CI Financial (CIX:TSE) Fundamental Valuation Report

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Valuation Summary:

CI Financial $28.39 (CAD) Close Price as of 20/02/2018

Based on the analysis conducted in this report, CI Financial, (CIX:TSE) is found to be Undervalued.

Company	CI Financial
Symbol:Exchange	CIX:TSE
Industry	Financial Services:Asset Management
Close Price/Date	$28.39 (CAD) 20/02/2018

Weighted Average Valuation	$31.26 (CAD)
Summary	CIX:TSE is found to be Undervalued by 10.1% using the 3 valuation models shown below.
Valuation Models Used	Analyst Consensus: $30.38 (CAD)
(in order of importance)	Adjusted Book Value: $32.82 (CAD)
	Multiples: $30.78 (CAD)

Valuation Methods Analysis	This company is:
Cash Flow Basis:	Undervalued on a Cash Flow Valuation basis
Comparable Company Basis:	Overvalued on a Comparable Valuation basis
Asset Basis:	Undervalued on an Asset Valuation basis

Valuation Details

CI Financial Valuations

We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for CIX:TSE

Using a discounted cash flow model we generated an intrinsic value of $42.81 (CAD) for CIX:TSE

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

CIX:TSE	Current Values	Valuation If Dropped *		Valuation If Raised *
Calculated Value:	$42.81	1%	5%	1%	5%
WACC (or Ke)	7.17	$54.27		$35.19
Terminal Growth Rate	2.20	$35.89		$53.22
Tax Rate	0.33		$46.12		$39.50
Cash Flow	953,779,038		$40.57		$45.05
Capital Expenditures	-5,407,000		$42.80		$42.82
Long Term Debt	675,723,000		$42.94		$42.69

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $13.44 (CAD) for CIX:TSE. We also generated a valuation of $14.60 (CAD) using other metrics and comparables.
The comparable companies were Central Fund of Canada (CEF.A:TSE), Fairfax India Holdings (FIH.U:TSE), IGM Financial (IGM:TSE) and Sprott Physical Gold (PHYS:TSE)

Company CIX:TSE	End Date Value
Earnings/Share	$1.89 (CAD)
Book Value/Share	$7.61 (CAD)
Sales/Share	$7.98 (CAD)
Cash Flow/Share	$2.31 (CAD)
EBITDA/Share	$2.95 (CAD)

Price Based on Comps	Adjustment Factor (%)
$21.68 (CAD)	-17.3
$12.69 (CAD)	34.0
$32.57 (CAD)	-69.2
$33.17 (CAD)	-90.3
$19.03 (CAD)	0.0

CIX:TSE	Ratios Used	Average Values	FIH.U:TSE	IGM:TSE
15.02	PE Ratio	11.47	7.29	15.65
3.73	PB Ratio	1.67	1.32	2.01
3.56	PS Ratio	4.08	5.06	3.10
12.27	PCF Ratio	14.33	0.00	14.33
10.85	EV to EBITDA	7.89	7.89	0.00

Multiples

Using a multiples approach we generated a valuation of $30.78 (CAD) for CIX:TSE

Company CIX:TSE	End Date Value
Earnings/Share	$1.89 (CAD)
Book Value/Share	$7.61 (CAD)
Sales/Share	$7.98 (CAD)
Cash Flow/Share	$2.31 (CAD)
EBITDA/Share	$2.95 (CAD)

Price Based on Comps	Adjustment Factor
$28.53 (CAD)	0
$33.33 (CAD)	0
$31.56 (CAD)	0
$28.31 (CAD)	0
$32.18 (CAD)	0

Ratios	Ratio Average
PE Ratio	15.09
PB Ratio	4.38
PS Ratio	3.96
PCF Ratio	12.23
EV to EBITDA	10.91

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for CIX:TSE for the last 10 years was 4.34

We ran the Adjusted Book Value for CIX:TSE and generated a book value of $7.56 (CAD)
By multiplying these we get an adjusted valuation of $32.82 (CAD)

Analyst Data

In the Stockcalc database there are 8 analysts that provide a valuation for CIX:TSE. The 8 analysts have a concensus valuation for CIX:TSE for 2018 of $30.38 (CAD).

CIX:TSE CI Financial

Analyst Recommendation
Buy	Hold	Sell	Rating (of 5)	Guidance	As Of
3	2	1	3.6667	Outperform	2018-2-16

Current Price: not available

Analyst Consensus
CAD Millions	2018	2019
Mean EPS	2.48	2.65
# EPS Analysts	8	7
Mean Revenue	2,332.00	2,410.40
# Revenue Analysts	5	5
Mean Target Price	30.38
Mean Cash Flow	3.03	3.04
Mean EBITDA
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Company Overview (CIX:TSE CAD)

Price	28.39
Range	28.08 – 28.47
52 week	25.94 – 30.08
Open	28.24
Vol / Avg.	600187/396093
Mkt cap	7.26B
P/E	15.02
Div/yield	1.41/0.05
EPS	1.89
Shares	255.75M
Beta	0.87

Detailed Company Description

CI Financial Corp is a wealth management company that provides financial products and services including mutual funds, exchange traded funds, segregated funds, financial planning, insurance, investment advice, and succession planning.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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