Morguard Corporation

Morguard Corp is a real estate firm based in Canada and the United States that acquires, owns, and develops properties. Investments in real estate, ownership of real estate investment trusts (including Morguard REIT and Morguard North American Residential REIT), and real estate consultancy services and portfolio management are the company's three business segments.

Recent Highlights

• Morguard REIT Announces the Closing of a CAD 150 Million Convertible Debenture Offering, which was previously announced.
• The Company sold an unenclosed retail property in London, Ontario, for gross proceeds of CAD15.0 million on September 29, 2021.
• The change in the US dollar foreign exchange rate resulted in a CAD2.1 million loss.

Why Investor’s Should Book Profit?

• For the three months ending September 30, 2021, net income climbed by CAD 146.4 million to CAD108.8 million, compared to a net loss of CAD37.6 million for the same period in 2020. The rise was primarily due to a CAD189.5 million increase in net fair value gain, which was somewhat offset by a CAD46.5 million increase in deferred income tax expense and a CAD9.6 million increase in impairment on hotel assets.
• For the three months ended September 30, 2021, total income from real estate properties and hotels climbed by CAD10.8 million, or 4.5 percent, to CAD249.3 million, up from CAD238.5 million for the same time in 2020.
• Increased vacancy because of fewer lease traffic due to social distance limits and present economic conditions, resulting in a CAD1.9 million drop in the Canadian residential portfolio.
• At CAD 150, MRC's prices are seeing significant resistance. We should expect more correction in the stock because it has already created a double top and is trading below the trend 21 Days SMA, which is a trend following signal. On the daily chart, the RSI (14-period) is at 45.34, indicating that the stock is in a negative trend. The CMP is below the 50-period and 21-period SMAs, indicating that the trend is negative.
  

Valuation Methodology (Illustrative) Price to Earnings:

Stock Recommendation:

The firm reported available liquidity of CAD 476 million at the end of Q3FY21, which included a cash balance of CAD 129 million and CAD 347 million in available credit facilities. The information provided above is sufficient to support the company's future operations. However, because Omicron is already influencing people's behavior and business processes, experts predict that the variant will be a drag on growth early next year, reducing companies' profitability in the fourth quarter. We calculated a double-digit downside for the company using the Price to Earnings-based relative valuation method (in percentage terms). We investigated peers such as Summit Industrial Income REIT, CT Real Estate Investment Trust, and others for these purposes. We recommend a 'Sell' recommendation on the shares of MRC at the last traded price of CAD 132.24 on December 23, 2021, based on the foregoing information.

One-Year Technical Price Chart (as on December 23, 2021). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

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