BRASCAN IN MIX TO BUY AUSTRALIAN HYDRO UNIT
T R A D I N G D E S K
A report by RBC Capital Markets analyst Neil Downey says Brascan Corp. is in the mix to buy Southern Hydro, the Australian unit of New Zealand’s stateowned power company, Meridian Energy Ltd.
Mr. Downey said Southern Hydro produces 640 megawatts of hydro power per hour and 90 megawatts of wind power per hour with 566 megawatts of potential projects. Put in context, it produces roughly as much energy as one Pickering nuclear reactor.
Souther Hydro is expected to fetch up to $1.2-billion. Brascan is one of four bidders on the shortlist, Mr. Downey said citing industry sources.
The analyst also is increased his target on Brascan to $48 from $43, a move that comes following the company’s investors conference in New York City Wednesday. Brascan officials spent three hours at the investor forum talking to 75 to 80 buy- and sell-side analysts, most of them based in the United States. Chief among the topics was the fact Brascan is changing its name to Brookfield Asset Management. Brascan loathes being called a conglomerate and now refers itself as a specialist asset management company focused on property, power and other infrastructure assets.
“During [ Wednesday’s] summary remarks, chief executive Bruce Flatt commented that this was ‘only the beginning’ — that the goal is to establish Brascan as a ‘speciality manager of choice’ for institutional investors,” said Mr. Downey. Garry Marr Pop fizzling
With four profit warnings in twelve months before this week at Cott Corp., analysts could be forgiven for thinking the pop maker had finally set an achievable earnings target. But chief executive John Sheppard had more disappointment up his sleeve on Wednesday. “We’re going to be off our earnings for 2005 and miss our guidance,” he announced, sounding like a broken record. This time around, Mr. Sheppard blamed the rising cost of petroleumbottling products as well as the weak U.S. soft drinks market.
That announcement caught Jennings Capital analyst Cynthia Rose-Martel off guard, as she had just taken a chance and upgraded the stock to “buy” from “sell” earlier this week.
On the latest earnings warning, she revised her 2005 earnings estimate to US83¢ per share from US$1.07 and said the sharp drop in Cott’s share price — down 23% the last two days since the announcement — showed the markets have given up on management. “ Should we too?” she asked.
“Cott is fundamentally a good business,” she said. “If management cannot run the business properly, someone will buy it out and fix it for them.” She kept her “buy” on the stock but cut her target to US$22.35, after raising it to US$29.80 from US$20 earlier this week. The stock fell US$1.34 to US$17.40 yesterday. Duncan Mavan
Financial Post
gmarr@ nationalpost. com