bmo research highlights mar 24

Wednesday, March 24, 2010

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

Initiating Coverage

Computer Modelling Group Initiating Coverage at Outperform M. Mazar

Pason Systems Initiating Coverage at Market Perform M. Mazar

Rating Changes

Golden Star Resources Upgrading to Outperform and Raising Target Price; Mines Delivering With Potential Catalysts Ahead

A. Breichmanas

SouthGobi Energy Resources

Upgrading to Outperform (Speculative) M. Bandy

Large Cap Stocks

J.B. Hunt Transport Services Increasing Target Price to $38 on Tightening Industry Conditions J. Granger

Peyto Energy Trust Going Horizontal G. Tait

Small Cap Stocks

Genivar Income Fund Target Increased to $31; Management Continues to Execute; Outperform Rating Maintained

B. Powell

Legacy Oil + Gas Q4/09 Results M. Leggett

Theratechnologies Not Much New In 1Q10; Waiting for Tesamorelin FDA Advisory Meeting J. Zhang

Coast Wholesale Appliances Income Fund

Increasing Target to $5.50 on Long-Term Outlook; Q4/09 Results in Line S. MacLeod

Descartes Systems Group Target Price Raised to $7.00; Porthus Acquired T. Moschopoulos

Glacier Media Trends Improving T. Casey

SEMAFO The New Premium-Rated West African Producer as Mana Exploration Potential Continues to Impress

A. Breichmanas

Industry/Macro Comments

Apparel Retail MALL TALK: March Field Team Finds J. Morris

Energy - Royalty Trusts Weekly Royalty Trust Report – Week Ending March 19, 2010 G. Tait

Quantitative Analysis Relative Strength Filter — Euro Breakdown M. Steele

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

Wednesday, March 24, 2010

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Earnings & Conference Calls AGF Management Ltd. (AGF.B) EPS Q1/10 BMO EPS $0.32 vs. $0.14 last year; First Call Mean $0.35

866-300-4047; Webcast: www.agf.com 11:00 am

Hochschild Mining (HOC) EPS FY09 BMO EPS $0.12 vs. $0.08 last year; First Call Mean $0.20

44-203-003-2666; Replay: 44-208-198-1996 (Passcode: 7993057#) 5:30 am

Endeavour Silver (EDR) EPS FY09 BMO EPS ($0.06) vs. ($0.37) last year; First Call Mean ($0.02)

877-240-9772 or 416-340-8530 Mar. 252:00 pm

ICL (ICL) EPS Q4/09 BMO EPS US$0.15 vs. US$0.12 last year; First Call Mean US$0.18

877-407-0784, 201-689-8560 or 800-224-6266 10:30 am

Eurasian Natural Resources (ENRC) EPS FY09 BMO EPS US$0.85 vs. US$2.05 last year; First Call Mean US$0.87

Today's Events & Marketing

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

Atul Shah (Diversified Financials Analyst) Marketing in Vancouver & Alberta

Eastern Platinum (ELR) Company presentation in Europe. Ian Rozier (CEO).

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

John Morris (Apparel Retail Analyst) Marketing in San Francisco

Ambrish Srivastava (Semiconductor Analyst) Marketing in New York

Dave Shove (Managed Care and Pharmacy Benefit Managers Analyst)

Marketing in Kansas City, Dallas & Austin

Edwin Chee (Chemicals & Fertilizers Analyst) Marketing on the West Coast

Cedar Shopping Centers (CDR) Company presentation in New York. Leo Ullman (CEO & President) and Larry Kreider (CFO).

Bert Hazlett (Pharmaceuticals Analyst) Marketing in Boston

Ken Zaslow (Food & Agribusiness Analyst) Marketing San Francisco & Los Angeles

Mike Mazar (Oil & Gas Services Analyst) Marketing in Kansas City

BMO Capital Markets Calendar of Events

Page 2 March 24, 2010 (Back to Index)

Economics/Industry Data

Time Data Period BMO Capital Markets Estimate

Previous Period

Consensus

10:00 am U.S. New Home Sales Feb. (e) 309,000 a.r. (unch) 309,000 a.r. (-11.2%) 315,000 a.r. (+1.9%)

Upcoming Events & Marketing

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

Mar. 22-25

Dave Shove (Managed Care and Pharmacy Benefit Managers Analyst)

Marketing in Kansas City, Dallas & Austin Mar. 23-25

Edwin Chee (Chemicals & Fertilizers Analyst) Marketing on the West Coast Mar. 23-25

Ken Zaslow (Food & Agribusiness Analyst) Marketing San Francisco & Los Angeles Mar. 24-25

Mike Mazar (Oil & Gas Services Analyst) Marketing in Kansas City Mar. 24-25

John Reucassel (Financials Analyst) Marketing in New York Mar. 25

MOSAID Technologies (MSD) Company presentation in Toronto. Michael Salter (Director, Investor Relations & Corporate Communications).

Mar. 25

Flowserve (FLS) Company presentation in New York. Dean Freeman (Sr. VP Finance & Treasurer), Kyle Ahlfinger (VP, Chief Marketing Officer) and Paul Fehlman (VP, Financial Planning & Analysis and IR).

Mar. 25

Marvell Technology (MRVL) Company presentation in Toronto & Montreal. Jeff Palmer (VP of Investor Relations). Mar. 25-26

Peyto Energy Trust (PEY.UN) Company presentation in Toronto. Darren Gee (President & CEO). Mar. 25-26

Dan Salmon (Marketing Services & Advertising Agencies Analyst)

Marketing in Kansas City & Dallas Mar. 25-26

Bert Powell (Special Situations Analyst) Marketing in Vancouver & Alberta Mar. 25-26

Christopher Brown (Oil & Gas International Producers Analyst)

Marketing in Europe Mar. 25-26

Winn-Dixie Stores (WINN) Company presentation in New York Mar. 25-26

Peter Sklar (Auto Parts/Food & Drug Retailing Analyst)

Marketing in Vancouver Mar. 26

Joanne Wuensch (Medical Technology & Devices Research Analyst)

Marketing Florida Mar. 26



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

Mar. 26

Carl Kirst (North American Pipeline Analyst) Marketing in Montreal Mar. 29

Bunge (BG) Company presentation in Boston. Jackie Fouse (CFO) and Mark Haden (Director of Investor Relations).

Mar. 29

Alan Laws (Oil Services Analyst) Marketing in Atlanta Mar. 29

Tim Long (Communications Equipment Analyst) Marketing in the Mid-Atlantic Mar. 29

TELUS (T) Company presentation in New York & Boston. Bob McFarlane (EVP & CFO) and Robert Mitchell (Investor Relations).

Mar. 29

EnCana (ECA) Company presentation in Los Angeles & San Francisco. Mike McAllister (VP, Canadian Deep Basin (Montney & Bighorn)), Todd Brown (Team Lead, Texana (Haynesville)) and Ryder McRitchie (VP, Investor Relations).

Mar. 29-31

TELUS (T) Company presentation in Montreal. Bob McFarlane (EVP & CFO) and Robert Mitchell (Investor Relations).

Mar. 30

Bert Hazlett (Pharmaceuticals Analyst) Marketing in Boston Mar. 30

Karen Short (Food Retailing Analyst) Marketing in Chicago Mar. 30

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

Mar. 31

Ballard Power Systems (BLD) Company presentation in Toronto Mar. 31

Mike Vinciquerra (Exchanges & Discount Brokers Analyst)

Marketing in Boston Mar. 31


Marketing in Chicago Mar. 31-Apr. 1

Karine MacIndoe (Real Estate & REITs Analyst) Marketing in the Mid-Atlantic region Apr. 1


Marketing in the Pacific Northwest Apr. 5

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

Andrew Kaip (Precious Metals & Mining Analyst) Marketing in Boston & New York Apr. 5-7

INV Metals (INV) Company presentation in Toronto. Bob Bell (President & CEO) and Candace MacGibbon (CFO).

Apr. 6



Gordon Tait (Royalty & Income Trusts Analyst) Marketing in Vancouver Apr. 6

Meredith Bandy (Coal Analyst) Marketing in Boston Apr. 6

Connie Maneaty (Personal Care & Household Products Analyst)

Marketing in Richmond & Atlanta Apr. 6

Lana Chan & Peter Winter (Financial Institutions Analysts) Marketing in Texas Apr. 6-8

Gammon Gold (GAM) Company presentation in Boston & New York. Scott Perry (CFO) and Anne Day (Director, IR).

Apr. 6-9

Joanne Wuensch (Medical Technology & Devices Research Analyst)

Marketing in the Mid-West Apr. 7

Karine MacIndoe (Real Estate & REITs Analyst) Marketing in Vancouver Apr. 7

Claude Proulx (Airlines & Special Situations Analyst) Marketing in Toronto Apr. 7-8

Cap REIT (CAR.UN) Company presentation in Winnipeg & Vancouver. Tom Schwartz (President & CEO) and Richard Smith (CFO).

Apr. 7-8


Marketing in Winnipeg Apr. 8

Alan Laws (Oil Services Analyst) Marketing in New York & Connecticut Apr. 8-9


Marketing in Toronto Apr. 9

Carl Kirst (North American Pipeline Analyst) Marketing in Boston Apr. 12

Wayne Hood (Broadline Retailing Analyst) Marketing in Europe Apr. 12-14

Gammon Gold (GAM) Company presentation in Texas, L.A. & San Francisco. Scott Perry (CFO) and Anne Day (Director, IR).

Apr. 12-14

Alpha Natural Resources (ANR) Company presentation in Europe. Kevin Crutchfield (CEO), Frank Wood (CFO) and Allen Todd (VP, IR).

Apr. 12-15

Alpha Natural Resources (ANR) Company presentation in Europe. Kevin Crutchfield (CEO), Frank Wood (CFO) and Allen Todd (VP, Investor Relations).

Apr. 12-16

Detour Gold Corp. (DGC) Company presentation in Europe Apr. 12-16

New Gold (NGD) Company presentation in Europe Apr. 12-16



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

Marketing in Toronto Apr. 13-15

Gordon Tait (Royalty & Income Trusts Analyst) Marketing in Montreal Apr. 14

General Mills (GIS) Company presentation in the Mid-Atlantic. Don Mulligan (CFO) and Kristen S. Wenker (VP, Investor Relations).

Apr. 14

Carl Kirst (North American Pipeline Analyst) Marketing in the Mid-West Apr. 14-15

Jim Byrne (Integrated Oils & Refiners Analyst) Marketing in Vancouver Apr. 15

Paul Adornato & Richard Anderson (U.S. REITs Analysts) Marketing in Boston Apr. 15

Jeffrey Logsdon (Entertainment & Gaming Analyst) Marketing in Boston Apr. 15-16

Gammon Gold (GAM) Company presentation in Toronto. Scott Perry (CFO) and Anne Day (Director, IR). Apr. 16

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

Marketing in Montreal Apr. 16

Osisko Mining (OSK) Company presentation in Europe Apr. 19-23

Gordon Tait (Royalty & Income Trusts Analyst) Marketing in Toronto Apr. 20-21

Alamos Gold (AGI) Company presentation in Europe. John A. McCluskey (President and CEO) and Jeremy Link (Investor Relations Manager).

Apr. 21

John Morris (Apparel Retail Analyst) Marketing in the Pacific Northwest Apr. 21

Pacific Rubiales (PRE) Company presentation in Europe Apr. 22-23

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) 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 13 to 15.

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Computer Modelling Group (CMG-TSX) Stock Rating: Outperform Industry Rating: Market Perform

March 23, 2010 Research Comment Calgary, Alberta

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

Initiating Coverage at Outperform

The Company CMG is the world leader in developing and supplying dynamic reservoir

simulation software. The company’s products aid its customers in

understanding the physics and hydrocarbon flow characteristics of their

reservoirs prior to development, which helps determine extraction processes

and, ultimately, recover more hydrocarbons. The company has more than 350

customers in 50 countries, roughly 125 employees and is headquartered in

Calgary, Alberta.

Forecasts We expect CMG to generate EPS of $0.90 in fiscal 2011 (the company has a

March 31 year-end) and $1.00 in fiscal 2012, up from $0.81 in fiscal 2010.

Revenues are expected to grow from $45.7 million in 2010 to $50.3 million in

2011 and $55.6 million in 2011. Our estimates assume essentially a 100%

renewal rate for existing annuity/maintenance licences.

Valuation CMG’s shares currently trade at 18.8x F2011E EPS and 16.9x F2012E EPS,

roughly in line with the Canadian energy services group averages. EV/EBITDA

is not as relevant a metric for CMG as P/E because of the extremely low capital

base and therefore very low depreciation. Despite its small size, we believe that

CMG should trade at a premium to the group in light of its steady cash flows,

high free cash flow yield, industry leading EVA and ROE performance,

dominant market position and exceptionally strong balance sheet. Our $21

target price is based on a P/E of 23.4x 2011E EPS and 21.1x 2012E EPS.

Recommendation We are initiating coverage of Computer Modelling Group with an Outperform

rating and a $21 target price.

Price (22-Mar) $16.80 52-Week High $17.71 Target Price $21.00 52-Week Low $8.65

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Computer Modelling Group (CMG)Price: High,Low,Close

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Last Data Point: March 19, 2010

(FY-Mar.) 2009A 2010E 2011E 2012E EPS $0.95 $0.81 $0.90 $1.00 P/E 20.7x 18.8x 16.9x CFPS $1.05 $0.92 $0.95 $1.06 P/CFPS 18.2x 17.7x 15.8x Total Debt ($mm) $0 $0 $0 $0 ROCE (%) nm nm nm nm LT Liab. (%) nm nm nm nm EV/EBITDA 5.1x 12.6x 11.2x 10.0x Quarterly EPS Q1 Q2 Q3 Q4 2009A $0.15 $0.17 $0.28 $0.35 2010E $0.15 $0.13 $0.22 $0.30 2011E $0.21 $0.17 $0.23 $0.29 Dividend $0.72 Yield 4.3% Book Value $1.54 Price/Book 10.9x Shares O/S (mm) 17.7 Mkt. Cap ($mm) $297 Float O/S (mm) 13.3 Float Cap ($mm) $223 Wkly Vol (000s) 129 Wkly $ Vol (mm) $1.9 Net Debt ($mm) -$28.9 Next Rep. Date May (E)

Notes: All values in C$ Major Shareholders: Foundation CMG (12.8% Non Voting), Directors and Officers (12.6%) First Call Mean Estimates: COMPUTER MODELLING GROUP LTD (C$) 2010E: $0.76; 2011E: $0.95


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Pason Systems (PSI-TSX) Stock Rating: Market Perform Industry Rating: Market Perform


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

Initiating Coverage at Market Perform

The Company Pason is the world’s largest provider of oilfield instrumentation, on a per day

rental basis, that enables data acquisition of reservoirs and the drilling process to

enhance efficiency, safety and economics. Pason does this by offering a suite of

products that are added to a land-based drilling or workover rig with a

communications link so that data can be stored and analyzed both at the well-

site and at offsite locations. Pason has been in business since 1978 and has been

publicly traded on the TSX since 1996.

Forecasts We expect Pason to generate EPS of $0.26 in 2010, growing to $0.66 in 2011 as

drilling activity continues to recover from trough 2009 levels. Revenues are

expected to be $227.1 million in 2010 and $288.5 million in 2011. We expect

improving operating margin performance in 2010 with margins of just over 51%

versus 50% in 2009, but still well below the 64% achieved in 2008.

Valuation Pason’s shares currently trade at 10.0x 2010E EBITDA and 6.6x 2011E

EBITDA. This is a modest premium to the company’s small- to mid-cap

Canadian energy services peer group average. While we believe a modest

premium is warranted in light of the company’s dominant competitive position,

track record for growth, high level of exposure to the secular trend toward more

complex drilling programs and its strong balance sheet, we believe the current

valuation is discounting a stronger drilling environment in 2011 than is likely

given continued challenging natural gas price fundamentals. Our $13 target

price is based on 7.6x 2011E EBITDA.

Recommendation We are initiating coverage of Pason with a Market Perform rating and $13 target

price.


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Pason Systems (PSI)Price: High,Low,Close Earnings/Share

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(FY-Dec.) 2008A 2009A 2010E 2011E EPS $0.75 -$0.07 $0.26 $0.66 P/E 44.7x 17.5x CFPS $1.52 $0.51 $0.91 $1.27 P/CFPS 12.7x 9.2x Total Debt ($mm) $0.0 $0.0 $0.0 $0.0 ROCE (%) 42% -3% 13% 32% LT Liab. (%) -75% -64% -85% -131% EV/EBITDA 7.2x 20.2x 10.0x 6.6x Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.26 $0.08 $0.26 $0.15 2009A $0.06 -$0.11 -$0.05 $0.03 2010E $0.12 -$0.06 $0.07 $0.12 Dividend $0.28 Yield 2.4% Book Value $3.79 Price/Book 3.1x Shares O/S (mm) 81.5 Mkt. Cap ($mm) $945 Float O/S (mm) 46.3 Float Cap ($mm) $537 Wkly Vol (000s) 526 Wkly $ Vol (mm) $5.6 Net Debt ($mm) -$119.9 Next Rep. Date May (E)

Notes: All values in C$ Major Shareholders: James Hill (President and CEO) (20.0%), Royce & Associates (12.9%), Caisse De Depot (10.3%) First Call Mean Estimates: PASON SYSTEMS INC (C$) 2010E: $0.34; 2011E: $0.70

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

Golden Star Resources (GSS-AMEX; GSC-TSX) Stock Rating: OutperformIndustry Rating: Outperform

March 24, 2010 Research Comment Toronto, Ontario

Andrew Breichmanas (416) 359-8387 [email protected]

David Haughton

Assoc: Jeffrey Schok / Steven Willis

Upgrading to Outperform and Raising Target Price; Mines Delivering With Potential Catalysts Ahead


ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 8 to 11.

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Golden Star Resources (GSS)Price: High,Low,Close(US$) Earnings/Share(US$)

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Event Following a review of estimates, BMO Research is upgrading Golden Star

Resources to Outperform and raising the target price to US$5.

Impact Positive. The company has recently focused on demonstrating consistent

performance from its two mines, delivered solid operational results in 2009 and

appears poised to generate significant cash this year as it begins to focus on its

next phase of growth. Cash flow from operations was US$123M in 2009 and the

mines generated free cash flow of US$55M. Cash at year-end was US$154M,

allowing the company to double its exploration budget for 2010 to US$18M.

Forecasts BMO Research forecasts are unchanged. Current estimates do not include any

contribution from processing ore from Prestea South at the Bogoso oxide plant

in 2010. No value is ascribed to the Prestea Underground, but development

could add approximately US$0.25 per share to NPV estimates and increase

annual production by roughly 40,000oz.

Valuation The US$5 target price is based on a blend of 1.3x the BMO Research 10%

NPVPS estimate at spot prices and 10x the 2010 CFPS forecast.

Recommendation Golden Star is rated Outperform. The company offers attractive relative value

with possible catalysts for re-rating through permitting of Prestea South,

progress at Prestea Underground, and results from newly expanded drill

programs.

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(FY-Dec.) 2008A 2009A 2010E 2011E EPS -$0.16 $0.02 $0.15 $0.26 P/E 24.7x 14.8x CFPS $0.10 $0.51 $0.61 $0.78 P/CFPS 6.2x 4.9x Real'd Price ($/oz) $870 $978 $1,150 $1,150 Prod'n (000 oz.) 295.9 409.9 400.0 477.9 Ttl. Cash Cost ($/oz) $743 $595 $657 $632 T

tl. Prod. Cost $954 $899 $971 $934

Quarterly EPS Q1 Q2 Q3 Q4 2008A -$0.02 -$0.03 -$0.10 -$0.03 2009A -$0.01 $0.00 $0.00 $0.03 2010E $0.05 $0.04 $0.04 $0.03 Dividend $0.00 Yield 0.0% Book Value $2.02 Price/Book 1.9x Shares O/S (mm) 257.4 Mkt. Cap (US$mm) $976 Float O/S (mm) 256.2 Float Cap (US$mm) $971 Wkly Vol (000s) 21,572 Wkly $ Vol (USmm) $63.5 Net Debt ($mm) -$29.5 Next Rep. Date May (E)

Notes: All values in US$ Major Shareholders: Sentry Select Capital (16.5%), Van Eck Associates (5.30%) First Call Mean Estimates: GOLDEN STAR RESOURCES LTD. (US$) 2010E: $0.23; 2011E: $0.35

Changes Target $4.00 to $5.00 Rating Mkt to OP

This report was prepared in part by an analyst(s) em nd who is (are) not registered as a research analyst(s) under FINRA rules. For disc e refer to pages 5 to 7.

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SouthGobi Energy Resources (SGQ-TSX) Stock Rating: Outperform(S)Industry Rating: Market Perform

March 24, 2010 Research Comment Denver, Colorado

Meredith Bandy, CFA (303) 436-1113 [email protected]


Upgrading to Outperform (Speculative)

ployed by a Canadian affiliate, BMO Nesbitt Burns Inc., alosure statements, including the Analyst's Certification, pleas

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South Gobi Energy Resources (SGQ)Price: High,Low,Close Earnings/Share(US$)

Event BMO Research is upgrading SouthGobi to Outperform (Speculative) from

Market Perform (Speculative) and maintaining the price target of C$21. Prior to

the Hong Kong listing (priced January 22); SouthGobi shares ran up to over

C$20, but have since been range-bound around C$16–17/share. BMO is also

adjusting estimates for Q4/09 results (reported March 22, 2010). 0

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Impact

Positive.

Forecasts BMO forecasts that SouthGobi’s Ovoot Tolgoi and Soumber mines reach full

production of 10.5Mt saleable coal production by YE2013, up from 1.3Mt of

sales in 2009. The revised model assumes a slightly slower production ramp,

but also incorporates the company’s guidance on higher realized coal pricing.

The net effect is a decrease in 2010–12 earnings, but a slightly higher NPV.

Valuation BMO’s 10% NPV per share increased 2% from US$22.56 (C$23.01) to

US$22.93 (C$23.39).

Recommendation BMO Research is upgrading SouthGobi to Outperform (Speculative) from

Market Perform (Speculative) and maintaining the price target of C$21.

SouthGobi currently trades at about 70% of NPV whereas the rest of the coals

trade at over 90% NPV. On BMO’s estimates, the weakness in the shares

following the Hong Kong listing represents a good entry point for long-term

investors. SouthGobi has an excellent growth profile with accesses to growing

regional Chinese coal demand.

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(FY-Dec.) 2008A 2009A 2010E 2011E EPS -$0.48 -$0.37 $0.00 $0.31P/E na 50.6x CFPS -$0.01 -$0.10 $0.17 $0.56P/CFPS 92.2x 28.0x Rev. ($mm) $3 $36 $111 $252 EV ($mm) $1,938 $2,344 $2,691 $2,934 EBITDA ($mm) -$60 -$28 $27 $114 EV/EBITDA na na 99.7x 25.7x Quarterly EPS Q1 Q2 Q3 Q4 2008A -$0.10 -$0.10 -$0.17 -$0.10 2009A -$0.07 -$0.06 -$0.11 -$0.12 2010E -$0.02 -$0.03 $0.01 $0.05 Dividend $0.00 Yield 0.0% Book Value $14.69 Price/Book 1.1x Shares O/S (mm) 183.4 Mkt. Cap ($mm) $2,964 Float O/S (mm) 49.6 Float Cap ($mm) $802 Wkly Vol (000s) 231 Wkly $ Vol (mm) $3.5 Net Debt ($mm) -$516.3 Next Rep. Date 15-Jun (E)

Notes: Share price and market capitalization in C$, all other values in US$ Major Shareholders: Ivanhoe Mines Ltd (57.7%), CIC (13.6%) First Call Mean Estimates: SOUTHGOBI ENERGY RESOURCES LTD (US$) 2009E: -$0.35; 2010E: $0.01; 2011E: $0.38

Changes Annual EPS Annual CFPS Quarterly EPS Rating 2010E $0.11 to $0.00 2010E $0.33 to $0.17 Q1/10E -$0.02 to -$0.02 Mkt(S) to OP(S) 2011E $0.41 to $0.31 2011E $0.74 to $0.56 Q2/10E $0.03 to -$0.03 Q3/10E $0.05 to $0.01 Q4/10E $0.05 to $0.05


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J.B. Hunt Transport Services (JBHT-NASDAQ)

Stock Rating: Market PerformIndustry Rating: Market Perform


Jason Granger, CA, CFA (416) 359-4293 [email protected]

Increasing Target Price to $38 on Tightening Industry Conditions

Event Conditions among active vehicles in the Truckload segment have been

tightening.

Impact Positive.

Forecasts We are not making any changes to our 2010 forecast; however, we are

increasing our 2011 EPS estimate to $1.89 from $1.72.

Valuation We are increasing our target price to $38 from $32 to reflect the increase to our

2011 earnings estimate and some multiple expansion, with improvements in

industry conditions. Our target is based on 20.2x our 2011 EPS forecast and

8.6x our 2011 EBITDA estimate.

Recommendation Industry reports suggest the supply-demand balance is nearing equilibrium in

some regions and we expect this trend to become more widespread in H2/10,

driven by continued supply contraction (with an acceleration in bankruptcies)

and firming in demand. Improvements in industry conditions should have a

more meaningful impact on pricing in 2011, which should bode well for JB

Hunt’s intermodal, Dedicated Carriage and Truckload business lines.

Approximately 88% of 2009 revenues were generated from intermodal, DCS

and freight brokerage. These services have more defensible characteristics and

higher barriers to entry than typical truckload. The company’s strong presence

in intermodal and the nature and location of its network position it well to

continue to capitalize on some unique opportunities. Notwithstanding these

factors, we currently do not see enough upside in valuation to warrant an

Outperform rating on the stock. Low rates have already been locked in by many

shippers for 2010. JB Hunt is rated Market Perform.


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(FY-Dec.) 2008 A 2009A 2010E 2011E EPS $1.56 $1.10 $1.41 $1.89P/E 25.9x 19.3x CFPS $3.48 $2.64 $2.98 $3.41P/CFPS 12.3x 10.7x Rev. ($mm) $3,732 $3,203 $3,410 $3,805 EV ($mm) $4,631 $3,944 $5,127 $4,920 EBITDA ($mm) $564 $447 $511 $596 EV/EBITDA 8.2x 8.8x 10.0x 8.3x Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.28 $0.39 $0.47 $0.41 2009A $0.24 $0.23 $0.31 $0.32 2010E $0.25 $0.31 $0.42 $0.43 Dividend $0.48 Yield 1.3% Book Value $5.06 Price/Book 7.2x Shares O/S (mm) 127.2 Mkt . Cap (US$mm) $4,648 Float O/S (mm) 89.4 Float Cap (US$mm) $3,265 Wkly Vol (000s) 9,916 Wkly $ Vol (USmm) $300.7 Net Debt ($mm) $557.2 Next Rep. Date April (E)

Changes Annual EPS Annual CFPS Target 2011E $1.72 to $1.89 2011E $3.24 to $3.41 $32.00 to $38.00


Back to Index

Peyto Energy Trust (PEY.UN-TSX) Stock Rating: Market PerformIndustry Rating: Market Perform


Gordon Tait, CFA (403) 515-1501 [email protected] Assoc: Chris Bolton, CFA/Peter Kranz, P. Eng.

Going Horizontal

Event We recently met with Peyto management to get an update on their drilling

results and future drilling inventory.

Impact Slightly Positive.

Forecasts Our per unit operating cash flow estimates (CFPU) increase to $1.90 from $1.60

in 2010 and to $2.12 from $1.92 in 2011. We are increasing our 2010 cash

distribution per unit (CDPU) estimate to $1.44 from $1.08. Our 2011, CDPU

estimate remains unchanged at $1.08.

Valuation Our $14.50 target price is based on 6.7x 2010E debt-adjusted cash flow (DACF)

plus $4.96 per unit to account for our risked estimate of its development upside

(9.1x 2010E DACF only).

Recommendation Peyto continues to be one of the lowest cost operators in western Canada and

has historically demonstrated relatively high capital efficiency. While Peyto is

relatively new to horizontal drilling (13 wells spud to date) initial results have

been encouraging. The advent of horizontal drilling with multi-stage fracs has

the potential to add significant production and reserves at relatively attractive

metrics. We believe Peyto is a good bet for investors that are moderately bullish

on the outlook for natural gas. However, BMO Capital Markets does not share a

particularly bullish view on North American natural gas prices. Consequently,

we believe that the unit/share price of a natural gas producer such as Peyto may

be range-bound until the outlook for natural gas prices improves. Based on our

total return outlook, we continue to rate Peyto Energy Trust Market Perform.


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(FY-Dec.) 2008 A 2009A 2010E 2011E CDPU $1.76 $1.47 $1.44 $1.08 P/CDPU 9.3x 12.3x CFPU $2.71 $1.79 $1.90 $2.12P/CFPU 7.0x 6.3x Oil & Liq (b/d) 3,265 3,028 3,800 3,900 Nat. Gas (MMcf/d) 100.4 92.7 109.8 118.2 Boe/d (6:1) 19,996 18,481 22,100 23,600 EV/EBITDA 6.7x 7.5x 8.8x 8.0x Quarterly CDPU Q1 Q2 Q3 Q4 2008A $0.42 $0.44 $0.45 $0.45 2009A $0.39 $0.36 $0.36 $0.36 2010E $0.36 $0.36 $0.36 $0.36 Annual Dist. $1.44 Yield 10.8% Book Value $5.33 Price/Book 2.5x Units O/S (mm) 114.9 Mkt . Cap ($mm) $1,531 Float O/S (mm) 104.8 Float Cap ($mm) $1,396 Wkly Vol (000s) 2,046 Wkly $ Vol (mm) $22.6 Net Debt ($mm) $435.0 Next Rep. Date May (E)

Notes: All values in C$; Net debt and Units O/S at Q4/09 Major Unitholders: 9% held by management and directors First Call Mean Estimates: Not Available

Changes Annual CDPU Annual CFPU Quarterly CDPU 2010E $1.08 to $1.44 2010E $1.60 to $1.90 Q1/10E $0.27 to $0.36 2011E $1.92 to $2.12 Q2/10E $0.27 to $0.36 Q3/10E $0.27 to $0.36 Q4/10E $0.27 to $0.36


Back to Index

Genivar Income Fund (GNV.UN-TSX) Stock Rating: OutperformIndustry Rating: Outperform

Member of: Top 15 Small Cap Stock Selections Top 15 Growth Stock Selections


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

Target Increased to $31; Management Continues to Execute; Outperform Rating Maintained

Event Genivar reported Q4/09 net revenues of $108.7 million, up 16.6% year over

year, versus our expectation of $108.2 million. Reported EBITDA was $21.0

million versus our expectation of $21.6 million, and was negatively affected by

a $1.4 million non-cash F/X loss. EPU were $0.48 versus our expectation of

$0.53. Excluding the F/X loss, earnings were in line with expectations.

Impact Neutral.

Forecasts For 2010, we forecast net revenue of $471.8 million and EPU of $2.57. For

2011, we forecast net revenues of $561.3 million and EPU of $2.36.

Valuation Our $31 target is based on 8.0x 2011E EV/EBITDA discounted back one year at

15.0%.

Recommendation Genivar delivered an in-line quarter with better-than-expected organic growth

despite a challenging economic environment. Operating margins continued to

remain fairly stable and backlog improved y/y. We remain confident

management will continue to execute on the M&A front and the strong balance

sheet provides the flexibility to pursue additional acquisition opportunities. We

continue to rate Genivar Outperform and have increased our target price to $31

from $30.


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(FY-Dec.) 2008 A 2009A 2010E 2011E CDPU $1.70 $1.95 $1.50 $1.50 P/CDPU 18.4x 18.4x DCPU $2.42 $2.56 $2.93 $2.93P/DCPU 9.4x 9.4x Payout % 72% 79% 51% 51% EV ($mm) $529 $621 $698 $723 EBITDA ($mm) $69 $79 $99 $117 EV/EBITDA 7.7x 7.9x 7.1x 6.2x Quarterly CDPU Q1 Q2 Q3 Q4 2008A $0.25 $0.25 $0.38 $0.83 2009A $0.38 $0.38 $0.38 $0.83 2010E $0.38 $0.38 $0.38 $0.38 Distribution $1.50 Yield 5.4% Book Value $10.52 Price/Book 2.6x Units O/S (mm) 27.2 Mkt . Cap ($mm) $751 Float O/S (mm) 27.2 Float Cap ($mm) $751 Wkly Vol (000s) 206 Wkly $ Vol (mm) $5.3 Net Debt ($mm) -$45.9 Next Rep. Date 20-May (E)

Notes: All values in C$ Major Unitholders: Goodman & Company (4.1%); British Columbia Investment Management (3.0%); Montrusco Bolton (2.86%) First Call Mean Estimates: GENIVAR INCOME FUND (C$) 2009E: $2.13; 2010E: $2.30; 2011E: $2.05

Changes Annual DCPU Target 2010E $3.15 to $2.93 $30.00 to $31.00 2011E $2.92 to $2.93


Back to Index

Legacy Oil + Gas (LEG-TSX) Stock Rating: OutperformIndustry Rating: Market Perform


Mark Leggett, CFA (403) 515-1508 [email protected] Assoc: Jason Chang

Q4/09 Results Price (23-Mar) $12.61 52-Week High $14.88 Target Price $14.25 52-Week Low $1.86


Event Legacy reported Q4/09 CFPS of $0.27, slightly above our estimate of $0.23,

primarily reflecting lower operating costs. Average production of 4,728 boe/d

was in line with our forecast of 4,832 boe/d. The company exceeded 2009 exit

production guidance of 5,750 boe/d reflecting strong drilling results. Proved

plus probable (2P) reserves in 2009 were 16.1 MMboe. Legacy completed a

Q4/09 drilling program of 23 (18.0 net) wells with a 100% success rate

including 9.9 net Bakken horizontal wells in the Stoughton/Heward, Star Valley

and Taylorton areas. To date in Q1/10, Legacy has drilled 18 (14.2 net) wells.

The initial 2010 capital budget of $117 million was maintained consisting of 76

(58.7 net) wells targeting light oil. Based on this budget, Legacy expects to

achieve average production of 6,525 boe/d (97% oil) and exit production of

7,250 boe/d (26% growth from 2009 exit) in 2010.

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Neutral.

Forecasts Reflecting adjustments to our operating assumptions based on Q4/09 results, our

CFPS estimates have been slightly increased to $1.31 in 2010 and $1.77 in

2011. Our financial estimates are based on production forecasts of 6,512 boe/d

in 2010 and 7,710 boe/d in 2011.

Valuation Legacy shares trade at premium 2010E valuation multiple of 9.6x P/CFPS and

9.8x EV/EBITDA. Our target price is supported by our updated sum-of-parts

analysis of $14.31 per share (flat long-term Cdn. par crude $80/bbl).

Recommendation We continue to rate Legacy shares Outperform. Taylorton Bakken wells

represent compelling near-term catalysts.

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(FY-Dec.) 2008A 2009A 2010E 2011E CFPS $1.38 $0.91 $1.31 $1.77P/CFPS 9.6x 7.1x EPS $0.21 -$0.40 $0.31 $0.53 P/E 40.7x 23.8x CF/boe $43.71 $33.51 $43.46 $49.70 EV/EBITDA 3.1x 32.2x 9.8x 7.1x ROCE 4.0% -3.0% 3.0% 6.0% D/CF 1.2x 2.3x 0.7x 0.3x Quarterly CFPS Q1 Q2 Q3 Q4 2008A $0.31 $0.45 $0.39 $0.24 2009A $0.06 $0.12 $0.16 $0.27 2010E $0.31 $0.29 $0.34 $0.37 Dividend $0.00 Yield 0.0% Book Value $7.36 Price/Book 1.7x Shares O/S (mm) 74.2 Mkt. Cap ($mm) $936 Float O/S (mm) 61.1 Float Cap ($mm) $770 Wkly Vol (000s) 937 Wkly $ Vol (mm) $10.3 Net Debt ($mm) $67.8 Next Rep. Date May (E)

Notes: All values in C$; EPS (diluted), CFPS (diluted) Major Shareholders: Insiders (17%) First Call Mean Estimates: LEGACY OIL + GAS INC (C$) 2010E: $1.40; 2011E: $2.04

Changes Annual CFPS Quarterly CFPS 2010E $1.29 to $1.31 Q1/10E $0.30 to $0.31 2011E $1.74 to $1.77 Q3/10E $0.33 to $0.34

Please r cluding the Analyst's Certification.

Back to Index

Theratechnologies (TH-TSX) Stock Rating: Outperform(S)I ndustry Rating: Market Perform

March 24, 2010

Biotechnology

Jason Zhang, Ph.D.BMO Capital Markets Corp.

[email protected]

Alex Arfaei212-885-4033

[email protected]

Not Much New In 1Q10; Waiting for Tesamorelin FDA Advisory Meeting Securities Info

Price (23-Mar) $5.11 Target Price $8 52-Wk High/Low $6/$2 Dividend --Mkt Cap (mm) $309 Yield --Shs O/S (mm, BASIC) 60.4 Float O/S (mm) 59.7Options O/S (mm) na ADVol (30-day, 000s) 108

Price Performance

Event Theratechnologies (aka Thera) reported 1Q10 net loss of $0.07 per share, in

line with Street expectations. The loss per share was $0.02 narrower than our

estimate owing to lower R&D and market development costs.

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Impact Investors are primarily focused on two upcoming events for TH shares: the FDA advisory panel meeting on 5/27/10 followed by the PDUFA date of7/27/10 for tesamorelin. We continue to believe that tesamorelin has a compelling clinical profile and expect a positive outcome for both events(please see our prior notes for our in-depth analysis of tesamorelin). However, we pushed back our expected launch date for tesamorelin to 3Q10from 2Q10. Moreover, we updated our portfolio valuation model, which isbased on a modified discounted cash flow method.

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Forecasts We estimate tesamorelin can capture ~50% and ~40% of the severe lipohypertrophy patients in the US (22K) and ex-US (10K), respectively. With a slightly higher price than previous assumed, our tesamorelin peaksales estimate is $275 million in the US and $100 million in ex-US markets.

Valuation We estimate the present value of tesamorelin’s profits to be ~$317 million, present value (risk adjusted) of the US milestones (higher probability thanprevious assumption), cash position to be $160 million, and total firm value of $487 million or $8 per share.

Recommendation We maintain our OUTPERFORM(S) rating on TH shares.

Changes Annual EPS Annual FCF Quarterly EPS Target

2010E $0.23 to $0.21 2010E $0.05 to $0.03 Q2/10E $0.35 to -$0.07 $6.00 to $8.00 2011E $0.12 to $0.11 2011E -$0.04 to -$0.05 Q3/10E -$0.03 to $0.37 Q4/10E $0.00 to -$0.02

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Last Data Point : March 22, 2010

Valuation/Financial Data

(FY-Nov.) 2008A 2009A 2010E 2011E

EPS GAAP -$0.85 -$0.25 $0.21 $0.11 P/E 24.3x 46.5x First Call Cons. -$0.05 $0.24

FCF na $0.10 $0.03 -$0.05 P/FCF 170.3x nm EBITDA ($mm) na -$12 $15 $9 EV/EBITDA 15.9x 26.5x Rev. ($mm) na $20 $39 $36 EV/Rev 6.1x 6.6x

Quarterly EPS 1Q 2Q 3Q 4Q 2009A -$0.18 -$0.09 $0.10 -$0.08 2010E -$0.07A -$0.07 $0.37 -$0.02

Balance Sheet Data (08/31/09) Net Debt ($mm) -$70 TotalDebt/EBITDA nm Total Debt ($mm) $0 EBITDA/IntExp na Net Debt/Cap. nm Price/Book 6.5x Notes: All values in US$.

Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global Insight, Reuters, and Thomson Financial.


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Coast Wholesale Appliances Income Fund (CWA.UN-TSX)

Stock Rating: Market PerformI ndustry Rating: Market Perform


Stephen MacLeod, CFA (416) 359-8069 [email protected]

Increasing Target to $5.50 on Long-Term Outlook; Q4/09 Results in Line



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Event

Release of Q4/09 results.

Impact Neutral. Coast’s Q4/09 results were generally in line with our forecasts, with

slightly lower-than-expected revenue offset by lower costs, resulting in

EBITDA of $2.6 million, compared to our forecast of $2.7 million.

Forecasts We have lowered our 2010 EBITDA forecast to $11.8 million from $11.9

million to reflect a challenging retail environment, expected Olympics-related

softness in Q1/10, partially offset by improving contract sales in late 2010. Our

2011 EBITDA forecast remains $13.1 million.

Valuation Our increased target price of $5.50 is based on a higher valuation multiple of

6.0x 2010E EV/EBITDA. This level of valuation represents a discount to the

peer group, in line with Coast’s historic relative valuation.

Recommendation We maintain our cautious outlook on Coast’s business through 2010, given

cautious retail spending on appliances, price competition in the retail segment

and reduced contract sales to the builder segment. However, recent growth in

housing starts and building permits authorized in Western Canada bode well for

the contract business over the longer-term, but these sales are not likely to be

recognized for 12-18 months (late 2010, into 2011), upon project completion.

Coast further reduced its debt levels in Q4/09 and has sufficient balance sheet

flexibility to weather economic challenges and potentially maintain its

distribution post-SIFT tax, aided by a $45 million tax shield. Coast units are

rated Market Perform.

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(FY-Dec.) 2008A 2009A 2010E 2011E CDPU $1.17 $0.54 $0.50 $0.50 P/CDPU 10.1x 10.1x CFPU $1.31 $1.73 $1.04 $1.17P/CFPU 4.9x 4.3x Rev. ($mm) $147 $144 $146 $152 EV ($mm) $84 $52 $65 $59 EBITDA ($mm) $13.9 $10.6 $11.8 $13.1 EV/EBITDA 6.0x 4.9x 5.5x 4.5x Quarterly EPU Q1 Q2 Q3 Q4 2008A $0.19 $0.27 $0.33 $0.24 2009A $0.10 $0.18 $0.21 $0.16 2010E $0.12 $0.21 $0.26 $0.21 Dividend $0.50 Yield 9.9% Book Value $5.67 Price/Book 0.9x Units O/S (mm) 10.0 Mkt. Cap ($mm) $51 Float O/S (mm) 6.5 Float Cap ($mm) $33 Wkly Vol (000s) 27 Wkly $ Vol (mm) $0.1 Net Debt ($mm) $19.6 Next Rep. Date May (E)

Notes: All values in C$ Major Unitholders: CWAL Investments (35% of total units); The Jerry Zucker revocable Trust (16.1% of Class A units); The Futura Corporation (15.4% of Class A units) First Call Mean Estimates: COAST WHOLESALE APPLIANCES INC F (C$) 2009E: $0.70; 2010E: $0.89; 2011E: $0.97

Changes Annual CFPS Quarterly EPS Target 2010E $1.30 to $1.04 Q1/10E $0.13 to $0.12 $4.25 to $5.50 2011E $1.16 to $1.17 Q4/10E $0.22 to $0.21


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Descartes Systems Group(DSGX-NASDAQ; DSG-TSX) Stock Rating: Market PerformIndustry Rating: Market Perform


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

Target Price Raised to $7.00; Porthus Acquired

Event Descartes held a conference call to discuss its previously-announced acquisition

of Porthus, a vendor of network-based logistics solutions based in Belgium.

Descartes has acquired 96% of the shares and will be consolidating Porthus’

results as of March 19. It expects to acquire the remaining 4% by April 19.

Management reiterated its prior FY2011 guidance for revenue of $100+ million

and adjusted net income of $25 million for the combined entity.

Impact Slightly positive. We had expected that the transaction would successfully close,

although the fact that it has, with no unforeseen delays, is incrementally

positive. The acquisition will better help position Descartes with large global

customers in advance of new EU compliance requirements, which take effect in

2011, as Porthus was the leading vendor for electronic customs filings in

Europe. We don’t believe there is significant integration risk; while Porthus is

the largest acquisition that the current management team has completed, the

complementary nature of the product portfolio (which is also network-based)

should facilitate integration.

Forecasts We are raising our forecasts to reflect the acquisition. Our revised estimates are

roughly consistent with our previously published pro forma estimates for the

combined entity.

Valuation We are raising our target price to $7.00, reflecting 10.5x EV/EBITDA based on

FY2012E (roughly calendar 2011).

Recommendation We are maintaining our Market Perform rating.


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(FY-Jan.) 2009 A 2010A 2011E 2012E GAAP EPS $0.38 $0.25 $0.10 $0.21P/E 62.7x 29.9x CFPS $0.31 $0.29 $0.34 $0.49P/CFPS 18.4x 12.8x Rev. ($mm) $66.0 $73.8 $101.7 $112.7 EV ($mm) $111.0 $268.2 $319.7 $289.0 EBITDA ($mm) $17.0 $20.3 $25.3 $32.0 Quarterly GAAP EPS Q1 Q2 Q3 Q4 2009A $0.02 $0.03 $0.04 $0.29 2010A $0.04 $0.02 $0.02 $0.17 2011E $0.00 $0.02 $0.03 $0.05 Dividend $0.00 Yield 0.0% Book Value $3.00 Price/Book 2.1x Shares O/S (mm) 62.5 Mkt . Cap (US$mm) $392 Float O/S (mm) 41.4 Float Cap (US$mm) $260 Wkly Vol (000s) 921 Wkly $ Vol (USmm) $4.8 Net Debt ($mm) -$54.6 Next Rep. Date 10-Jun (E)

Notes: All values in US$ Major Shareholders: Mawer (11%); Acuity (10%); Jarislowsky (10%); Directors & Executives (3%); remainder widely held First Call Mean Estimates: Not Available

Changes Annual EPS Annual CFPS Quarterly EPS Target 2011E $0.11 to $0.10 2012E $0.40 to $0.49 Q1/11E $0.01 to $0.00 $6.50 to $7.00 2012E $0.16 to $0.21 Q2/11E $0.03 to $0.02 Q4/11E $0.03 to $0.05


Back to Index

Glacier Media (GVC-TSX) Stock Rating: Market PerformIndustry Rating: Market Perform


Tim Casey, CFA (416) 359-4860 [email protected] Assoc: David Fidler

Trends Improving

Event Fiscal 2009 results.

Impact Slightly positive. 2009 operating results were slightly ahead of expectations and

business conditions have begun to improve.

Forecasts Mostly unchanged. Please note our estimates do not include contributions from

potential acquisitions.

Valuation Our $2.35 target price is based on ~6x 2011E EBITDA.

Recommendation Glacier Media reported fiscal 2009 results that were slightly ahead of

expectations. Business conditions began to improve in Q4 and the company

remains cautiously optimistic for 2010. We have assumed modest revenue

growth in 2010. Cost savings initiatives undertaken in 2009 will be fully

realized in 2010. We reiterate our view that Glacier will be very selective in any

acquisitions and that it is highly unlikely they will acquire any meaningful

exposure to urban dailies. Glacier Media is rated Market Perform.


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(FY-Dec.) 2008 A 2009A 2010E 2011E EPS $0.30 $0.15 $0.26 $0.30 P/E 7.9x 6.8x FCFPS $0.39 $0.18 $0.19 $0.22P/FCFPS 10.8x 9.3x CFPS $0.49 $0.28 $0.25 $0.29 Rev. ($mm) $249 $229 $234 $238 EBITDA ($mm) $51.4 $35.8 $43.5 $46.7 EV/EBITDA 5.9x 8.1x 6.2x 5.3x Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.09 $0.14 $0.04 $0.03 2009A $0.03 $0.09 $0.05 -$0.02 2010E $0.06 $0.14 $0.03 $0.03 Dividend $0.00 Yield 0.0% Book Value $3.35 Price/Book 0.6x Shares O/S (mm) 92.7 Mkt . Cap ($mm) $190 Float O/S (mm) 60.5 Float Cap ($mm) $124 Wkly Vol (000s) 208 Wkly $ Vol (mm) $0.4 Net Debt ($mm) $103.7 Next Rep. Date 14-May (E)

Notes: All values in C$ Major Shareholders: Madison Venture Corp. (33%) First Call Mean Estimates: GLACIER MEDIA INC (C$) 2009E: $0.22; 2010E: $0.27; 2011E: $0.29

Changes Annual EPS Annual FCFPS Quarterly EPS Target 2010E $0.27 to $0.26 2011E $0.21 to $0.22 Q2/10E $0.15 to $0.14 $2.00 to $2.35


Back to Index

SEMAFO (SMF-TSX) Stock Rating: Market PerformIndustry Rating: Outperform


Andrew Breichmanas (416) 359-8387 [email protected]

David Haughton

Assoc: Jeffrey Schok / Steven Willis

The New Premium-Rated West African Producer as Mana Exploration Potential Continues to Impress



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Event BMO Research has reviewed its estimates following Q4/09 financial results and

a geological presentation hosted by management. Given continued impressive

exploration results at the company’s Mana mine in Burkina Faso, the potential

for resource additions and expansion of operations has been assessed.

Impact Potentially Positive. BMO Research currently includes upside to the current

resources and PEA parameters for the Wona Deeps underground development.

However, airborne geophysics has suggested extensive regional potential and

expanded drill programs are beginning to test the identified targets. BMO

Research analysis indicates that the current premium afforded SEMAFO shares

implies that additions of at least 1.0Moz to mineable reserves are anticipated.

Forecasts BMO Research EPS and CFPS estimates were negatively affected by higher

corporate costs, depreciation and capital expenditures from Q4/09 results.

Valuation The increased C$5.50 target price is based on a blend of 2.0x the BMO

Research 10% NPVPS estimate at spot prices from the Mana upside scenario

and 10x the 2011 CFPS forecast using base case assumptions.

Recommendation SEMAFO is rated Market Perform. The company has transitioned to a mid-tier

producer and established a solid foundation for growth at Mana. Further

exploration success is likely given the prospectivity of the property, but much of

the potential appears assumed given the current premium rating.

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200

400

(FY-Dec.) 2008A 2009A 2010E 2011E EPS $0.12 $0.18 $0.29 $0.33P/E 18.3x 16.2 x CFPS $0.23 $0.35 $0.47 $0.53P/CFPS 11.3x 10.0x Real'd Price ($/oz) $858 $988 $1,150 $1,150 Prod'n (000 oz.) 195.4 242.4 263.8 290.0 Ttl. Cash Cost ($/oz) $508 $507 $524 $516 Ttl. Prod. Cost $657 $686 $710 $711 Quarterly EPS Q1 Q2 Q3 Q4 2008A $0.01 $0.05 $0.06 $0.01 2009A $0.04 $0.05 $0.05 $0.04 2010E $0.08 $0.08 $0.06 $0.07 Dividend $0.00 Yield 0.0% Book Value $1.08 Price/Book 4.8x Shares O/S (mm) 252.7 Mkt. Cap ($mm) $1,360 Float O/S (mm) 249.9 Float Cap ($mm) $1,344 Wkly Vol (000s) 6,861 Wkly $ Vol (mm) $23.6 Net Debt ($mm) -$28.1 Next Rep. Date 11-May (E)

Notes: Share price, target price and capitalization in C$, all other values in US$ Major Shareholders: Sentry Select Capital (16.5%) First Call Mean Estimates: SEMAFO INC (US$) 2009E: $0.20; 2010E: $0.33; 2011E: $0.39

Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E $0.34 to $0.29 2010E $0.49 to $0.47 Q1/10E $0.07 to $0.08 $4.50 to $5.50 2011E $0.41 to $0.33 2011E $0.57 to $0.53 Q3/10E $0.09 to $0.06 Q4/10E $0.09 to $0.07

March 24, 2010

Back to Index

Apparel Retail

Industry Rating: Market Perform

March 24, 2010

John D. MorrisBMO Capital Markets Corp.

[email protected]

Jennifer Redding Edward Plank212-885-4072 [email protected] [email protected]

MALL TALK: March Field Team Finds Summary Month to date business in March has been strong,

based on our field research. Weather has been

favorable for early spring shopping, with mall traffic up

3% through the week ended 3/20. We expect the

release of Apple’s iPad to boost mall traffic in April

and shopping spillover to specialty apparel.

AEO – OP: We believe AEO is having a strong

month, driven by a spring floor set that is better

represented in wovens relative to its peers. We

expect to see improvements in AUR, given much less

clearance. We remain comfortable with our 1Q EPS

estimate of $0.16.

LULU – MP: We expect 4Q EPS of $0.30, slightly

ahead of guidance for $0.26-$0.28. We expect

management to stress the continued need for

incremental SG&A spend in FY2010 on store labor to

build back service levels, which may limit SG&A

leverage.

The Sale Rack Index continues to run roughly 5%

lower than last year.

Month to date, business in March has been strong, according to our field research. Weather has been favorable for early spring shopping, evidenced by a 3% uptick in mall traffic through the week ended March 20. Our store checks indicate that conversions are improving, given pent-up demand and the infusion of better fashion items into many assortments. We also expect the release of Apple’s iPad on April 3 to boost mall traffic in April and create shopping spillover to our specialty apparel stores.

American Eagle (AEO – OP): We believe AEO is having a strong month, driven by a spring floor set that is better represented in wovens (a key trend of the season) relative to its peers. We expect to see improvements in AUR, given much less clearance, coupled with a stronger position in denim and knits. We remain comfortable with our 1Q EPS estimate of $0.16.

lululemon athletica (LULU – MP): We expect LULU to report 4Q EPS of $0.30, slightly ahead of guidance for $0.26-$0.28. We expect management to stress the continued need for incremental SG&A spend in FY2010 on store labor to build back service levels, which may limit SG&A leverage.

Reitmans (RET.A – OP): We expect RET to report 4Q EPS of $0.21, in line with consensus. We believe strength in December carried through the remainder of the quarter and into 1Q10. Based on our channel checks, we believe business in early spring has been solid thus far, as well.

The Sale Rack Index continues to run roughly 5% lower than last year.

23-Mar EPS P/E Mkt CapApparel Retail Rating Price Target 2009E 2010E 2011E 2009E 2010E 2011E Div Yld Book ($mm)Abercrombie & Fitch (ANF) Market Perform $44.86 $39 $1.04 $1.65 $2.04 43.1 27.2 22.0 $0.70 1.6% $20.22 3,947Aeropostale (ARO) Market Perform $29.46 $29 $2.29 $2.60 $2.73 12.9 11.3 10.8 $0.00 0.0% $4.53 2,769American Eagle Outfitters (AEO) Outperform $19.33 $22 $0.76 $1.15 $1.41 25.4 16.8 13.7 $0.40 2.1% $7.37 4,016Gap (GPS) Market Perform $23.21 $21 $1.58 $1.75 $1.82 14.7 13.3 12.8 $0.34 1.5% $7.17 16,015Gymboree (GYMB) Market Perform $53.94 $53 na $3.95 $4.40 na 13.7 12.3 $0.00 0.0% $14.20 1,617Hot Topic (HOTT) Market Perform $6.55 $6 $0.24 $0.24 $0.28 27.3 27.3 23.4 $0.00 0.0% $6.05 290J. Crew Group (JCG) Outperform $45.87 $55 $1.91 $2.34 $2.75 24.0 19.6 16.7 $0.00 0.0% $5.18 2,917Limited Brands (LTD) Outperform $25.46 $29 $1.23 $1.62 $1.90 20.7 15.7 13.4 $0.60 2.4% $5.79 8,206lululemon athletica (LULU) Market Perform $36.23 $29 $0.72 $0.96 $1.18 50.3 37.7 30.7 $0.00 0.0% $2.15 1,844Pacific Sunwear of California (PSUN) Market Perform $5.09 $5 -$0.78 -$0.70 -$0.33 nm nm nm $0.00 0.0% $5.21 337Reitmans (Canada) (RET.A) Outperform $16.26 $19 $0.98 $1.25 $1.40 16.6 13.0 11.6 $0.72 4.4% $7.53 888Ross Stores (ROST) Market Perform $54.26 $52 $3.54 $4.11 $4.47 15.328 13.2 12.14 $0.64 1.2% $8.94 6,721The Children's Place Retail Stores (PLCE) Market Perform $45.01 $38 $2.65 $3.04 $3.33 16.985 14.81 13.52 $0.00 0.0% $20.20 1,233TJX Companies (TJX) Market Perform $43.53 $39 $2.84 $3.17 $3.43 15.327 13.73 12.69 $0.48 1.1% $7.01 17,969Zumiez (ZUMZ) Market Perform $20.05 $17 $0.33 $0.51 $0.71 60.8 39.3 28.2 $0.00 0.0% $6.04 607

Refer to pages 5 to 6 for Important Disclosures, including Analyst's Certification.

Back to Index

Drill Bits Weekly Royalty Trust Report Week Ending March 19, 2010

March 23, 2010 Gordon Tait, CFA (403) 515-1501 Assoc: Chris Bolton, CFA/Peter Kranz, P. Eng (403) 515-1503/1517 Email: [email protected]

Index Performance:Weekly YTD

Week Ending: 19-Mar Change ChangeS&P/TSX ET Index: 327.75 -0.4% 6.4%S&P/TSX E&P Index 3,834 -2.2% -0.8%

S&P/TSX Composite 31,716 -0.5% 2.2%

Commodity Performance:WTI Oil (US$/bbl): $80.68 -0.7% 1.7%AECO Gas (C$/Mcf): $3.80 -8.9% -34.4%US$/C$ Exchange Rate $0.9830 0.2% 3.4%

BMO Forecast Assumptions: '10E '11E

WTI Oil (US$/bbl): $75.00 $80.00AECO Gas (C$/Mcf): $4.26 $5.05US$/C$ Exchange Rate: $0.95 $0.95

Source: BMO Capital Markets, Bloomberg

S&P/TSX Energy Trust Index vs. S&P/TSX E&P Index vs. S&P/TSX Composite Index

50

60

70

80

90

100

110

120

130

140

150

Jan-07 M ay-07 Oct-07 Feb-08 Jul-08 Nov-08 Apr-09 Aug-09 Jan-10

ET IndexTSX Comp.E&P Index

N o te: last data po int M arch 19, 2010

ET Index

TSX Comp.

E&P Index

Source: BM O Capital M arkets, B loomberg

WTI Oil (US$/bbl) and AECO Gas (C$/Mcf)

$15

$30

$45

$60

$75

$90

$105

$120

$135

$150

Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 M ar-09 Aug-09 Jan-10

WTI

Oil

(US$

/bbl

)

$1.50

$3.00

$4.50

$6.00

$7.50

$9.00

$10.50

$12.00

$13.50

$15.00

AEC

O Gas (C

$/Mcf)

AECO

WTI

N o te: last data po int M arch 19, 2010 Source: BM O Capital M arkets, B loomberg

Weekly Highlights For the week, the S&P/TSX Canadian Energy Trust Index decreased

0.4%, while the S&P/TSX E&P Index declined by 2.2%. Year to date, the Energy Trust Index is up 6.4%, compared to a 0.8% decrease for the E&P Index and a 2.2% increase for the S&P/TSX Composite.

WTI crude oil ended the week at US$80.68/bbl (C$81.94), a decrease of 0.7% over last week’s close. WTI crude oil has averaged US$69.64/bbl over the past 12 months and US$78.38/bbl year to date. AECO natural gas closed the week at C$3.80/Mcf, a decline of 8.9% from last week. AECO has averaged C$4.00/Mcf over the past 12 months and $5.10/Mcf year to date.

The top three performing royalty trusts last week were COS (4.6%), FRU (3.6%), DAY (3.3%), while the weakest performance came from PVE (-8.9%), AAV (-7.1%), PEY (-4.5%).

We have Outperform ratings on AET, BNP, BTE, COS, CPG, NAE, PGF and VET. We are restricted on PMT.


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 8 to 9.

Back to Index

Market Elements March 23, 2010 Research Comment Quantitative/Technical Research Mark Steele (416) 359-4641 [email protected] Assoc: Tiberiu Stoichita

Equity markets gained; with the S&P 500 and FTSE 100 advancing to new highs; the VIX fell to a new closing low.

Most global government bond markets rallied (North American market was the exception); Greek bonds staged a rebound; the corporate CDS market rebounded after a 2-day sell off.

Major currency crosses were little changed; Swiss Franc rose to a record high vs. Euro, Brazilian real rebounded off of its 200d MA the Euro closed on the 1.35 mark, the lowest close since last May.

Commodities generally rallied; albeit with little gusto.

Levels* Currencies (USD per) Commodities Government 10- Yr Benchmark Equity Indices & Sentiment

Symbol H/L Level %Chg Symbol H/L Level %Chg Symbol H/L Level Chg Symbol H/L Level %ChgDXY 80.82 0.2% DJ UBS 131.79 -0.2% U.S. 3.69 0.03 S&P 1200 1,345 0.5%EUR 1.3498 -0.4% WTI Oil 81.89 0.8% Canada 3.47 0.01 S&P 500 H 1,174 0.7%CHF 0.9456 0.1% NMX Gas 4.14 1.5% Germany 3.06 -0.01 S&P/TSX 12,045 0.6%GBP 1.5039 -0.4% AECO Gas 3.60 0.0% France L 3.37 -0.02 Euro STOXX 2,911 0.7%JPYx10 0.1106 -0.3% Gold 1,104.7 0.2% Switzerland 1.90 0.01 FTSE 100 H 5,674 0.5%CAD 0.9844 0.3% Silver 17.03 0.3% Italy L 3.91 -0.02 Hang Seng 20,988 0.3%AUD 0.9191 0.1% Platinum 1,610.5 0.7% Spain 3.82 -0.03 Topix 947 -0.2%NZD 0.7076 0.2% Palladium 463.50 1.0% Greece 6.31 -0.14 S&P/ASX 4,875 0.9%BRL 0.5630 0.8% CMX Cu 336.95 -0.1% U.K. 3.92 -0.01 Shang/Shen 3,276 -0.8%MXNx10 0.8007 0.4% LME Al 3m 1.02 0.1% Australia 5.66 -0.02 Sensex30 17,451 0.2%ZAR 0.1365 -0.1% LME Ni 3m 10.20 1.0% Hong Kong 2.66 -0.02 CDX IG 5Yr 87.35 -2.5%KRWx10 0.8816 0.0% LME Zn 3m 1.02 -1.6% India 7.87 -0.01 TRIN 0.77 7%SGD 0.7140 0.1% Lumber 278.40 -0.1% Japan 1.36 -0.02 VIX L 16.34 -3.1%

Moves Currencies (spot) Commodities Government 10- Yr Benchmarks Equity Indices

1.0% 0.5% 0.0% 0.5% 1.0%

EUR

GBP

JPY

ZAR

KRW

CHF

SGD

AUD

NZD

CAD

MXN

BRL

2.0% 1.0% 0.0% 1.0% 2.0%

LME Zn 3m

DJ UBS

Lumber

CMX Cu

AECO Gas

LME Al 3m

Gold

Silver

Platinum

WTI Oil

Palladium

LME Ni 3m

NMX Gas

-0.15-0.10-0.050.000.05

Greece

Spain

Italy

Hong Kong

Australia

France

Japan

Germany

India

U.K.

Sw itzerland

Canada

U.S.

1.0% 0.5% 0.0% 0.5% 1.0% 1.5%

Shang/Shen

Topix

Sensex30

Hang Seng

S&P 1200

FTSE 100

S&P/TSX

Euro STOXX

S&P 500

S&P/ASX

Sectors S&P Global 1200 S&P Europe 350 S&P 500 S&P/TSX Composite

0.0% 0.2% 0.4% 0.6% 0.8% 1.0%

Hlth Care

Utilities

Telecom

Cons Stap

Energy

Cons Disc

Financials

Industrials

Info Tech

Materials

0.0% 0.5% 1.0% 1.5%

Utilities

Energy

Hlth Care

Cons Disc

Financials

Cons Stap

Telecom

Info Tech

Industrials

Materials

0.5% 0.0% 0.5% 1.0% 1.5%

Hlth Care

Cons Stap

Telecom

Utilities

Cons Disc

Energy

Info Tech

Financials

Materials

Industrials

0.5% 0.0% 0.5% 1.0% 1.5% 2.0%

Industrials

Cons Stap

Materials

Telecom

Energy

Utilities

Financials

Cons Disc

Hlth Care

Info Tech

Source for all data and graphics in this publication: BMO Capital Markets, Bloomberg, Thomson * H/L = at a new closing 52- wk High/Low; / = within 10% of the 52- week High/Low; Colour codes are inverted for bond and sentiment indications

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Market Elements


Daily Charts 3- Month View with 50- and 26- Day Moving Averages

Greek to Me (Greek 10-year bond yields fell 14bps and are 34bps off of Monday’s high): Germany, France Back IMF Role – Bloomberg; Greece, the IMF and the euro - LEX; Greek Crisis Risks Boiling Over - WSJ; Germany sets conditions for Greek rescue - FT.

New high for the S&P 500; new low for the VIX.

Currencies Commoditie s Bonds Equities

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Market Elements


Intra Day Charts 2- Day Tick View

U.S. home sales result (10am release) gave a positive lift to equities, euro, gold, copper, oil.

U.S. treasury yields tracked equities higher all day - BMOChart.

Currencies Commoditie s Bonds Equities

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Market Elements


Daily Sector Charts 3- Month View with 50- and 26- Day Moving Averages

New Highs: U.S. - Industrials, Discretionary, Staples, Technology; Canada – Discretionary, Health Care, Financials; Europe – Materials, Industrials, Discretionary, Technology.

S&P 500

S&P/TSX Composite

S&P Europe 350

Market Elements


Market Movers – Largest Daily Percentage Moves Global - Cairn Energy (CNE LN) shares surge on improved India outlook - AFP.

U.S. - Titanium Metals (TIE), RTI International Metals (RTI) surge in wake of Boeing production boost - MW.

Canada – Bankers Petroleum (BNK) volumes have grown on this breakout.

S&P Global 1200 ex U.S. & Canada S&P 500 S&P/TSX CompositeName Symbol % Chg Name Symbol % Chg Name Symbol % ChgSECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg

Energy Cairn Energy PLC CNE LN 7.9% EOG Resources Inc EOG 2.9% Bankers Petroleum Ltd BNK 7.5%Technip SA TEC FP 5.3% Peabody Energy Corp BTU 2.5% Crew Energy Inc CR 3.9%

Saipem SpA SPM IM 4.0% Pioneer Natural Resources Co PXD 2.3% Mullen Group Ltd MTL 3.1%Nippon Oil Corp 5001 JP -0.6% Baker Hughes Inc BHI -0.8% AltaGas Income Trust ALA-U -1.0%

TonenGeneral Sekiyu KK 5012 JP -0.7% BJ Services Co BJS -0.8% Pacific Rubiales Energy Corp PRE -1.6%

SK Energy Co Ltd 096770 KS -0.8% Nabors Industries Ltd NBR -4.3% Progress Energy Resources Corp PRQ -2.0%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgMaterials Cia Siderurgica Nacional SA SID US 5.8% Titanium Metals Corp TIE 9.3% Silvercorp Metals Inc SVM 5.0%

Vale SA VALE/P US 4.3% Cliffs Natural Resources Inc CLF 6.9% HudBay Minerals Inc HBM 4.0%

BlueScope Steel Ltd BSL AU 3.6% United States Steel Corp X 4.9% Lundin Mining Corp LUN 3.9%

Nitto Denko Corp 6988 JP -2.1% Airgas Inc ARG -0.4% Quadra Mining Ltd QUA -2.3%

Mitsui Chemicals Inc 4183 JP -2.1% Sigma-Aldrich Corp SIAL -0.5% Rubicon Minerals Corp RMX -2.3%

UPM-Kymmene OYJ UPM1V FH -5.0% CF Industries Holdings Inc CF -0.9% Jaguar Mining Inc JAG -4.1%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgIndustrials TNT NV TNT NA 4.2% Flowserve Corp FLS 4.8% Transat AT Inc TRZ/B 2.1%

Metso OYJ MEO1V FH 3.6% Caterpillar Inc CAT 4.1% Superior Plus Corp SPB 2.1%

Mitsubishi Heavy Industries Lt 7011 JP 3.1% Cummins Inc CMI 4.0% CAE Inc CAE 1.8%

European Aeronautic Defence an EAD FP -2.1% Norfolk Southern Corp NSC -0.3% TransForce Inc TFI -0.8%

BAE Systems PLC BA/ LN -2.2% Union Pacific Corp UNP -0.4% Canadian Pacific Railway Ltd CP -0.9%

All Nippon Airways Co Ltd 9202 JP -6.0% Lockheed Martin Corp LMT -1.1% Canadian National Railway Co CNR -1.1%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgCons Disc OPAP SA OPAP GA 8.7% JC Penney Co Inc JCP 5.1% Linamar Corp LNR 4.0%

Li & Fung Ltd 494 HK 4.7% Lennar Corp LEN 4.7% Corus Entertainment Inc CJR/B 2.4%

Sony Corp 6758 JP 3.6% AutoNation Inc AN 4.2% Thomson Reuters Corp TRI 1.6%

Kingfisher PLC KGF LN -2.6% Amazon.com Inc AMZN -0.9% Sears Canada Inc SCC 0.0%DSG International PLC DSGI LN -3.4% Harley-Davidson Inc HOG -1.0% Gildan Activewear Inc GIL -0.0%

Volkswagen AG VOW GR -4.4% Expedia Inc EXPE -2.3% Canadian Tire Corp Ltd CTC/A -0.1%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgCons Stap Henkel AG & Co KGaA HEN3 GR 4.0% Kraft Foods Inc KFT 3.5% North West Co Fund NWF-U 1.6%

Carlsberg A/S CARLB DC 2.0% CVS Caremark Corp CVS 2.1% Cott Corp BCB 1.6%Grupo Modelo SAB de CV GMODELOC MM 2.0% Mead Johnson Nutrition Co MJN 1.7% Saputo Inc SAP 1.4%

Wilmar International Ltd WIL SP -0.8% Coca-Cola Enterprises Inc CCE -0.5% Loblaw Cos Ltd L 0.1%

Asahi Breweries Ltd 2502 JP -1.2% Dr Pepper Snapple Group Inc DPS -0.6% Maple Leaf Foods Inc MFI -0.6%

Unilever PLC ULVR LN -1.6% Philip Morris International In PM -0.9% Metro Inc MRU/A -0.8%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgHealth Care Elan Corp PLC ELN ID 2.7% Pfizer Inc PFE 2.3% MDS Inc MDS 2.2%

Novo Nordisk A/S NOVOB DC 1.4% Waters Corp WAT 2.1% Biovail Corp BVF 1.1%

Sonic Healthcare Ltd SHL AU 0.9% Watson Pharmaceuticals Inc WPI 1.8% CML Healthcare Income Fund CLC-U 0.5%

Eisai Co Ltd 4523 JP -1.6% Quest Diagnostics Inc/DE DGX -1.2% SXC Health Solutions Corp SXC -0.0%

CSL Ltd CSL AU -1.7% WellPoint Inc WLP -1.2%

Fresenius Medical Care AG & Co FME GR -2.0% Laboratory Corp of America Hol LH -2.5%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgFinancials Legal & General Group PLC LGEN LN 4.7% E*Trade Financial Corp ETFC 7.3% FirstService Corp FSV 2.4%

Resolution Ltd RSL LN 4.5% Citigroup Inc C 2.2% AGF Management Ltd AGF/B 2.3%

Alpha Bank AE ALPHA GA 3.5% Wells Fargo & Co WFC 2.2% CI Financial Corp CIX 1.6%

Daiwa House Industry Co Ltd 1925 JP -2.2% Goldman Sachs Group Inc/The GS -0.8% Dundee Real Estate Investment D-U -0.7%

Mitsui Fudosan Co Ltd 8801 JP -3.3% SunTrust Banks Inc STI -0.8% National Bank of Canada NA -0.7%Promise Co Ltd 8574 JP -3.6% ProLogis PLD -0.9% Home Capital Group Inc HCG -0.8%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg

Technology Infineon Technologies AG IFX GR 5.1% Lexmark International Inc LXK 5.5% Celestica Inc CLS 4.6%

Toshiba Corp 6502 JP 3.6% KLA-Tencor Corp KLAC 4.4% Research In Motion Ltd RIM 2.2%

ASML Holding NV ASML NA 3.1% Dell Inc DELL 4.1% MacDonald Dettwiler & Associat MDA 1.5%MediaTek Inc 2454 TT -2.1% Google Inc GOOG -1.5% CGI Group Inc GIB/A 0.0%

Asustek Computer Inc 2357 TT -2.1% Amphenol Corp APH -1.7% Open Text Corp OTC -0.2%

Redecard SA RDCD3 BZ -2.2% Yahoo! Inc YHOO -1.9%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgTelecom Telenor ASA TEL NO 2.0% Qwest Communications Internati Q 3.7% TELUS Corp T 1.5%

Portugal Telecom SGPS SA PTC PL 1.9% Sprint Nextel Corp S 3.4% BCE Inc BCE 0.5%

Singapore Telecommunications L ST SP 1.6% MetroPCS Communications Inc PCS 2.0% Bell Aliant Regional Communica BA-U 0.2%

Telstra Corp Ltd TLS AU -1.3% AT&T Inc T 0.6% Manitoba Telecom Services Inc MBT 0.1%

Tele Norte Leste Participacoes TNE US -1.9% CenturyTel Inc CTL 0.5% Rogers Communications Inc RCI/B -0.1%

Nippon Telegraph & Telephone C 9432 JP -2.3% Frontier Communications Corp FTR 0.3%SECURITY_NAME TICKER Chg SECURITY_NAME TICKER Chg SECURITY_NAME TICKER ChgUtilities Veolia Environnement VIE FP 4.1% Questar Corp STR 1.6% Capital Power Income LP CPA-U 1.8%

Suez Environnement Co SEV FP 3.4% FirstEnergy Corp FE 1.4% Fortis Inc/Canada FTS 1.1%

Cia Energetica de Minas Gerais CIG US 2.6% Oneok Inc OKE 1.2% TransAlta Corp TA 1.0%

United Utilities Group PLC UU/ LN -1.4% AES Corp/The AES -0.4% Atco Ltd ACO/X -0.1%

Osaka Gas Co Ltd 9532 JP -1.8% Sempra Energy SRE -0.5% Just Energy Income Fund JE-U -0.5%

Chubu Electric Power Co Inc 9502 JP -3.1% Xcel Energy Inc XEL -0.9% Atlantic Power Corp ATP -0.5%

Bold = move of more than 5%

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Market Elements


Canadian Market Movers

Quadra (QUA), FNX Mining (FNX) create ‘merger of equals' - FNX, Presentation, Bloomberg.

Marsulex (MLX) announced strategic review - MLX.

Top Right = String of New Highs yet again!

Energy Materials Industrials Consumer Discretionary Technology FinancialsSymbol H/L Last %Chg Symbol H/L Last %Chg Symbol H/L Last %Chg Symbol H/L Last %Chg Symbol H/L Last %Chg Symbol H/L Last %ChgPD-U 7.69 1.9% MX 25.10 0.3% BBD/B 5.87 0.6% MG/A H 62.88 0.2% XIT 7.62 1.6% XFN H 23.92 0.8%ESI 14.82 1.1% POT 124.35 -0.4% CAE H 9.67 1.7% LNR 18.64 3.9% OTC 47.95 -0.2% RY H 60.24 1.1%TDG 7.15 0.9% AGU 72.50 0.6% RNO 6.20 0.8% MRE 9.45 0.5% MN 3.73 0.0% TD H 76.13 0.6%SVY 7.10 -0.6% CCL/B 28.15 0.0% VIC-U 16.10 -4.4% WPT 16.75 2.1% CX 0 .99 6.4% BNS H 51.29 1.1%TCW 13.10 0.1% CAS 8.43 3.6% WFI 27.50 2.7% BLD 2 .78 8.1% MMC 0.24 -4.0% BMO H 62.31 1.2%SCL/A 28.36 2.7% TCK/B 41.55 2.4% SNC 50.90 0.6% AZD 0.22 0.0% GIB/A 15.16 0.0% CM H 77.19 0.8%MTL 15.68 3.0% IVN 16.90 3.4% ARE 13.85 0.1% ZNN 2. 33 -8.2% MTK 3.53 -0.5% NA 62.60 -0.7%CFW 23.06 4.8% FM 88.86 1.8% GNV-U 27.62 2.0% DII/B 32.43 0.3% CTY H 18.25 0.8% CWB 24.17 0.2%PSI 11.83 2.0% IMN 57.26 -0.7% BDT-U 32.45 -0.3% GIL 26.88 -0.0% MDA 38.06 1.4% LB 44.15 0.2%FES 12.70 4.0% LUN 5.06 3.9% KHD US 14.29 2.4% GC 8.24 2.3% CSU H 42.25 1.4% MIC 26.65 -0.1%TESO US 11.52 -1.2% EQN 3.71 3.0% CUQ 20.37 0.3% THI 33.37 0.3% DSG 6.45 1.0% HCG 42.96 -0.7%SU 31.40 0.6% S 8.82 2.3% SDC 14.40 0.9% MTY 9.61 0.1% CMG 16.65 -0.8% ETC 24.15 0.6%IMO 38.69 0.0% HBM 13.80 3.9% CSIQ US 22.45 5.4% BPF-U 11.90 0.0% ESL 7.80 0.0% FN-U 21.47 1.5%HSE 27.61 -0.2% TCM 13.81 1.3% TIH 29.97 0.7% PZA-U 7.44 0.0% ENA 0.60 -1.6% MKP 12.00 -4.3%CVE 25.59 1.3% QUA 16.98 -2.3% NFI-U 11.06 -0.5% AW-U 16.20 1.5% MKX 11.75 0.0% FC-U 11.22 -0.1%IOC US 68.67 0.3% FNX 15.14 1.9% AFN 36.00 1.1% KEG-U 12.05 -0.4% RKN 1.48 -0.6% HEQ 7.19 0.7%PVE-U 7.87 2.2% WTN H 5.58 9.4% ATA 6.55 -0.1% CWI-U 5.29 0.1% TWT 3.35 0.0% DHF-U 17.38 -0.2%CLL 1.33 3.1% NDM 9.37 2.4% ARF-U 21.29 -0.9% AER 10.70 0.4% ABT 5.85 1.7% OCX 27.75 0.9%CNQ 72.66 0.1% TKO 4.98 1.6% WJX-U H 26.74 2.1% MDZ/A 11.08 0.0% BWC 10.43 1.3% X 30.04 0.2%ECA 31.49 1.2% ORA 3.93 -2.7% GLV/A 9.00 -0.3% ACM/A 35.24 0.8% AXX 1.68 -1.7% QC 1.30 -0.7%TLM 17.20 -0.5% MDI 25.37 3.5% FTT 17.73 0.9% CJR/B 19.60 2.4% RIM 76.75 2.1% CSF 14.77 0.4%COS-U 28.85 -0.1% GCE H 8.14 5.0% SPB 14.38 2.0% TVA/B 15.44 2.9% AAH 32.14 1.2% IGM 43.99 1.2%NXY 24.18 -0.2% CTQ 7.85 5.2% RUS H 19.29 0.9% SJR/B 20.11 0.4% DWI 10.76 3.2% CIX 21.18 1.5%PWT-U 21.71 1.6% AVM 3.96 -0.5% RCH 22.97 0.9% CCA 41.66 0.9% WIN 2.87 -0.3% AGF/B 18.58 2.2%CPG 38.89 0.4% ABX 39.44 -1.6% CWX 4.68 -1.4% CGO 33.25 2.0% SW 8.87 0.5% DC/A 13.21 0.3%UPL US 44.68 1.0% G 39.54 0.8% CVL 13.85 -0.7% CGX-U 19.46 1.4% CDV 3.14 0.9% SII 4.37 -0.6%AET-U 21.74 2.9% K 18.11 -0.0% TCL/A 13.74 1.2% IMX H 16.86 1.6% RCM 19.35 0.2% U 5.88 1.7%PBG 54.83 -0.7% AEM 58.93 0.7% BIN 17.82 -0.3% LGF US 5.99 2.9% SVC 2.02 0.0% GS 21.01 0.0%NKO 100.77 0.7% YRI 10.43 0.9% NAL 8.71 2.5% FMN 1.61 -2.4% VCM 6.90 4.5% PNP 1.76 -1.6%PBN 26.50 0.0% ELD 12.86 0.2% MLX H 12.73 6.0% TRI 37.51 1.5% EXF 6.09 1.1% GCG/A 8.08 -0.1%PRE 19.68 -1.5% IMG 14.63 -0.2% RBA US 21.88 0.2% YLO-U 6.20 2.6% TZT 1.66 -1.7% DW 13.99 -0.7%ERF-U 24.00 1.6% RBI 20.30 -1.2% BDI 19.90 0.0% QBR/B 33.97 0.2% WEW 0.58 1.7% GMP 13.77 1.3%BTE-U H 35.81 0.0% FNV 26.56 0.4% GW 11.33 0.7% TS/B 9.65 0.6% ET 13.75 -0.1% CF 11.13 0.4%PGF-U 11.51 1.4% CG 13.22 0.3% MSI-U H 10.73 0.2% GVC 2.10 2.4% PUR 4.65 1.5% WES 3.39 -1.7%BNP-U 24.18 0.7% OSK 8.48 1.3% STN 25.97 1.2% UNS 30.09 1.8% CTW/S 2.06 -1.9% MFC 19.89 -0.3%PMG 32.19 0.5% IGT 110.05 0.1% IBG-U 14.10 -4.0% SCC 28.75 0.0% MT 4.64 -0.2% GWO H 28.33 1.2%VET-U 35.20 2.3% NGD 4.55 -1.0% WJA 13.75 1.8% CTC/A 54.97 -0.0% VNP 5.34 0.3% PWF H 33.01 1.1%PRQ 11.84 -1.9% AGI 14.01 0.2% TRZ/B 12.66 2.0% DOL 21.99 0.8% DSA 8.20 0.6% SLF 32.09 0.6%DAY-U 11.20 0.6% GBU 4.28 -0.9% JAZ-U H 4.54 0.0% RET/A 16.26 0.0% CLS H 11.41 4.5% POW 30.39 0.9%NAE-U 13.36 0.6% GAM 8.78 0.5% AC/B 1.89 8.6% CTU/A 12.90 1.5% SO 9.92 0.7% IAG 34.61 -0.3%PEY-U 13.32 0.3% SMF H 5.38 3.0% CNR 59.69 -1.0% GLN 15.05 0.1% MSD 23.40 1.6% FFH 378.29 0.5%BNK H 9.47 7.5% DGC 18.75 2.0% CP 55.00 -0.8% RON 15.95 0.8% GND 6.16 1.6% IFC 42.79 0.6%POU 16.07 -0.5% NG H 7.92 1.6% TFI 9.89 -0.7% FGL 14.27 1.3% ZL 1.91 0.0% XRE 12.14 0.4%NVA 12.29 -0.4% XGD 20.01 -0.0% STB H 5.13 1.3% IDG 17.89 0.5% HR-U 16.40 0.3%

AAV 7.32 1.2% EGU 6.52 2.6% CSS 8.92 0.1% LNF 12.20 -1.6% Utilities REF-U 27.37 0.1%UTS 2.62 3.9% LSG 2.77 2.9% WTE-U H 16.67 1.0% GBT/A 36.25 -0.6% Symbol H/L Last %Chg CUF-U 19.29 0.9%

BIR 8.76 0.6% RMX 4.20 -2.3% Health Care Consumer Staples FTS 29.02 1.1% CRR-U 11.54 -0.0%CR H 17.13 3.9% SGR 3.31 0.3% Symbol H/L Last %Chg Symbol H/L Last %Chg EMA 24.54 0.5% AP-U 20.10 -0.9%TNP 3.27 3.4% JAG 11.15 -4.1% IM 6.75 0.0% SC 44.79 0.6% GZM-U 16.37 -0.4% D-U 25.83 -0.6%IE 3.56 2.2% GSC 3.83 0.2% EKO 1.42 1.4% PJC/A 9.90 0.4% CU 48.30 0.6% WRK-U 15.00 0.4%FRU-U 17.32 1.3% NGX 3.19 2.9% FMD-U 9.35 0.5% GCL 12.32 0.0% ACO/X 50.81 -0.1% BEI-U 40.52 -0.4%CLT 20.04 1.2% SEA 21.94 1.8% CLC-U 12.75 0.4% L 37.57 0.0% JE-U 14.26 -0.4% CAR-U 14.25 0.5%QEC 4. 22 7.3% VEN 9.48 -0.2% DR-U H 10.95 1.2% WN 70.22 1.1% TA 22.91 0.9% NPR-U H 24.10 1.2%LEG 12.61 1.2% R 2.00 0.0% SXC H 67.76 0.0% MRU/A 41.68 -0.7% BRC-U 21.14 0.6% REI-U 19.40 0.6%TET 8.32 -2.1% ARZ 4.88 1.4% CNJ 4.49 0.2% ATD/B 18.12 0.3% NPI-U 13.69 0.9% CWT-U 21.34 1.5%PXX 2.63 5.2% CRU 0. 47 -5.1% TH 5.11 6.4% EMP/A 51.81 1.3% CPA-U H 18.00 1.7% PMZ-U 17.20 0.5%BNE 36.44 1.9% JIN 4.55 -1.0% QLT 5.32 1.1% NWF-U 18.24 1.6% ATP 12.74 -0.5% MRT-U 13.31 0.3%PMT-U 4.84 0.2% MFL 9.85 -0.3% BU 9.09 0.3% LIQ-U 16.95 0.5% CPX 22.77 0.3% AX-U 11.70 -0.4%GO 6.96 2.2% XRC 7.09 -0.7% ONC 3.39 -0.5% BR-U 16.90 1.7% RPG 3.01 -0.3% CSH-U 7.42 -0.5%CMF 7.87 3.9% HRG 0.73 -2.6% HBP 2.80 2.1% CDL/A 15.37 -0.1% AQN 4.65 1.9% EXE-U 10.55 0.9%OPC 1.86 -1.0% GBG 1.77 -1.1% RVX 5.80 -0.8% BCB 7.67 1.5% BLX 10.39 -1.5% INN-U 5.78 0.0%SEO 10.54 -1.2% SLW 16.07 2.8% NYMX US 3.74 0.8% VT 9.32 -1.2% MXY 1 .64 11.5% BAM/A 25.58 0.3%KEY-U 26.42 1.2% PAA 24.00 0.2% YM 1.18 0.8% ABC 1.47 2.0% IEF-U 12.19 1.1% FCR 22.25 0.4%PKI-U 11.55 -0.7% SSO 18.16 2.0% TTH 2.76 3.7% SAP 29.38 1.4% MPT-U 7.20 -0.2% MRC 43.00 1.4%TRP H 37.17 0.3% SVM 7.16 4.9% MDG 0.57 -3.3% CBY 51.80 1.5% PCC 3.49 -1.9% BPP 19.25 0.0%ENB H 49.30 1.2% ELR 1.40 0.0% AEZ 0.84 -1.1% MFI 10.22 -0.5% BPT-U 4.41 0.4% PRK 5.47 -2.3%

IPL-U 11.79 -0.3% HW 10.14 2.4% BVF 16.45 1.1% AGT 33.97 -0.9% Telecom Services BPO H 15.75 0.8%PIF-U 17.78 0.2% PPN 1.41 0.7% PLB H 23.25 0.4% RSI-U 4.91 0.2% Symbol H/L Last %Chg MIM/A 13.17 0.5%FCE-U 10.65 0.9% GNA 7.86 2.2% COM H 6.72 0.5% BXI 1.90 -2.0% PIX 1.09 3.8% KMP 8.23 0.4%ALA-U 18.62 -0.9% CLM H 9.13 3.7% DDS 1.49 -0.6% PBH 14.25 1.1% BCE 30.66 0.5% MEQ 10.38 -1.0%CCO 28.06 0.1% LIF-U 51.54 1.0% ANP 1.14 -2.5% SOY 3.95 -1.2% T H 37.65 1.5% MRD 11.55 -0.7%SGQ 16.49 -2.4% TRE 20.68 0.9% NRI 0.24 -4.0% HLF 10.60 -1.8% BA-U 25.79 0.2% GDC 3.91 -1.0%UUU 2.60 -0.7% WFT 38.72 0.2% MDS 8.73 2.2% AG-U 2.97 -0.3% MBT 31.54 0.0% FSV H 22.50 2.4%DML 1. 48 -5.1% CFP 9.15 1.1% PTI 2.59 0.0% ATB 17.18 0.4% WRX 0.89 -1.1% AIF-U 13.32 0.9%XEG 17.80 0.4% NBD 16.51 -0.5% GLG 7.29 5.6% RCI/B 35.33 -0.0% BRE-U 13.23 -1.1%

H/L = at a new closing 52- wk High/Low; / = within 10% of the 52- wk High/Low; Blue = S&P/TSX 60 member, Italics = ETF, Bold = move of more than 5%

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Market Elements


Earnings Expected Next Session

Company Ticker Country Sector Industry MktCap Period TimeResolute Energy Corp REN US U. S. Energy OG E&P 630 Q4PetroChina Co Ltd PTR US China Energy Int O&G 24,580 YEndeavour Silver Corp EDR CN Canada Materials PrecMet 200 Q4 Bef-mktAlexis Minerals Corp AMC CN Canada Materials DvrsMng 80 Q4Commercial Metals Co CMC US U. S. Materials Steel 1,850 Q2Omnova Solutions Inc OMN US U. S. Materials SpecChm 320 Q1 21:00Eurasian Natural Resources Corp ENRC LN U.K. Materials DvrsMng 22,360 YNan Ya Plastics Corp 1303 TT Taiwan Materials ComdChm 15,780 YFormosa Plastics Corp 1301 TT Taiwan Materials ComdChm 13,510 YWacker Chemie AG WCH GR Germany Materials SpecChm 7,080 Y 16:00Israel Chemicals Limited ICL IT Israel Materials Fert&Ag 1,690 YHochschild Mining plc HOC LN U.K. Materials PrecMet 1,400 YMirabela Nickel Ltd MBN AU Australia Materials DvrsMng 790 S1Canadian Pacific Railway CP CN Canada Industrials Railroads 9,180 Q1Robbins & Myers Inc RBN US U. S. Industrials Ind Mach 860 Q2 Bef-mktGenCorp Inc GY US U. S. Industrials Aero&Def 280 Q1Q-Cells AG QCE GR Germany Industrials ElcCmpEq 840 YDP World Ltd 3DW GR UAE Industrials MarineSrv - YDollarama Inc DOL CN Canada CMR Disc GMrchStrs 1,560 Q4Wescast Industries Inc WCS.A CN Canada CMR Disc AutoParts 10 Q4Lennar Corporation LEN US U. S. CMR Disc HomeBld 2,500 Q1 Bef-mktCKE Restaurants Inc CKR US U. S. CMR Disc Rstaurnt 620 Q4 Aft-mktdELiA*s Inc DLIA US U. S. CMR Disc CatalgRtl 60 Q4 Bef-mktLi & Fung Ltd 494 HK Bermuda CMR Disc Distrib 19,570 YBelle International Holdings Ltd 1880 HK Cayman CMR Disc ApparlRtl 10,820 YChina Dongxiang Group Co 3818 HK Cayman CMR Disc Aprl&Gds 4,130 YMRV Engenharia e Participacoes SA MRVE3 BZ Brazil CMR Disc HomeBld 3,620 Y Aft-mktBellway PLC BWY LN U.K. CMR Disc HomeBld 1,340 S1Medion AG MDN GR Germany CMR Disc Distrib 540 YGeneral Mills Inc GIS US U. S. CMR Stap PkgFdMt 24,050 Q3 Bef-mktAEterna Zentaris Inc AEZ CN Canada Hlth Care Biotech 50 Q4 Bef-mktAGF Management Ltd AGF.B CN Canada Financials AsstMgmt 1,590 Q1 08:00Resolution Ltd RSL LN Guernsey Financials LifeHthIns 2,700 YGuangzhou R&F Properties Co Ltd 2777 HK China Financials REstDevl 1,610 YEspirito Santo Financial Group SA ESF PL Luxembourg Financials DiversBnk 1,560 Y 07:00Bank Hapoalim BM POLI IT Israel Financials DiversBnk 560 YPure Technologies Ltd PUR CN Canada Info Tech ElecInstr 150 Q4Cyberplex Inc CX CN Canada Info Tech InetSftSrv 60 Q4 Aft-mktPaychex Inc PAYX US U. S. Info Tech DataProc 11,740 Q3 Aft-mktRed Hat Inc RHT US U. S. Info Tech SystmSwr 5,660 Q4Epistar Corp 2448 TT Taiwan Info Tech Semi 2,590 YZTE Corp 763 HK China Info Tech ComEquip 2,050 YWPG Holdings Co Ltd 3702 TT Taiwan Info Tech TechDist 1,510 YRichtek Technology Corp 6286 TT Taiwan Info Tech Semi 1,470 YChina Unicom Ltd CHU US Hong Kong Telecom IntegTelSrv 28,110 YMobile Telesystems OJSC MBT US Russia Telecom WlsTelSrv 21,720 YA2A SpA A2A IM Italy Utilities MultiUtil 5,630 Y

Red = Canadian incorporated, Blue = U.S. incorporated, Highlighted = S&P Global 1200 Index member

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Relative Strength Filter March 24, 2010 Research Comment Quantitative/Technical Research Mark Steele (416) 359-4641 [email protected] Assoc: Tiberiu Stoichita

Euro Breakdown

CLICK HERE for a printer friendly version of this report including research disclosures.

The euro brok e to the down side at 4:40 a.m. this morning (before Fitch downgraded Portugal; and on this downgrade, we note that it is having little if any impact on Portuguese sovereign deb t so far – see BMO Chart). This euro break down follows a failed upsid e r eversal only eight sessions ago – Figure 1. Risk on the euro is to the 1.32 level. Headline risk is certainly the order of the week and year for the euro.

This euro weakness / dollar st rength will certainly weaken gold shares, which have dropped to a 6th decil e position in our Group Selection Report.

It will a lso hold Europ ean indi ces in four-bom b underperforming trends, and No rth American in dices in four-star outperforming patterns compared to the S&P Global 1200 – see link.

For equity investors - stay dollar bloc.

Figure 1: Euro With 200-, 50- and 26-Day Moving Averages at 6:40 a.m. This Morning

Source: BMO Capital Markets, Bloomberg, Thomson, Markit

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Economic Research

March 24, 2010 Research Comment Dr. Sherry Cooper (800) 613-0205 Michael Gregory (416) 359-4747 Benjamin Reitzes (416) 359-5628

A.M. Notes

Dr. Sherry Cooper, Chief Economist [email protected]

416-359-4112

NORTH AMERICA – Michael Gregory

On today’s docket… U.S. durable goods orders—February (@ 08:30): Sal Guatieri notes that they should rise 0.6%, boosted by a jump in Boeing orders. However, lower auto production likely acted as a slight headwind. Excluding transportation, orders are expected to retrace part of the prior month’s 1% decline. Core capital goods orders (a good proxy for business capital spending) which were particularly weak in January, plunging 4.1%, likely also rebounded, but probably not enough to erase the earlier decline.

U.S. new home sales—February (@ 10:00): Sal also notes that they are likely to hold flat at January’s record low 309,000. While the small increase in the NAHB index in February points to some potential gain, it was likely overwhelmed by the poor weather. And, with the NAHB falling in March, the outlook for housing remains negative. (Yesterday, existing sales slipped 0.6% to 5.02 mln, down for the third month in row).

Then cometh the Canadian policymakers… Finance Minister Jim Flaherty will hold a news conference @ 9:00. He’s apparently announcing the kickoff of pension reform consultations, as advertised in the recent budget.

Bank of Canada Governor Carney speaks on “The Virtue of Productivity in a Wicked World”. The text will be released @12:50, followed by a press conference @ 14:10. Any discussion on productivity will probably touch on the loftiness of the loonie and the need for Canadian firms to become more productive to compete in foreign markets and at home (with the C$ also providing a means to achieve this—cheaper imported capital goods). It could also touch on other implications of Canada’s poor productivity performance—it lowers the economic speed limit and has already been cited (in January’s MPR) as a culprit contributing to the “stickiness” of core inflation by keeping unit labour cost increases stubbornly high.

However, with it now looking like the BoC’s projections for Q1 core CPI inflation (1.6% y/y) and real GDP growth (3.5%) will both come up short, market participants will be scouring the text and Q&A for clues to the timing and magnitude of those first few policy rate hikes. While Mr. Carney might hint at an upgrade to the near-term projections to be presented in April’s Monetary Policy Report, we still wouldn’t be surprised if the Governor downplays the recent upside surprise in the core CPI (owing to Olympic-sized hotel price hikes) and run of reports pointing to a solid January GDP gain with February overflow (owing to the Olympics again along with pulled-forward housing activity and the temporary ripples from North American inventory restocking). The policy clues could be sparse.

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Sector Comment Economic Research


The Province of Saskatchewan will table its FY2010/11 budget @ 16:15. Robert Kavcic notes that it’s expected to focus on spending restraint as resource revenues remain under pressure. In its latest FY2009/10 update, the Province penciled in a $425 mln surplus, but an $86 mln deficit before transfers from the reserve fund. The weakened fiscal position (which is still quite healthy relative to all other Provinces) is the result of a massive $2.1 bln decline in potash revenues from last year’s original budget plan—prices and production both fell sharply last year. The Province has already begun to reign in spending plans, lowering the FY2009/10 tally by $100 mln during the last year, and this year’s budget will likely take further aim at government expenses.

Yesterday afternoon, Manitoba tabled its budget. Rob reported that the province’s FY2010/11 plan takes a balanced approach to deficit reduction against a still-fragile economic backdrop, offering modest spending growth and some tax/user fee increases. It is projecting a $545 mln summary deficit in FY2010/11, slightly improved from an estimated $555 mln deficit in FY2009/10. The Province will lean on its Fiscal Stabilization Account for $129 mln. Longer term, the Province is anticipating four years of deficits before returning to a $185 mln surplus in FY2014/15… We get Ontario tomorrow.

Rounding out Wednesday’s docket… 10:30: U.S. DoE petroleum report for March 19th… 10:45: KC Fed Pres. Hoenig (the two-time FOMC dissenter) speaks on “The Financial Foundation for Main Street”… 12:05: C$3.2 bln auction of 3-year Government of Canada bonds… 13:00: US$42.0 bln auction of 5-year U.S. Treasury notes… 20:00: Fed Gov. Kohn speaks on “Homework Assignments for Monetary Policymakers”.

Just in… The ABC News consumer index decreased a notch to -44 for March 21st, still the second best reading in the past 11 weeks… The MBA mortgage index decreased 4.2% (-47.9% y/y) for March 19th.

OVERSEAS – Benjamin Reitzes

The US$ index is up strongly this morning, thanks mostly to a sizeable drop in the euro (see below). All the other majors are weaker as well, with the NZ$ lagging after Q4’s current account deficit widened much more than expected. Elsewhere, Japan’s February merchandise trade surplus came in higher than consensus, as exports rose 45.3% y/y. Export volumes were solid too, up 1.2% on the month and 44% y/y. But the decent data didn’t help the yen. The pound is softer ahead of a pre-election budget announcement by the ruling Labour party (who are trailing in the polls). The budget is expected to lay out the framework for returning to a more sustainable fiscal path. The strong US$ is weighing on commodities: oil is down 1.7% to $80.50, gold is $10 lower to $1095, base metals are down 1% to 2%, and grains are weaker as well. The euro fell to its lowest level since last May, as it appears that the IMF will be part of any aid package for Greece. Markets are concerned that IMF involvement could mean ever harsher austerity measures (since currency devaluation isn’t an option), which could prompt a potential exit from the Euro area by Greece. The push to get the IMF involved came solely from Germany who has strongly resisted providing any support to Greece, as it is politically extremely unpopular. IMF involvement would add some credibility to the process, as it is very experienced in these matters, but it certainly shows that the Euro area can’t take care of its own. This crisis is a test of the currency’s staying power, and if Greece is allowed to exit, that may only be the first step towards eventual dissolution of the Euro area. Greece isn’t the only country facing difficulty, as Fitch downgraded Portugal’s sovereign debt rating one notch to AA- and kept the negative outlook (meaning more downgrades are possible). Politics are

Sector Comment Economic Research


starting to play a more prominent role in the crisis, which could spell trouble for heavily indebted Euro area countries. As long as the Greece situation drags on without resolution, the euro will likely remain under pressure. Moreover, if there’s no resolution soon, Portugal and Spain could soon be in the spotlight as well. Meantime, Euro area data were mostly solid. The manufacturing and services PMIs for March handily beat expectations. The manufacturing index rose to its best level since Dec. ’06, while the services measure hit a 28-month high. Germany’s Ifo survey of business confidence also beat expectations, rising 2.9 pts to 98.1 in March, a 21-month high. The current situation and expectations components both gained ground. The improvement in both the PMIs and the Ifo survey point to more solid growth in Q2 following a weather-dampened Q1. There was one bit of softer news though, as Euro area industrial new orders fell 2% in January. The consensus call was for a similar-sized gain. Bottom Line: Europe is recovering, but the pace remains sluggish. Asian equity markets closed higher, as the Nikkei rose 0.4%, the Hang Seng gained 0.1%, and China’s CSI 300 was flat. European markets are down; DAX (-0.7%), CAC (-0.9%), FTSE (-0.5%). U.S. equity futures are pointing to a lower open. U.S. treasuries are little changed. Gilts and Bund 10-yrs yields are flat as well. JGB 10-yr yields were down 1 bp.

Currency Market Current Change High Low

7:01 AMUS$ Index 81.56 +0.66 81.609 80.803C$ 1.0219 +0.0060 1.0228 1.0157C$ (US cents) 97.85 -0.58 97.77 98.46GBP 1.4958 -0.0091 1.5047 1.4949EUR 1.3359 -0.0140 1.3505 1.3350JPY 91.19 +0.79 91.27 90.38A$ 0.9127 -0.0061 0.9195 0.9111CNY 6.8267 +0.0003

Data Docket: Japan: Merchandise Trade Surplus (Feb) ¥651 bln, better than expected;

exports up 45.3% y/y Euro area: Manufacturing PMI (Mar A) 56.3, up 2.1 pts and better than

expected Services PMI (Mar A) 53.7, up 1.9 pts and better than expected Industrial New Orders (Jan) -2.0%, +7.0% y/y Germany: Ifo Survey (Mar) 98.1, up 2.9 pts and better than expected

AM CHARTS

Perhaps That 5% Q4 Growth Was No Fluke A Tale Of Two Housing Markets ON THE WEB: (Link to Chart)

http://www.bmonesbittburns.com/economics/amcharts/mar2410.pdf�

BMO Capital Markets Disclosure Statements


IMPORTANT DISCLOSURES Analyst's Certification As to each company 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 prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness 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 companies from which BMO Capital Markets Corp. has received 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 Index, S&P 500, Nasdaq Composite, as appropriate for each company. BMO Capital Markets eight Top 15 lists guide investors to our best 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

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