Inside Carney's $9B defense promise, GFL's potential $5B carve-out
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WHAT'S ON TAP
Carney’s $9B defense promise is good for Calian Group
GFL’s $5B rumour could drive aggressive M&A cycle
U.S. & China get back on track, market doesn’t care
VHI up 5% on new coverage, LNR continues its run
HOT OFF THE PRESS
Carney’s $9B defense promise lifts CGY
The good news for Canadian defense names keeps on coming, as Carney committed an additional $9B of investment for the year on Monday (full details here).
Investment | Purpose |
|---|---|
$2.6B | Recruitment & retention |
$844M | Repair equipment & infra |
$560M | Digital capabilities |
$1.0B | Expansion & innovation |
$2.1B | Private/public partnership |
$2.0B | International partnerships |
Combined with a ~$14B reallocation of defense-related spend currently sitting in other categories, the Liberal government aims to break $60B this year, above the 2% NATO target that was originally a 2030 goal.
Unlike previous defense announcements that were equipment-focused, this $9B is largely directed towards expanding our armed forces and ensuring the right infrastructure is in place for them to succeed.
In comparison to other Canadian defense names the focus on “operational readiness” reads well for Calian Group (CGY), which we break down in the full piece below.
If the above link doesn’t work, try this: https://www.bullpen.finance/content/152
GFL eyes M&A with potential $5B carve-out
While a potential sale of GFL’s infrastructure business (GIP) doesn’t come as a surprise for those following the story, a rumoured $5B price tag is new information. The multiple isn’t all that exciting at 16-17x EBITDA based on guidance…
So we’ll be exiting this year with a $300 plus million EBITDA number, and there’s still a fairly good backlog of M&A opportunities.
… but the use of proceeds is, with leverage already closer to the peer group than it used to be.
That means any capital inflow is likely to be redeployed into growth, with management highlighting a more robust M&A pipeline now than in recent years…
… which could drive margin expansion in the core business, and help GFL close the remaining valuation gap to peers.
If the above link doesn’t work, try this: https://www.bullpen.finance/content/153
FUNNY BUSINESS
It looks like the U.S. and China are getting their relationship back on track, with a framework agreement on how to return to the 90-day truce from early May.
The idea is we’re going to go back and speak to President Trump and make sure he approves it. They’re going to go back and speak to President Xi and make sure he approves it, and if that is approved, we will then implement the framework.
Futures aren’t budging, indicating this was the expected outcome and participants are becoming immune to the noise… or the pain.
INSIDER TRANSACTIONS
| Insider | Company | Value |
|---|---|---|
| Shawn Beber | CIBC (CM) | $859K |
| Andrew Anovitz | CAE Inc. (CAE) | $264K |
| Pascal Grenier | CAE Inc. (CAE) | $1.4M |
| Helene Gagnon | CAE Inc. (CAE) | $135K |
| Jeff Hoffmeister | Shopify Inc. (SHOP) | $435K |
| Jessica Hertz | Shopify Inc. (SHOP) | $641K |
| Harley Finkelstein | Shopify Inc. (SHOP) | $541K |
| Pablo Mir | Lundin Gold (LUG) | $997K |
| Nadeem Velani | Canadian Pacific (CP) | $2.7M |
| John Hooks | PHX Energy (PHX) | $755K |
| Jennifer Squitieri | Canaccord (CF) | $195K |
| Douglas Seneshen | dynaCERT (DYA) | $148K |
| Olivier Newton | BTQ Tech (BTQ) | $130K |
| Russell Girling | Suncor (SU) | $605K |
| Louis-Pierre Gignac | G Mining (GMIN) | $194K |
ON OUR RADAR
GAINERS & LOSERS
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VitualHub popped 5% after NBF analyst John Shao initiated coverage with an “Outperform” rating and a $14 price target.
Linamar (LNR) is continuing its run, up nearly 25% since confirming last month that "virtually everything" they ship to the U.S. is exempt from tariffs thanks to USMCA compliance.
EARNINGS
YESTERDAY’S EARNINGS
| Company | Actual | Consensus |
|---|---|---|
| 🇨🇦 D2L (DTOL) | 0.06 | 0.11 |
| 🇨🇦 Stingray (RAY-A) | 0.27 | 0.24 |
| 🇨🇦 ADF Group (DRX) | 10.4M | 8.9M |
TODAY’S EARNINGS
| Company | Time | Consensus |
|---|---|---|
| 🇨🇦 Blackline (BLN) | AM | -0.03 |
| 🇨🇦 North West (NWC) | AM | 0.58 |
| 🇨🇦 Dollarama (DOL) | AM | 0.84 |
| 🇨🇦 Haivision (HAI) | PM | 1.8M |
| 🇨🇦 Major Drilling (MDI) | PM | 0.06 |
| 🇨🇦 Andrew Peller (ADW) | PM | -0.09 |
| 🇨🇦 Currency Exchange (CXI) | PM | - |
| 🇺🇸 Oracle (ORCL) | PM | 1.64 |
ECONOMIC DATA
YESTERDAY’S ECONOMIC RELEASES
| Release | Actual | Consensus |
|---|---|---|
| 🇺🇸 Biz. Optimism Index | 98.8 | 95.9 |
| 🇺🇸 Oil Stock Change | -0.4M | 0.7M |
TODAY’S ECONOMIC RELEASES
| Release | Time | Consensus |
|---|---|---|
| 🇨🇦 Building Permits M/M | 8:30AM | 2.2% |
| 🇺🇸 Core Inflation M/M | 8:30AM | 0.3% |
| 🇺🇸 Core Inflation Y/Y | 8:30AM | 2.9% |
| 🇺🇸 Inflation M/M | 8:30AM | 0.2% |
| 🇺🇸 Inflation Y/Y | 8:30AM | 2.5% |
COMMODITIES
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