National Post from Toronto, Ontario, Canada • 21

TheFinancial Post Friday, April 18, 1997 INVESTING' 21 Hot Stock Dell deal paves way for Newcourt listing Newcourt Credit Group Inc Benchmark yields Previous Spread off Bond or bill Urtwl clow Canada Canada $mo. T-bill 3.20 3.16 U.S. 3-mo. T-bill 5.28 5.29 -208 Canada 2-yr bond 4.88 4.89 U.S. 2-yr bond 6.42 6.46 -154 Canada 10-yr bond 6.70 6.75 U.S.

lOyr bond 6.85 6.89 -15 Australia 10-yr bond 7.79 7.82 -109 Britain 10-yr bond 7.47 7.52 -77 France lOr bond 5.73 5.71 97 Germany 10-yr bond 5.78 5.83 92 Japan 10-yr bond 2.37 2.34 433 Canada 30-yr bond 7.26 7.30 U.S. 3fyr bond 7.07 7.10 19 For other yields see page 42 CEO: Steven Hudson Ticker: NCT Listed: TSE Head office: Toronto, Ont. Tel: (416) 594-2400 Data supplied by FT DataGroup Earnings 4th Qtr. 3rdQtr. 2nd Qtr.

1st Qtr. 4th Qtr. 3rd Qtr. 123196 93096 63096 33196 123195 93095 Operating rev. 56,550 48,508 37,011 29,531 29,392 23,410 Net income 17,590 13,882 11,225 8,003 8,768 8,454 Earnings per share 0.31 0.26 0.22 0.18 0.22 0.22 Dividends-cash 0.035 0.030 0.030 0.030 0.030 0.025 Cash flow opers n.a.

2,066 15,866 (2,101) 16,041 18,045 Cash flow opers per share 0.034 0.297 (0.046) 0.351 0.469 PE ratio: 27.19 Dividend yield: 0.54 (at 41697) Oala supplied by FP DataGroup Bond Markets Prices rise as growth seen slowing Share price, daily data on TSE riign o-oay moving average I Low mm 20-dav movine average 23 21 19 100 500 the stock had previously been ranked a "hold" because he thought it was fully valued at 21 times its 1997 Ere estimate of $1.30. While Lazaris isn't changing his EPS estimates, he is "more comfortable that Newcourt can grow its business through non-traditional means outside of expensive acquisitions." Midland Walwyn's Keating says the chance for further Dell-like deals is growing as companies focus on their core businesses and contract out or form joint ventures for their financing arms. Newcourt is also moving away from its more cyclical markets of construction, transportation and manufacturing, says Sharpless. There are no publicly traded competitors to Newcourt in Canada. Nevertheless, it vies with the likes of heavyweights GE Capital Corp.

and which have a number of divisions outside of those of interest to Newcourt. "We will continue to have a much narrower focus than they have," Sharpless says. Michael Hodes, analyst with Goldman Sachs Co. in New York, compares Newcourt favorably on a range of financial ratios with publicly traded U.S. financial services companies such as Green Tree Financial Money Store Inc.

and Finova Group Inc. Both Sharpless and Hodes say the main risk facing Newcourt is its ability to keep increasing the amount of its new loans. "The company is driven off of loan volumes and that's one of the risks that they're not going to be able to continue to expand their base of loans," Hodes says. "I think they will," he adds. "But by no means is it an easy task." Volume Thousand shares ail llill.llll,.ilM..llli.

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March April 1996 Newcourt's profit rose 72 in 1996 to $50.7 million ($1.92 a share) from $29.4 million ($1.52) in 1995. Revenue rose to $171.6 million from $92.2 million. According to a survey of analysts by First Call, earnings per share are expected to reach $1.30 this year, compared with 960 last year and 760 in 1995. The analysts call for EPS of $1.65 in 1998. and one of them even sees the prospect of $1.90 for 1999.

The stock is a "buy" on most analysts' lists as a growth company. Timothy Lazaris, analyst at RBC Dominion Securities switched his recommendation from a "hold" to a "buy" after the Dell deal was outlined. In a report, Lazaris said BY SUSAN YELLIN Financial Services Reporter The Financial Post Two weeks before it lists on the New York Stock Exchange, financial services company Newcourt Credit Group Inc. has taken a major step toward making itself better known to U.S. investors.

With its NYSE trading debut expected April 30, Toronto-based Newcourt said Monday it had reached a joint-venture agreement with U.S. computer maker Dell Computer Corp. The two have formed Dell Financial Services, which will look after the leasing and asset management needs of Dell customers in the U.S. In doing so, Newcourt beat out a number of other prestigious finance companies and pushed even further into the U.S. "There's going to be a much increased awareness of the company in the United States now," says Jamie Keating, analyst with Midland Walwyn Capital Inc.

in Toronto. Their profile will be raised another notch by the completion of the Dell Financial Services deal." Newcourt's Canadian-listed shares (ncttse) have enjoyed a strong rally this winter, two-for-one on April 9. They rose from about $20 (reflecting the split) in early November to a high of $27.73 last month, before being pulled clown this month along with the overall market. The stock closed down 60C yesterday at $25.50. One of the largest non-bank financial institutions in North America, Newcourt specializes in asset-based financing.

It acts as a middleman getting money to loan out primarily from large insurance companies in Canada and the U.S. and setting up financing packages for borrowers. It originates, or writes, these new, quality loans in two areas: It sets up financing programs for manufacturers involved in transportation, health care, information technology (as in the Dell joint venture) and commercial equipment. The loan is secured by the asset and doesn't require other collateral. It advises and sets up asset financings for corporate borrowers acquiring capital, including putting together international debt financing to buy equipment.

Five years ago, almost 85 of Newcourt's loan originations new loans came from Canada. That's slowly been tipping in favor Canadian bonds rose yesterday, pushing yields to three-week lows, on optimism the U.S. economy may be growing at a pace that won't boost inflation. The Philadelphia Federal Reserve said its general index of economic activity in the northeastern U.S. plunged to 5.7 in April, from 21.1 in March, suggesting the economy may be slowing.

That raised expectations that the gap between Canadian and U.S. interest rates would not widen further in coming months. "It's the first April number, so it gives a bit of hope that this month's numbers will show signs of slowing U.S. growth," said Robert Marcus, a portfolio manager with Altamira Management Inc. "It's possible the Fed could hold off raising rates." The U.S.

Federal Reserve board raised its target fed funds rate to 5.5 from 5.25 March 25 to ward off a potential increase in inflation. The Bank of Canada, though, has left its target for overnight loans to commercial banks unchanged at 3.25 since November. While that gap in lending rates has caused investors to sell Canadian debt securities in recent weeks for higher-paying U.S. issues, yesterday's report suggests investors may be willing to hold their securities if the Fed only raises rates one more time in coming months, traders said. Evidence of weaker U.S.

growth could convince Fed officials not to raise rates at their May 20 policy setting meeting. Bonds also rose as some traders reversed short sales. In a short sale, traders borrow bonds and sell them, expecting to buy them back later at a cheaper price. If bonds instead rise, traders scramble to buy bonds, reversing their positions, to avoid further losses. Bloomberg of the U.S.

and other international markets to the point that the company believes only 27 of new loans will come from Canada this year. Newcourt also is introducing Credit Link, a new proprietary computer system that will provide a one-stop credit check and approval system. Terminals have been set up in about 700 spots in North America. Newcourt hopes to eventually have 3,000 to 4,000 in the U.S. alone.

It means a consumer will be able to walk into offices or showrooms of many of Newcourt's vendor finance partners, including Yamaha Motor Canada pick out their purchase and terms of lease and determine if their credit is acceptable in about five minutes rather than the traditional 48 hours. Analysts are generally keen on the company and the stock. Technical analyst David Chapman of Gorinsen Capital Inc. says New-court's stock has had a great ride over the last couple of years but has started drifting downward, suggesting a correction may be in the offing. "The best-case scenario is that it falls to $24, the worst case to $22 and after that depends on a number of factors," Chapman says.

Chapman says a fall to $24 would be viewed as a buying opportunity. Newcourt is fashioned as a stock for investors looking for capital appreciation since the company pays an annual dividend of only 14C, a yield of 0.56. It's an amount New-court chairman David Sharpless says may be increased in the future. However, Sharpless notes that a lower dividend rate is not unusual for a growth company. IPOs chase upturn new YORK The stock market is so unpredictable these days that initial public offering deal makers move with lightning speed the moment conditions change for the better.

A lot of planned IPOs that were delayed during the recent correction have been green-lighted as conditions seem to improve. When market analysts pronounced that the end of the fall was at hand last Wednesday, a bevy of deals was rushed to market in the following two days. Four deals have started trading this week as the market perks up, including a 135-point advance Tuesday that was the second-largest point gain ever. All but one got priced below the price range first mentioned by investment banks, and all are trading with little fanfare. Decrane Aircraft Holdings Inc.

(DAHXnasdaq) opened Wednesday at below price talk of to It closed yesterday at ASI Solutions Inc. (Asisnasdaq) opened Wednesday at V2, below price talk of to It closed yesterday at Cornerstone Properties Inc. (CPPnyse) opened Wednesday at below talk of to It closed at Take Two Interactive Software Inc. otwonasdaq) opened Tuesday at just above price talk of It closed yesterday at "They pop things through the window," said John Fitzgibbon, who edits the IPO Aftennarket newsletter. Dow Jones Company I Symbol I Release topic Story Company Symbol Release topic Slor) Agnico-Eagle Mines Limited AGE Announces closing of its common shares offering 14383 MC2 (Sq) Learning Systems Announces approval of PE1 learning project 1415 Alpine Exploration AXC Expands with major West Africa acquisition 26960 McCanill Corporation MCR Announce royalty coverage nearing 100 films 1427 Ballard Power Systems Inc BLD Daimler-Benz to invest over (450 in fuel cell 14209 Montemor Resources Inc.

MORI To take-over all shares of Omagh Minerals 1335 Badger Daylighling Inc. BAD Announces unaudited 3 month financial results 26961 NewWestwin Ventures Inc. NVW Announces two Mexican agreements 1462 BMW Canada Inc. BMW first to offer new safety technology 14614 Phoenix Int'l Life Sciences PHX Announces profit for second quarter 1997 2696 ComincoLtd. CLT Comlnco announces first quarter results 14467 PlatinovaAS PAS Evaluates pillar recovery In Black Angel mine 1443 Emerging Africa Cold Inc EAC1 Additional diamond drill holes from Jean vein 13831 PLM Group Ltd.

PGL PLM records 146 increase in net income 1382 Finning Ltd. FTT Record quarter lead Finning's growth in Ql 14274 Probe Exploration Inc PRX Substantial six month reserve growth 1379 Gentry Resources Ltd. GNY.B. Year end results revenue up 33 over 1995 14662 Probe Exploration Inc PRX Record operating and financial results 2696 Guyana Goldfiekls Inc GGFI Intersects high grade gold on 3 rones In Guyana 14343 RJK Explorations Ltd. RJXA.

RJK reports on Its Brazilian properties 2696 10NA Appliances Inc. 1AP IONA's Q3 pre-tax income soars 124 14304 TNK Resources Inc TNKR Discovers two kimberlites on Gope, Africa 1463 London Insurance Group LON Closes sale of Meloche Monnex Inc 14166 Wlnspear Resources Ltd. WSP Interim drill report at Camsell Lake, NWT 1432 dpi W6.