Manufacturing sales of $71B in February missed estimates slightly, but were still up 3.6% sequentially - thanks to a partial recovery in vehicle production…

… which drove a 43% gain in motor vehicle sales, echoing February’s trade print and feeding through to wholesale activity - which increased 2% M/M.

The pickup in production also pushed capacity utilization higher, the first up month in the last five - but not enough to prevent a further build in backlogs…

… with unfilled orders rising ~2%. Combined with a declining inventory-to-sales ratio and a drawdown in raw material balances…

… the data continues to point toward a supply-constrained environment.

In the $9.4B acquisition of First Capital, Choice Properties (CHP-U) is absorbing the best $5B of the portfolio and leaving the rest to KingSett…

… which will increase its exposure to population-dense core markets post-close (Montreal, Toronto, Vancouver, etc.).

While the transaction reduces CHP’s exposure to Loblaw in favour of third party tenants, its necessity-based exposure will stay flat…

… alongside occupancy, with the acquired assets running at 98.2% - the same as Choice’s current portfolio.

To fund the deal, the company is issuing $1.7B of equity ($600M filled by George Weston) and using debt for the rest - taking pro-forma leverage to 8.5x…

… which should be manageable given the maturity ladder (worst case, could sell assets). Retail REITs caught a bid on the news, given the price tag represents an 8% premium to NAV…

… but with the rest of the group trading at a sizeable discount, time will tell if the move higher has staying power or if we’re getting a repeat of Minto and InterRent.

Auto parts manufacturers sold off after BRP Inc. (DOO) put a $500M+ price tag on the tariff amendments, prompting Linamar (LNR) to call out its industrial segment as having exposure…

… while its mobility segment remains protected under USMCA.

Martinrea (MRE) issued similar guidance, citing only modest exposure on some raw material inputs…

… that should be further quantified alongside Q1 results, which could create a near-term valuation overhang…

… despite supply chain management being the bread and butter of these firms.

Cineplex (CGX) ran 6% on the back of rumours it’s testing the waters with potential buyers like Cineworld and Cinemark, who trades at a higher multiple…

… but suffers from a similar post-COVID lull in patronage, making consolidation a potential path to margin preservation. A deal would follow the $70M sale of CGX’s place-based media business…

… which didn’t have the value unlocking effect investors had hoped for.

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