Disclosure: Bullpen receives compensation from VersaBank for research coverage. VersaBank is also an IR client of LodeRock Advisors, an affiliate of Bullpen.
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WHAT'S ON TAP
HOT OFF THE PRESS
Meta’s $13B data center… long Alberta?
Meta’s $13B data center investment in Alberta is official, powered by Pembina’s 932 MW Greenlight gas plant - which should add $310M of run-rate EBITDA once online…
… representing a ~7x build multiple, well below where PPL currently trades - making them the clear winner on the corporate side…
… but not the only one, with Aecon (ARE) winning the $1.7B construction contract…
… and Capital Power (CPX) entering a >10 year, 250 MW supply agreement with Meta to plug the gap while Greenlight gets built. Should Alberta attract more AI investment, CPX could also benefit from a healthier spot market…
… as could TransAlta (TA), who has plenty of merchant exposure in the province.
It wouldn’t stop at power producers either, with Mullen Group’s freight and industrial logistics businesses benefitting from elevated construction activity.
Beyond issuers, a new wave of investment could be a serious tailwind to Alberta’s economy - with Meta’s project alone knocking ~2% off provincial unemployment during construction.
Better job prospects could could keep interprovincial migration flowing from east to west…
… which would benefit Boardwalk (BEI-U), who generates two thirds of its rental revenue from Canada’s Texas. Long Alberta? Let’s see.
VERSABANK
VersaBank (VBNK) was up 2% after announcing a second US SRP deal with an ECN Capital subsidiary, which management expects will add at least US$300M of run-rate fundings…
… with the potential to exceed US$500M per year in the future. That should drive continued efficiency gains in the US…
… and could represent upside to management’s US$1B funding target for the year. Combined with the commercial rollout of its real-time SRP, VersaBank is laying the foundation for higher ROE…
… which investors are starting to price in.
ON OUR RADAR
GAINERS & LOSERS
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MDA Space (MDA) was down nearly 9% after announcing an upsized bought deal to help fund its $920M majority purchase of CLS - which adds ~40% to revenue combined with its recent $874M BCT deal…
… and transforms the company into a vertically integrated geointelligence player, with the addition of the target’s monitoring and forecasting business.
At just ~15x attributable EBITDA, it’s not cheap by any means - so execution is key…
… as the company digests two splashy transactions and a $688M contract win at the same time.
Richelieu (RCH) slid 9% on the back of its Q2 results, which missed small on the top line as organic growth continued to slow…
… and missed big on EPS, with US tariffs weighing on profitability. Management indicated it needs to see stronger end market activity to hit its 11% EBITDA margin target…
… which should keep a lid on the multiple until Q3 rolls around.
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