TSX Commentary » Yellow Pages Income Fund

Yellow Pages Income Fund YLO.UN Takeaways from Analyst Meeting and Investor

admin — Wed, 24 Feb 2010 17:46:20 +0000

Yellow Pages Income Fund (YLO.UN) – $5.89 – Takeaways from Analyst Meeting and Investor
Outperform, Average Risk, Price Target: $7.00
Takeaways from analyst meeting and investor luncheon – (i) the roadmap for renewed revenue growth in 2011 under a full-service, integrated marketing services approach was provided; (ii) the company announced the acquisition of a 100% of Clear Sky Media and a 60% equity interest in 411.ca for an estimated ~$25MM; including Restaurantica; these acquisitions bring total unique visitors for the yellowpages.ca network to 9.3MM, or 11.0MM including Trader; and (iii) the conversion to a corporate structure will take place “by the end of 2010″ with the possibility of an “early” conversion. RBC CM expects the stock to trade in the $5-$6 range pending the emergence of a sustainable economic recovery in Canada given current peer valuations as well as public market concerns with the long-term growth outlook for the company. In this respect, RBC CM believes Q2/10 results will represent a crossroad for the stock reflecting: (i) the provision of 2011 guidance; and (ii) early indications of an actual cyclical recovery in directories given the lag in the selling cycle. In the meantime, RBC CM believes a stronger fundamental floor is forming under this $5-$6 range due to: (i) a slowly improving sales environment for directories; (ii) better visibility on a cyclical recovery in vertical; and (iii) the reflation of equity value in RBC CM’s NAV estimate following the distribution cuts. There are no changes to RBC CM’s $7.00 target price.

Yellow Pages YLO.UN Clarity on Path to Conversion Finally Puts Focus on Revenue Growth

admin — Thu, 18 Feb 2010 19:42:39 +0000

Yellow Pages (YLO.UN): $5.67 – Clarity on Path to Conversion Finally Puts Focus on Revenue Growth
Outperform, Average Risk, Price Target: $7.00
Yellow Pages reported Q4/09 results on February 11th and provided clarity on the path to conversion. RBC CM expects the stock to trade in the $5-$6 range pending the emergence of a sustainable economic recovery in Canada given peer valuations and lingering investor concerns with the growth outlook for the company. RBC CM believes Q2/10 results will represent a crossroad for the stock reflecting: (i) the provision of 2011 guidance; and (ii) early indications of a cyclical recovery in directories given the lag in the selling cycle. In the meantime, RBC CM believes a stronger fundamental floor is forming under this range due to: (i) a slowly improving sales environment for directories; (ii) better visibility on a cyclical recovery in vertical; and (iii) the reflation of equity value in the NAV following the May 2009 distribution cut and pending January 2011 distribution cut. The trust will convert to a corporation near the end of 2010. The current $0.80 distribution will be maintained through 2010 and commencing January 2011, the dividend will be $0.65 annualized and paid monthly. Based on RBC CM’s current forecast, the $0.65 dividend implies a payout ratio of: (i) 64% of AFFO; (ii) 62% of estimated “cash EPS”; or (iii) 65% of FCF.

YLO.un Directories In Line, But Trader Continues To weaken

admin — Thu, 05 Nov 2009 19:23:16 +0000

We had anticipated pressures to continue for YPG in Q3, and while the
results were light on revenues, EBITDA came in nicely ahead of consensus. The shortfall in the quarter stemmed entirely from Trader, as
Directories was solid yet again, and in line with our modest expectations.
Q3 takeaways are: 1) Revenues light on Trader shortfall, as Directory
resiliency intact; 2) Structural print declines at Directory more than offset
by robust online growth, as expected; 3) Mgmt affirmed intention to
maintain $0.80 distribution through 2010; and 4) De-leveraging top priority
Overall Q3 revenues of $410.1MM was light of our $415.9MM estimate,
entirely due to Trader shortcomings. However, total EBITDA of $227.0MM
was a touch above our $225.1MM estimate, with Directories nicely ahead of
our forecast. DCPU was $0.35 was in line with consensus.
we continue to believe that concerns over the
short-to-medium term health of the business is overblown.