 6.10 2.3 AGT 34.95 0.1 TCL.A 12.84 –0.8JBL 16.63 1.1 QLT 5.01 –2.3 ACO.X 50.39 –0.3 QBR.B 30.67 0.0 M FI 10.69 –1.3 SPB 13.81 0.1CLS 11.23 –0.4 TH 4.87 –0.8 CU 45.55 0.5 TRI 36.24 –1.8 PBH 14.60 0.1 ACE.B 6.74 –0.3INTC 20.53 0.0 BVF 15.88 –0.8 TA 22.10 –1.3 TS.B H 8.50 V 9.4 RSI-U 4.79 –0.2 WJA 13.83 –1.0GND 6.04 –0.2 PLB 19.79 0.2 CPA-U 17.02 1.1 CTC.A 54.10 V 1.8 SAP 30.25 0.0 TRZ.B 18.47 –2.4VNP 5.45 0.0 COM 5.61 –1.8 JE-U 14.10 0.4 RET.A 15.73 0.1 SOY 3.38 2.4 CNR 56.69 –0.5ZL 1.65 0.6 ANP 1.11 –13.3 NPI-U H 13.79 1.3 RON 15.22 –1.8 CBY 50.69 0.4 CP 55.17 0.6

NG: announced US$100mm private placement ( after close )

Financials I Financials II Materials I Materials II Energy I Energy IISymbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hg Symbo l Level %C hgBM O H 59.32 0.3 CF 9.42 V 9.5 ABX 40.94 –1.2 M DI 27.65 –4.4 PD-U 8.55 –0.1 CNQ 71.96 0.3BNS 49.12 0.6 DW 13.91 –0.8 AEM 61.83 –1.6 DM L 1.45 –1.4 ESI 14.90 –0.7 ECA 34.81 –0.9CM H 73.28 1.2 GM P 13.68 2.9 ELD 13.35 –2.9 CCO 27.91 –0.7 TDG 7.58 1.1 NXY 23.62 –0.6NA 62.06 0.2 GWO 27.00 0.0 G 40.66 –1.9 UUU 2.94 –3.3 TLM 19.03 –1.3RY 57.50 0.5 IAG 33.70 0.3 GSC 3.49 0.6 EQN 3.54 –1.4 FES 11.99 –0.7 CM T 0.87 –1.1TD H 69.71 2.0 M FC 19.75 2.3 IM G 15.60 –2.6 FM 80.38 –2.6 SCL.A 27.29 –1.7 CPG 38.60 –0.6CWB 22.00 1.6 SLF 30.75 2.2 K 19.38 –1.8 HBM 13.25 –5.7 TCW 14.74 2.4 NVA 13.75 –1.8LB 42.30 0.7 FFH 372.00 2.4 NG 6.29 –0.2 IM N 55.65 –3.8 FES 11.99 –0.7 PM G H 29.99 1.7POW 30.41 0.7 KFS 1.70 –4.0 YRI 10.92 –5.3 IVN 16.34 –0.5 CFW H 25.99 V 1.9 IE 3.55 3.2PWF H 32.17 0.9 IFC 43.10 –0.3 CG 12.82 –4.2 FNX H 14.29 3.3 M TL 15.18 –0.3 NKO 97.58 –1.4X 28.50 –0.5 M RC H 38.06 1.5 SSO 18.20 –1.4 S 8.10 0.0 ENB 47.20 0.4 POU 17.91 –1.0QC 1.30 2.4 BAM .A 24.87 0.2 SLW 15.57 –2.7 LUN 4.54 –2.2 TRP 35.84 1.2 PWT-U 21.24 –1.8AGF.B 16.98 1.5 BPO 14.49 –3.5 PAA 23.23 –0.1 TCK.B 40.47 –1.7 HSE 26.90 0.3 ERF-U 23.79 –1.0CIX 20.80 1.1 FCR 21.45 V 0.6 HW 10.48 –3.0 WTN 3.90 0.0 IM O 39.30 –1.4 AET-U 21.76 –2.3DC.A 13.25 0.2 M IM .A 13.00 0.7 CFP 8.61 0.2 TCM 14.29 –2.3 SU 31.57 –0.2 PGF-U 11.21 –1.6HCG 41.29 1.4 HR-U 16.80 0.4 TRE H 21.40 1.7 GNA 8.12 3.3 COS-U 28.03 –2.0 BTE-U 33.62 –1.3IGM 43.20 –0.0 REI-U 18.73 0.0 NBD 18.36 –0.5 CLM 8.87 0.7 OPC 1.89 –0.0 PEY-U 13.70 –1.5PNP 1.84 –2.1 AP-U 19.35 –1.0 WFT H 37.02 1.6 M X 26.00 –0.0 CLL 1.41 0.0 PVE-U 8.55 0.5OCX 26.83 1.5 EXE-U H 10.46 0.5 UFS 59.90 0.1 AGU 69.17 z –1.2 UTS 2.46 –1.6 BNP-U 24.57 –0.4DHF-U 16.62 –0.3 BEI-U H 40.45 1.9 CAS 8.13 –0.7 POT 118.48 z –0.5 PBG 54.38 –0.5 PRQ 12.45 0.2

CWB: results above consensus

TD: results above expectations

CF: to acquire Genuity for $286mm in cash and shares

SSO: results out after close

TRP: announced $300mm preferred share offering

BNP-U: posted results after close

CNQ: results out; raised dividend

Symbol guide: H/L: a stock has hit a new 52-wk H/L, /: a stock is within 10% of its 52-wk H/L, V/z: a stock had a H/L volume day relative to the last 52-week period, /: a stock has hit a new 52-wk RS H/L (relative to S&P/TSX Composite Index), /: a stock has hit a new 3-mth RS H/L (relative to S&P/TSX Composite Index) Source: Bloomberg

Market Elements


Relative Strength Filter Highlights: The Upward Bias

We have two morning peaks to see which way the wind blows for North American equity markets – the credit market and the currency market.

In FX land, the move of the Asian Dollar Index continues to correlate with the equity market. A rising ADXY means a rising equity market – Figure 1.

o The slope of the trend might be in question (bottom panel), but the upward bias is not.

This morning, all major currencies are higher against the U.S. dollar and yen.

o Friday is shaping up nicely for bulls like us.

Figure 1: S&P 500 Index and the Asian Dollar Index (ADXY)

Source: BMO Capital Markets, Bloomberg, Thomson, Markit

http://research-ca.bmocapitalmarkets.com/RSFilterApp/v18/RelativeStrengthFilter.application?datafile=http://research-ca.bmocapitalmarkets.com/RSFilterApp/Data/E096EC53-B359-4128-B10B-E488CDFD23ED.xml�

Back to Index

Economic Research

March 5, 2010 Research Comment Dr. Sherry Cooper (800) 613-0205 Robert Kavcic (416) 359-8329 Sal Guatieri (416) 359-5295

A.M. Notes

Dr. Sherry Cooper, Chief Economist [email protected]

416-359-4112

NORTH AMERICA – Sal Guatieri

The Canadian dollar showed little reaction to yesterday’s Federal Budget, which largely met expectations but, in our view, generally favourable for the loonie. Though lacking in major initiatives, the Budget pledged to deliver on the measures announced in last year’s Economic Action Plan, which, combined with provincial measures, amount to stimulus of $25 billion this year, a nice 1.6% boost to GDP (akin to last year’s lift). As well, the elimination of tariffs on imported materials and equipment used in manufacturing should provide modest support to investment. The fiscal support should help sustain the economic recovery and keep the Bank of Canada on track to begin tightening policy in July. As well, the Budget laid out a credible plan to virtually eliminate the current $54 billion deficit in five years time, pledging to grow program spending by less than 2% annualized over the next five years, which is less than inflation and far less than the austerity measures taken in the mid-1990s. The revenue projections also rely on conservative assumptions about economic growth and interest rates, suggesting the potential for smaller-than-projected deficits in coming years. The plan to balance the budget, even if five years out, is in stark contrast with the dire fiscal situation in many other countries. The U.S. government, for example, doesn’t even have a plan to put its budget deficit on a sustainable course, let alone eliminate it. On the political front, the prospect that this Budget will trigger an early election seems remote. While the opposition Liberal Party says it won’t support the Budget, it doesn’t plan to bring down the government and send reluctant Canadians to the polls. For more details and insight, see Douglas Porter and Michael Gregory’s write-up on our website at: (Link to Article) The only major economic report on either side of the border today is arguably the most important one…The consensus expects U.S. nonfarm payrolls to decline 68,000 in February, a moderate setback from January’s 20,000 decline but an improvement on the average losses in previous quarters (103k Q4, 260k Q3, 478k Q2 and 753k Q1). Recent better-than-expected ISM survey results suggest some upside risk to the report. The consensus also looks for an uptick in the unemployment rate to 9.8%, putting it three-tenths below October’s 26-year high. Expect ongoing losses in construction (-75k in January, extending a 2½ year slide), but further signs of recovery in professional/business services (up modestly the past four months) and manufacturing (we could see a first back-to-back increase in nearly four years based on the five-year high ISM manufacturing jobs measure).

mailto:[email protected]�

http://www.bmonesbittburns.com/economics/budget/2010ca/budget.pdf�

Sector Comment Economic Research


Two special factors will pull the February payroll figure in opposite directions: the East Coast snowstorms and Census hiring. The first of two major blizzards early in the month lasted a couple of days during the payroll survey week. Based on past experience, some analysts expect the storm to lop off more than 100,000 from payrolls. However, the impact on the reported number of losses might not be that significant because most employees were likely paid for at least part of the survey week, and thus would have been counted as employed in the month. If the snowstorm had a large impact, it will affect industries with a large number of hourly-paid employees, such as retail, rather than industries where compensation is more salary based, such as professional/business services. As well, the household survey tally of employment should not be affected by the storm. Pulling the other way, government hiring for the 2010 Census could add up to 50,000 new payroll jobs in February (9,000 were added in January, and the bulk of the more than one million temporary Census jobs will arrive in April and May). To control for this effect simply strip the federal government component out of the headline figure, or better yet focus on the private-sector figure (-12k in January and -123k in December). The Fed’s recent Beige Book noted that hiring plans remain soft. As in the last two post-recession periods, the recent recovery remains jobless. With consumer credit still contracting (January figures out at 3:00 are likely to show an unprecedented 12th straight decline) and households still rebuilding savings, the current recovery is probably more dependent on job and income growth than the previous two. On a more positive note, U.S. business confidence (at least for large firms) is on an upswing (see AM charts), which explains the recent upturn in capital spending and should lead to renewed hiring soon. In other news: “Fed Presidents Say Rates Need to Be Low Early in U.S. Recovery: Chicago Fed President Charles Evans told reporters in Chicago yesterday he needs to see signs of “highly sustainable” growth before supporting steps toward tighter monetary policy. St. Louis Fed President James Bullard said after a speech in St. Cloud, Minnesota that, with the economy at an early stage of renewal, policy makers want to remain “very accommodative.”” Bloomberg (Link to Article) “House Adopts $15 Billion Plan to Spur Job Creation: The House on Thursday approved a $15 billion measure intended to spur job creation by granting tax breaks to businesses that hire workers, as Democrats, bracing for new jobless figures, tried to show that Congress was doing something about stubborn unemployment.” New York Times (Link to Article) “Ottawa moves to eliminate tariffs: Canada will eliminate all tariffs on imports of machinery and other goods used in manufacturing, the government said yesterday, a move in its 2010 budget aimed at lowering the cost of doing business and helping the country boost its poor productivity.” National Post (Link to Article)

OVERSEAS – Robert Kavcic

Overnight action… The mood is positive overseas with equities rising more than 2% in Japan and close to 1% across Europe—the Nikkei posted its strongest week of the year as the yen weakened amid speculation that the BoJ will undertake further easing. Meantime, a successful 10-year bond sale by Greece (which raised €5 bln), and stronger-than-expected factory data, are giving Europe a lift, though the euro is little changed. Commodity prices are higher across the board, with oil above $80, gold up $2.50 to $1,135 and other base metals firm.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aClQsG5XSBeg&pos=4�

http://www.nytimes.com/2010/03/05/us/politics/05jobs.html?th&emc=th�

http://www.financialpost.com/story.html?id=2642005�

Sector Comment Economic Research


On the data front… It’s very quiet overseas this morning. German factory orders rose a better-than-expected 4.3% in January, lifting the annual rate to +19.6% y/y—that’s the biggest one-year jump on record dating back to 1992. Domestic orders were strongest, rising 7.1%, led by a 10% gain in capital goods. Meantime, U.K. producer prices rose 4.1% y/y in February, the quickest pace since the end of 2008. Input prices rose 6.9% y/y in the month, down from +7.7% y/y in the prior month. China to target 8% economic growth rate… “China will target a growth rate of 8 per cent in the economy this year, Premier Wen Jiabao said on Friday, although he warned that the authorities would slow the number of new investment projects, and that the banking sector contained “latent risks”.” FT. However, the Premier also said that a turnaround in the economy should not be interpreted as a fundamental improvement because “there is insufficient internal impetus driving economic growth”. With respect to the currency, he said the yuan would remain “basically stable”. Currency Market Current Change High Low

6:46 AMUS$ Index 80.55 -0.01 80.623 80.46C$ 1.0312 -0.0005 1.0329 1.0302C$ (US cents) 96.98 +0.06 96.82 97.07GBP 1.5034 +0.0002 1.5063 1.5011EUR 1.3588 +0.0007 1.3605 1.3573JPY 89.34 +0.32 89.41 89.00A$ 0.9031 +0.0030 0.9033 0.8988CNY 6.8265 +0.0001

DataWatch Germany—Factory orders: +4.3% in January (+19.6% y/y), better than expected U.K.—PPI (input): +0.1% in February (+6.9% y/y), softer than expected U.K.—PPI (output): +0.3% in February (+4.1% y/y), slightly firmer than expected

AM CHARTS

Ottawa Aims For Balance In 5 Years Bond-Friendly Decline in Labour Costs U.S. Business Confidence Fully Recovers U.S. Housing Market Continues to Fizzle Shoppers Braved The Elements to Shop ON THE WEB: (Link to Chart)

http://www.bmonesbittburns.com/economics/amcharts/mar0510.pdf�

BMO Capital Markets Disclosure Statements

Page 1 • March 5, 2010 (Back to Index)

IMPORTANT DISCLOSURES Analyst's Certification As to each com pany covered in this report, each analyst hereby certifies that the views expressed accurately reflect the analyst’s personal views about the subject securities or issuers. Each analyst also certifies that no part of the analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who p repared this r eport are compens ated b ased upon (a mong other f actors) th e ov erall prof itability of BMO Capital Mar kets and th eir affiliates, which includes th e overall profitability of inv estment banking services . Compensation for research is based on eff ectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Company Specific Disclosures For Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_Public.asp Distribution of Ratings (Dec. 31, 2009)

Rating Category

BMO Rating

BMOCM US Universe*

BMOCM USIB Clients**

BMOCM USIB Clients***

BMOCM Universe****

BMOCM IB Clients*****

First Call Universe

Buy Outperform 32.2% 12.3% 38.3% 36.1% 47.9% 50% Hold Market Perform 62.6% 10.2% 61.7% 56.9% 48.9% 43% Sell Underperform 5.3% 0% 0% 6.9% 3.2% 7%

* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts. ** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services

as percentage within ratings category. *** Reflects rating distribution of all comp anies from which BMO Capital Mark ets Corp. has r eceived compensation for Investment Banking

services as percentage of Investment Banking clients. **** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts. ***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as

percentage of Investment Banking clients. Ratings and Sector Key We use the following ratings system definitions: OP = Outperform - Forecast to outperform the market; Mkt = Market Perform - Forecast to perform roughly in line with the market; Und = Underperform - Forecast to underperform the market; (S) = speculative investment; NR = No rating at this time; R = Restricted – Dissemination of research is currently restricted. Market performance is measured by a benchmark index such as the S&P/TSX Composite I ndex, S&P 500, Nasdaq Composite, as appropri ate for each company. BMO Capital Markets eight Top 15 lis ts guide investors to our bes t ideas according to different objectives (Canadian large, small, growth, value, income, quantitative; and US large, US small) have replaced the Top Pick rating. Other Important Disclosures For Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_Public.asp or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3. Prior BMO Capital Markets Ratings Systems http://researchglobal.bmocapitalmarkets.com/documents/2009/prior_rating_systems.pdf Dissemination of Research Our research publications are available via our web site http://bmocapitalmarkets.com/research/. Institutional clients may also receive our research via FIRST CALL, FIRST CALL Research Dir ect, Reuters, Bloomberg, FactSet, C apital IQ, and TheMarkets.com. All of our research is ma de widely available at the same time to all BMO Capital Markets client groups entitled to our research. Additional dissemination may occur via email or regular mail. Please contact your investment advisor or institutional salesperson for more information. Conflict Statement A general description of how BMO Financial Group identifies and manages conflicts of interest is contained in our public facing policy for managing conflicts of interest in connection with investment research which is available at http://researchglobal.bmocapitalmarkets.com/Conflict_Statement_Public.asp

BMO Capital Markets Disclosure Statements

Page 2 • March 5, 2010 (Back to Index)

General Disclaimer “BMO Capital Markets” is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Ban k of Montreal and its subsidiaries BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Ltée./Ltd., BMO Capital Markets Ltd. in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns Inc., BMO Capital Ma rkets Ltd. and BMO Capital Markets Corp ar e affiliates. Bank of Montreal or it s subsidiaries (“BMO Financial Group”) has lending arrangements with, or provide othe r remunerated services to, man y issuers cover ed b y BMO Capital Markets. The opinions, estimates and projections contained in this report are those of BMO Capital Markets as of th e date of this report and are subject to change without notice. BMO Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we b elieve are reliable and contain information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report . The information in this report is not intended to be used as the primar y basis of investment decisi ons, and becaus e of individu al client objectives, should not be construed as advice designed to meet the particular investment needs of any investor. This material is for information purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short position in many of the securities discussed herein, related secur ities or in options, futures or other derivative instruments based thereon. The reader should assume that BMO Capital Markets or its affiliates may have a conf lict of interest and should not rely solely on this report in ev aluating whether or not to buy or sell securities of issuers discussed herein. Additional Matters To Canadian Residents: BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Lte e/Ltd., affiliates of BMO Capital Markets Corp., f urnish this repor t to Canadian residents and accept responsibility for the cont ents herein subject to the terms set out above. An y Canadian p erson wi shing to effect transactions in any of the securities included in this report should do so through BMO Nesbitt Burns Inc. and/or BMO Nesbitt Burns Ltee/Ltd. To U.S. Residents: BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd., affiliates of BMO NB, furnish this rep ort to U.S. residents and accept responsibility for the contents herein, except to the extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd. To U.K. Resid ents: In the UK this document is published b y BMO Capital Markets Lim ited which is auth orised and regu lated b y the F inancial Services Authority. The conten ts hereof are intended solely for the use of, and ma y only be issued or passed on to, (I) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Fina ncial Promotion) Order 2005 (the “Order”) or (II) high net worth ent ities falling within Article 49(2)(a) to (d) of the Order (all such p ersons together referred to as “relevant persons”). The contents hereof are not intended for the use of and may not be issued or passed on to, retail clients.

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, retail clients are served through Harris N.A. Investment and corporate banking services are provided in Canada and the US through BMO Capital Markets.

BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, Harris N.A. and BMO Ireland Plc, and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC), BMO Nesbitt Burns Trading Corp. and BMO Capital Markets GKST Inc. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member CIPF) in Canada, Europe and Asia, BMO Nesbitt Burns Securities Limited (U.S. registered and member of FINRA), and BMO Nesbitt Burns Ltée/Ltd. (Member CIPF) in Canada, and BMO Capital Markets Limited in Europe and Australia. “Nesbitt Burns” is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under license. “BMO Capital Markets” is a trademark of Bank of Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license.

® Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. TM Trademark Bank of Montreal

©COPYRIGHT 2010 BMO CAPITAL MARKETS CORP.

Financial GroupA member of BMO

Documents

BMO Nesbitt Burns - Research Highlights - March 5