BMO NESBITT BURNS: CI FINANCIAL (CIX) OUTPERFORM RESEARCH NOTE
CI Financial Inc (CIX-TSX)
Stock Rating: Outperform
Stock
Price: $31.03
Target Price: $39.00
Member of:Top 15 Income Stock Selections
June 1, 2006
Brief Research Note
Financial Services - Diversified Financials John Reucassel, CFA(416) 359-4379 John.Reucassel@bmonb.com
Assoc: Jennifer Kao, CFA
Very Good May Net Inflows; Estimated $0.16-0.17 monthly distribution upon conversion.
Impact Potentially Positive
Details & Analysis
CI announced long-term fund net sales of $185 million for May 2006 A strong result given the market volatility and a non-RRSP month. We believe that these results underscore the company's strong competitive position. Industry results are likely to also be favourable, with the banks showing particular strength.
The management circular was also released yesterday and indicated that as a business trust, CI expects its monthly distributions to start atapproximately $0.16-0.17, or $1.92 to $2.04. Using the mid-range of $2.00 implies a current yield of 6.5% (13.0x 2007E EBITDA; FYE is May). Given the company's organic growth prospects of roughly 7% over a cycle, we believe that this growth combined with the yield makes CI an attractive business trust. CI hopes to convert shortly after the shareholder meeting schedulefor June 22, 2006, and is conditional on receiving an advanced tax ruling.
CI remains Outperform rated.
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