Sienna Senior Living Inc. (TSX: SIA), is a Canada-based seniors' living providers. The Company serves the independent living (IL), independent supportive living (ISL), assisted living (AL), memory care (MC) and long-term care (LTC) through the ownership and operation of seniors' living residences in the Provinces of British Columbia and Ontario. 

Key highlights 

• Launching new retirement platform "Aspira": With the goal of providing a wider range of choices to the residents the company has decided to launch “Aspira” a new retirement platform with enhanced product and service offerings, which we believe will contribute to occupancy growth and financial performance. The new platform will be launched in late 2021 or early 2022.
  

• An income play:Despite this challenging environment, the company maintained its dividend payment while on the other hand, most of the businesses are cutting down or suspending their dividend distribution. The group recently announced a dividend of CAD0.078 per common for October 2021, representing CAD0.936 per Common Share on an annualized basis. Also, the stock offering a dividend yield of 6.555%, which looks lucrative considering the current interest rate environment.

• Steady rent collection: During Q2 2021, Retirement monthly same property average occupancy further improved from 77.9% in April to 78.9% in June and increased to 79.7% in July, reflecting the results of numerous marketing and sales initiatives and realization of lead indicators. Throughout the pandemic, rent collection levels continued to remain high, at and above 98%, looks impressive.

Source: Company

• Solid Financial Position: The Company maintains a strong financial position with significant liquidity and a substantial unencumbered asset pool. In Q2 2021, liquidity increased to CAD 234.7 million, from CAD217.1 million as on December 31, 2020, comprised of cash and cash equivalents and available credit facilities.

Source: Company

• Event update: The company will be releasing its Q3 2021, financial numbers on November 11, 2021.

• Dividend Announcement: On 15 October 2021, the company has announced dividend of CAD 0.078 per common share for the month of October 2021, representing CAD 0.936 per Common Share on an annualized basis. The dividend will be payable on November 15, 2021, to shareholders of record as at October 29, 2021.
  

Financial overview of Q2 2021 (In Thousands of Canadian dollars)

Source: Company 

• In Q2 2021, the company posted a muted revenue of CAD 162.6 million, compared to CAD 162.9 million in the previous corresponding period.
• The company reported an operating profit of CAD 10.9 million, against a profit of CAD 1.1 million in pcp. An operating profit rose mainly due to lower depreciation expenses and lower admin expenses.
• In the reported financials the company transformed from net loses to net profit which stood at CAD 1.3 million against a loss of CAD 6.7 million in pcp.
  

Risks associated with investment

Fluctuations in occupancy levels and business volumes, competition from other senior’s care providers are the key factors which may adversely affect the business, operating results or financial condition of the Company. 

Valuation Methodology (Illustrative): EV to EBITDA

Stock recommendation

With healthy rent collection and steady occupancy in the group’s retirement portfolio, the operations are getting benefitted from the re‐opening of their residences for in‐person tours, is a big positive for the company. We believe that in the upcoming time, the net pandemic expenses, which consisted primarily of additional staffing and PPE costs to manage COVID-19, will come down gradually, which will improve its EBITDA. Furthermore, with a strong financial position, along a healthy dividend yield of around 6.55% is a boon for the long-term horizon investors. Therefore, based on the above rationale and valuation, we recommend a “Hold” rating at the closing price of CAD 14.60 as on November 10, 2021. We have considered Chartwell Retirement Residences, NorthWest Healthcare Properties REIT, BTB Real Estate Investment Trust, etc. as the peer group for the comparison.

One-Year Technical Price Chart (as on November 10, 2021). Source: REFINITIV, Analysis by Kalkine Group 

Corby Spirit and Wine Ltd.

Corby Spirit and Wine Ltd. (CSW.A) is a Canadian manufacturer, marketer and importer of spirits and wines. The company derives its revenues from the sale of its owned brands in Canada and other international markets, as well as earning commissions from the representation of selected non-owned brands in the Canadian marketplace.  

Key Highlights:

• Improved margins: The company commands higher profitability margins when compared to its peers. Notably, the company posted its gross margin and EBITDA margin of 62.8% and 26.7%, respectively in Q3FY21, higher than the industry median of 51% and 19.3%, respectively. Notably, the company reported its net margin stood at 14.2% in Q3FY21, higher than the industry median of 9.9%. A higher profit margin denotes higher operational efficiencies.
  

• Better working capital management: The group has a strong working capital management and posted its quick ratio and current ratio of 2.72x and 3.99x, respectively, higher than the industry median of 1.19x and 1.55x, respectively. The above shows prudent working capital management, and also indicates that the company is meet its short-term liabilities through its short-term assets.
  

• Rise in cash flows: The company reported a higher cash flow of CAD 26.148 million in 9MFY21, as compared to CAD 24.975 million in pcp, supported by a higher net earnings. A higher cash flow is impressive as it enhances the overall liquidity position of the firm.

Q3FY21 Financial Highlights:

• A announces its quarterly result, wherein the company posted its topline of CAD 33.811 million, as compared to CAD 33.070 million in pcp. The growth was supported by Case goods sales coupled with higher commission income.
• Earnings from operations surged to CAD 8.420 million, from CAD 6.884 million in pcp, supported by higher revenue and lower Marketing, sales and administration costs (CAD 11.861 million v/s CAD 13.125 million in pcp).
• Net earnings surged to CAD 6.195 million, jumped from CAD 5.152 million in pcp, supported by lower financial expense.

Risks: The company might face steep competition due to entry of new player within the sector, which might lead to drag the market share of the company. Moreover, due to any shift in consumer taste and preferences, the product of the company might witness a slide in the sales volume.

Stock Recommendation:

For the 9MFY21, the company witnessed higher shipment volume from the company’s own brands like Lamb's rum and Ungava Spirits Brands, which grew 6% and 7% respectively on y-o-y basis. Additionally, the company’s leading brand J.P. Wiser's Canadian whisky generated a growth in its shipment of 3% y-o-y basis during the period. The above indicates improved customer demand despite the ongoing pandemic, which is a key positive and indicates resilient demand dynamics. Moreover, the stock carries a dividend yield of ~5.369% on an annualized basis, which looks impressive considering the persisting interest rate scenario. The stock is available at EV to EBITDA of 2.6x on TTM basis, as compared to the industry (beverages) median of 3.5x. Hence, we recommend a ‘Hold’ rating on the stock at the last traded price of CAD 17.88 on November 10, 2021. 

One-Year Technical Price Chart (as on November 10, 2021). Analysis by Kalkine Group

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

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.