Canada Research
Published by Raymond James Ltd.
Hydro One Ltd.
March 29, 2016
Company Report - Initiation of Coverage
H-TSX
Frederic Bastien CFA | 604.659.8232 | frederic.bastien@raymondjames.ca
Samir Ghafir (Associate) | 604.659.8470 | samir.ghafir@raymondjames.ca
Infrastructure & Construction | Asset Ownership & Management
Outperform 2
C$25.00 target price
Current Price ( Mar-24-16 )
Total Return to Target
52-Week Range
Suitability
Sometimes the Best Offense is a Good Defense
Recommendation
We are initiating coverage of Hydro One, Ontario’s leading transmission and distribution
(T&D) company, with an Outperform rating and target of $25.00. With virtually all its
essential services rate-regulated and void of commodity price risk, the utility easily ranks
as the safest name in our coverage universe. Our expectations are for Hydro One to
deliver high-single digit annual total returns, with upside in the low double digits.
Analysis





Multi-year visibility into 5% annual rate base growth. This is based on the company
committing an average $1.67 billion annually through 2020 on capital investments
to maintain the safety, reliability and integrity of its T&D assets and to allow for
modest growth. But with much of Hydro One’s infrastructure built half a century ago
and now nearing the end of its service life, entire lines may need replacement soon.
The distribution ‘upside’ is in regulation, not consolidation. Hydro One may have
an inside track on local distribution companies (LDCs) that may come up for sale as a
result of newly introduced tax incentives, but we question whether the opportunity
is large enough to trigger material upside for shareholders. We believe more value
can be unlocked in Hydro One’s existing distribution business—which has
unperformed under the current cost of service regulatory structure—as it transitions
to a performance-based model starting in 2018.
Status Quo Not an Option for CEO Mayo Schmidt. Although he has yet to unveil his
long-term vision for the business, we know the former Viterra head intends to
transform Hydro One from a Canadian regional leader to a North American T&D
powerhouse. We expect his experience in effecting productivity gains to serve Hydro
One particularly well today, as will his M&A credentials over a longer timeframe.
Deep dive into Hydro One shows massive opportunity for company to run better.
Significant value rests in streamlining rigid bureaucratic processes in place and
improving the company’s stats with the Ontario Energy Board (OEB), which should in
turn give Hydro One a license to increase its rate base further.
There is no point putting the cart before the horse M&A wise. Don’t expect
anything transformational until productivity improvements come to pass and the
proper skill set is in place to handle deal flow. Management’s current priority is to
bring capital market experience in, encourage internal talent to rise to the challenge,
and take an instructional view of the big cross-border utilities transactions making
headline news today.
C$23.63
10%
C$24.25 - C$21.01
Medium Risk/Income
Market Data
Market Capitalization (mln)
Current Net Debt (mln)
Enterprise Value (mil.)
Shares Outstanding (mln, f.d.)
10 Day Avg Daily Volume (000s)
Dividend/Yield
Key Financial Metrics
2015A
P/E
20.4x
EV/EBITDA
12.6x
Rate Base (mln)
C$16,914
EV/Rate Base
NA
Dividends Per Share
NA
Payout Ratio (%)
NA
Net Debt/EBITDA
Net Debt/Total Capital
2016E
2017E
20.2x
18.9x
12.0x
11.4x
C$17,626
C$18,660
1.4x
1.3x
0.84
0.88
72%
70%
5.2x
51%
Company Description
Hydro One is Ontario’s largest regulated transmission
and distribution utility, accounting for 96% of the
province’s transmission network and serving roughly
25% of its population through low voltage
distribution.
Valuation
To derive our valuation, we apply a target yield of 3.5% on our 2017 dividend estimate of
$0.88, which is consistent with what the stock is yielding on our 2016 forecast. We argue
that Hydro One will continue to command a premium to its utility peers, which
collectively yield 4.0%, given its scale and monopoly-like status in regulation-friendly
Ontario (see page 14 for further details).
Adjusted
EPS
1Q
Mar
2Q
Jun
3Q
Sep
4Q
Dec
Full
Year
Revenue
(mln)
EBITDA
(mln)
2015A
C$0.38
C$0.22
C$0.32
C$0.24
C$1.16
C$6,538
C$1,953
2016E
0.35
0.22
0.31
0.29
1.17
6,673
2,056
2017E
0.38
0.24
0.33
0.30
1.25
6,872
2,162
Source: Raymond James Ltd., Thomson One
Please read domestic and foreign disclosure/risk information beginning on page 24 and Analyst Certification on page 22.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
C$14,062
C$10,614
C$24,676
595.1
418
C$0.84/3.6%
Canada Research | Page 2 of 27
Hydro One Ltd.
Table of Contents
Our Top-10 List | Key Investment Considerations ............................................................................................... 3
Other Relevant Hydro One Tidbits ....................................................................................................................... 6
Company Backgrounder ...................................................................................................................................... 7
Regulation ............................................................................................................................................................ 9
Hydro One’s Rate-Regulated Operations ............................................................................................................. 10
Transmission ........................................................................................................................................... 10
Distribution ............................................................................................................................................. 11
Financial Analysis & Outlook................................................................................................................................ 12
Valuation & Recommendation ............................................................................................................................ 14
Appendix A: Financial Statements ....................................................................................................................... 15
Appendix B: Management & Board of Directors ................................................................................................. 18
Management ........................................................................................................................................... 18
Board of Directors ................................................................................................................................... 19
Appendix C: Risks ................................................................................................................................................. 20
Appendix D: Ontario’s 2016 Allowed ROE Formula ............................................................................................. 21
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 3 of 27
Our Top-10 List | Key Investment Considerations

We believe Hydro One’s ability to grow the rate base through 2020 is underappreciated.
For one, planned capital investments have already increased by an average of $140 million
(or 9%) annually since the IPO documents were filed. This detail may be lost on investors, but
it effectively translates into a compound annual growth rate (CAGR) in Hydro One’s rate base
of 5% over the next five years, up from 4% less than six months ago. Importantly, the path to
this rate base growth is just as clear since the incremental capex is of a sustaining nature, and
not contingent on placing large-scale developments into service or acquiring new assets.
Beyond the next two years we see more potential upside as productivity improvements give
Hydro One a license to increase the rate base further.
Exhibit 1: Increases to Hydro One’s Planned Capital Investments Are Reflected in Higher Expected Rate Base Growth
Source: Hydro One Ltd., Raymond James Ltd.

Deep dive into Hydro One shows massive opportunity for company to operate better. It
may be difficult to extract efficiencies from functional areas within Hydro One that already
perform at high levels, such as project execution. For those that are top-heavy, highly
unionized or simply not incentivized to think outside the box, it will take time to effect
change. But certain fixes—like replacing Hydro One’s paper-based dispatch system with a
mobile workforce management solution—have the potential to meaningfully impact
productivity in relatively short order. Over a longer horizon we believe a lot of value rests in
streamlining rigid bureaucratic processes in place (e.g., procurement) and improving the
company’s stats with the Ontario Energy Board (OEB), which should in turn enhance
management’s ability to grow the rate base. We were a little surprised to learn Hydro One
consistently ranks among the highest-cost utilities in North America, but therein lies the
opportunity for shareholders, in our opinion. While we fully expect Hydro One to act on
some cost saving opportunities, it will likely take a calculated approach to ensure some low
hanging fruit can still be picked under incentive-based regulation.
The company has embarked on a dual
track to improve productivity…

There is no point putting the cart before the horse M&A wise. There should be opportunity
for Hydro One to acquire the odd LDC in the near-term, but don’t expect anything
transformational until productivity improvements come to pass and the proper skill set is in
place to handle deal flow. Management’s current priority is to bring capital market
experience in, encourage internal talent to rise to the challenge, and take an instructional
view of the big cross-border utilities transactions making headline news today—including
Fortis’ proposed takeover of ITC Holdings. This makes sense to us, especially considering the
high valuations recently achieved in the sector.
…and build its M&A capabilities
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Canada Research | Page 4 of 27

Hydro One Ltd.
Visibility into years of healthy capex beyond 5-year plan. Three considerations lead us to
believe the expansion of Hydro One’s regulated assets after 2020 should continue to outstrip
the GDP-type growth that is common of utilities. First are the years of neglect from which
Ontario’s transmission and distribution sector has suffered as a result of the province’s more
pressing coal retirement goal. This initiative sparked significant investments in nuclear and
renewable power—to the benefit of firms like Pattern Energy, Brookfield Renewable, SNCLavalin and Aecon Group—but left other asset types underfunded. We therefore assume
some catching up is inevitable over the next decade. Second, with much of Hydro One’s
infrastructure built 50 to 60 years ago and now nearing the end of its service life, we
anticipate that entire lines will need to be replaced by 2030. Finally, Hydro One may have the
opportunity to participate in larger developments outside Ontario. In the United States alone
investments of US$61 billion are deemed necessary to modernize the transmission system
through 2024.
Hydro One has 5% rate base CAGR all
but locked in through 2020; imagine
the potential once the OEB starts
rewarding it for improved operating
performance
Exhibit 2: Sustaining Capex Represent Approximately 60% of Hydro One’s Planned Projects
Source: Hydro One Ltd.

Status quo not an option for CEO Mayo Schmidt. Although he has yet to unveil his long-term
vision for the business, we know the former Miami Dolphins wide receiver intends to
transform Hydro One from a Canadian regional leader to a North American transmission and
distribution powerhouse. Mr. Schmidt’s game plan is not overly dissimilar to the playbook he
used to turn Viterra from a sleepy grain handler into a global agriculture giant. We expect his
experience in effecting productivity gains and streamlining costs to serve Hydro One
particularly well as the firm moves to a performance-based model in the medium-term, as
will his M&A credentials over a longer timeframe. To the extent Mr. Schmidt must also
answer to two sets of bosses—public shareholders and the province of Ontario—his dealings
with the Saskatchewan government during his tenure at Viterra should also be beneficial.

Hydro One boasts one of the strongest balance sheets in the utility sector. The firm’s
predominantly rate-regulated operations, transparent company structure and strong track
record of raising capital in the public debt markets all underpin its investment grade status
with US and Canadian credit rating agencies. This, in turn, should guarantee continued access
to low-cost debt and facilitate future growth. We note that while Hydro One could easily
strap on another $800 million to $900 million of debt without adversely impacting its credit
rating, the added leverage would yield no real advantages to the company given its already
favourable tax structure. We expect this financial flexibility will come in handy down the
road, however, and improve shareholder accretion on a major acquisition.
Hydro One is generally viewed as one
of Canada’s best-rated borrowers
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.

Stock can better withstand a rising interest rate environment than its peers. Contrary to
other provincial utilities, Hydro One benefits from a highly transparent allowed ROE formula,
established by the OEB in 2009. The capital cost parameters are notably reset every
September for each upcoming calendar year based on current bond data and 10-year GOC
bond consensus forecasts (see Appendix D). Given the inverse relationship between GOC
bond yields and utility valuations, we believe this gives Hydro One’s stock a marked
advantage compared to the less transparent and less frequently revised cost-of-capital
methodologies that govern its peers. South of the border utilities still conform to the caseby-case approach used by regulators.

The distribution ‘upside’ is in regulation, not consolidation. As Ontario’s dominant
electricity transmitter and largest distribution company, Hydro One may have an inside track
on many small- to mid-sized distributors that may come up for grabs in the foreseeable
future. Given its scale, however, we question whether the tuck-in opportunity is sufficiently
large to trigger material upside for shareholders. For context consider that Hydro One’s
acquisitions of Haldimand, Norfolk and Woodstock over the past 18 months have only added
2% to its rate base. We believe significantly more value can be unlocked in Hydro One’s
existing distribution business, which has consistently unperformed under the current cost of
service regulatory structure, as it transitions to a performance-based one starting in 2018.
The company will then have the potential to over earn its allowed ROE by up to 300 bps for a
period of five years (with every 100 bps producing an incremental $0.05 per share annually
using Hydro One’s 2016 projected distribution rate base as point of reference). We see little
benefit in delivering big productivity savings until 2018, because these will be returned to
customers via rate reductions.
Canada Research | Page 5 of 27
Dividend-paying utility share prices
generally have an inverse relationship
with interest rates
Exhibit 3: The 15 largest Distribution Companies in Ontario Serve 78% of its Population
Source: Hydro One Ltd.

Strong underlying demand for stock to positively impact valuation. Our view is that Hydro
One’s stable and growing regulated cash flows will have broad investor appeal for as long as
the economy remains on shaky ground. So too will its generous allowed ROE in the context of
today’s low growth, low interest rate environment. Moreover, in our years of covering
owners of infrastructure assets, rarely has the investing public been offered a chance to
acquire a direct stake in a premier utility and benefit from its monopoly position; as
consumers of its services they almost always get stuck with the short end of the stick. For all
these reasons, we expect Hydro One to continue drawing substantial investor interest for
some time to come.

In the same class as Fortis. We argue that Hydro One will continue to command a premium
to the Canadian utility peer group average given its monopoly-like status in regulationfriendly Ontario and should trade range bound with the more diversified operations of Fortis
(since both firms generate virtually all of their earnings from rate-regulated businesses and
possess similar rate-base growth profiles).
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One possesses investment
attributes that are sought-after in
uncertain economic times
Canada Research | Page 6 of 27
Hydro One Ltd.
Other Relevant Hydro One Tidbits

No material exposure to commodity price risk. Hydro One recovers the cost of electricity
that it delivers, except for short-term timing differences.

The OEB has approved Hydro One’s use of US GAAP. This is in-line with the practice of other
Canadian utilities and, in our view, may facilitate a US listing down the road.

Ontario to act solely as an investor. Pursuant to the IPO the province signed a Governance
Agreement which states its intention to engage in the affairs of the company solely as an
investor and not as a manager.

Hydro One adopted a Dividend Reinvestment Plan (DRIP) at a 0% discount. However,
shares will not be issued from treasury, but rather repurchased by the firm on the open
market.

Company to pay minimal cash taxes over the next five years. This relates to a $1.2 billion
deferred tax asset that was recognized when Hydro One left the payment-in-lieu of tax (PILs)
regime in favour of the corporate tax regime.

Great Lakes Power Transmission (GLP) to boost transmission coverage to 98% of Ontario’s
capacity. Hydro One recently agreed to acquire GLP’s 560 km of high voltage transmission
lines, towers and stations from Brookfield Infrastructure Partners LP for $222 million in cash
plus assumed debt of $151 million. Transaction close is targeted for 4Q16.
Exhibit 4: GLP is a Contiguous and Already Interconnected Strategic Transmission Asset
Source: Hydro One Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 7 of 27
Company Backgrounder
Rate-regulated operations account for 99% of Hydro One’s business. Hydro One Ltd. is a holding
company which has a 100% interest in Hydro One Inc. and Hydro One Telecom. The former
business represents Ontario’s largest regulated transmission and distribution utility, accounting
for 96% of the province’s transmission network and serving roughly 25% of its population through
low voltage distribution. As a ‘wires only’ business, Hydro One passes through the cost of
electricity it delivers, leaving it with no material exposure to commodity price risk. The latter
business provides telecommunications support for the transmission and distribution operations,
in addition to selling fibre optic capacity to third parties. Hydro One Telecom is non-regulated and
accounts for only about 1% of the company’s net income. For this reason, the business is
deliberately omitted from this report.
Exhibit 5: Hydro One’s Operations are Rate-Regulated and Void of Electricity Price Risk
Source: Hydro One Ltd.
Company is a byproduct of Ontario’s Electricity Act. Prior to 1998 crown-owned Ontario Hydro,
one of the largest fully integrated electricity companies in North America, supplied most of the
province’s electricity needs. To promote greater competition—a common theme within the
electricity market at the time—the corporation was restructured into separate entities
responsible for electrical generation, transmission and delivery, and price management. Hydro
One took over the transmission and distribution businesses while Ontario Power Generation
assumed responsibility of province’s electricity producing assets. The Electricity Act also called for
transmitters and distributors to provide open access to their systems.
Hydro One owns the largest local distribution company in Ontario. As part of the restructuring
municipally-owned electricity distributors were organized into separate business corporations, or
local distribution companies (LDCs) as they are often referred to in Ontario. Municipal owners
were concurrently granted transfer tax exemptions for a limited time, which spurred a wave a
consolidation among LDCs. Hydro One was the province’s most active participant, acquiring 88
LDCs through the early 2000s. In recent years, however, the company added only three
distributors to its portfolio—Norfolk Power, Haldimand Hydro and Woodstock Hydro. To create
more efficiency in the distribution sector, the provincial government recently acknowledged the
need for further consolidation. To this end it rolled out new three-year tax incentives effective
January 1, 2016, including a transfer tax rate reduction to 22% from 33%, a transfer tax exemption
for LDCs with fewer than 30,000 customers, and an exemption from the capital gains portion of
the departure tax.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Virtually all of Hydro One’s operations
are regulated
Canada Research | Page 8 of 27
Hydro One Ltd.
Exhibit 6: Distribution Operations Span 75% of Ontario’s Geographic Area (Mostly Rural)
Source: Hydro One Ltd.
Monetization underway. In April 2014, the Ontario government formed an advisory council to
review certain provincially-owned assets. One year later the council recommended the partial sale
Hydro One to help address the province’s $11 billion projected deficit and fund a $130 billion
infrastructure investment promise over the next decade. The first steps were taken last
November, when the province completed an initial public offering (IPO) of a 15% interest in Hydro
One and earmarked a further 45% for sale via follow-on offerings over the medium-term. A total
of 89.3 million shares were notably sold to the investing public at $20.50 per share for gross
proceeds of approximately $1.8 billion. Based on a stock price of $23.63 and an annual dividend of
$0.84 per common share, Hydro One’s capitalization and dividend yield approximate $14.06
billion and 3.6%, respectively. At last check institutional ownership was broad, with no single fund
holding more than a 0.5% stake in the company.
Ontario is selling down its stake in
Hydro One to help fund much needed
infrastructure developments
High-profile executives appointed to lead utility. Mayo Schmidt was hired as President and CEO
of Hydro One last summer to lead its transformation from a government-run crown corporation to
a publicly-held company. Prior to joining Hydro One Mr. Schmidt spent 12 years at the helm of
Viterra, where he orchestrated the firm’s transformation from a regional agriculture and food
business of under $200 million to a global leader of $7.50 billion. Among his accomplishments are
the lengthy hostile takeover of rival Agricore United and the acquisition of Australia’s ABB, both
multi-billion dollar deals, and Viterra’s sale to Glencore. Backing Mr. Schmidt are CFO Michael
Veils and COO Sandy Struthers. Michael Veils also stepped into his role last year after spending 20
years at Maple leaf Foods, including a 10-year stint as CFO. He has extensive experience raising
both debt and equity capital and conducting various M&A transactions. Mr. Struthers is a 16-year
Hydro One veteran who has excelled in various senior leadership roles since joining the company.
He most recently served as CFO and CAO, where he oversaw the firm’s finance, regulatory and
corporate support functions.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 9 of 27
Regulation
The Ontario Energy Board (OEB) is the regulator responsible for approving electricity transmission
and distribution rates, as well as capital investment projects and M&A activities. Each year, it uses
a transparent formula based on interest rates and bond yields to determine the allowed return on
equity (ROE). This intuitive approach stands in contrast to the protracted and pricey cost-ofcapital reviews that regulators in other Canadian jurisdictions have undertaken. The ROE is then
applied to the company’s rate base (which is also approved annually by the OEB) using a deemed
capital structure of 60% debt and 40% equity to arrive at the actual rates charged by the utility to
meet a given revenue requirement. The two most common methodologies used in Ontario for
determining the rates charged by regulated utilities are as follow:
1)
Cost-of-service model: Under this framework, the rate charged by a utility for its
services permits the utility to recover its costs plus earn an allowed return on equity
(ROE). Additional costs savings are returned to customers through a lower revenue
requirement in the utility’s subsequent rate application. Since rate decisions are made
every one to two years, the utility has the potential to earn additional cost savings over
the short-term.
2)
Performance-based model: Similar to the cost-of-service model, the rate charged by a
utility for its services permits the utility to recover its costs plus earn an allowed ROE
percentage. However, since rates get approved over a longer period of time (usually 5
years), the utility can retain some (and in some cases all) of the over earnings. Imbedded
in the approved rates is the assumption that the utility becomes more efficient with
time.
Exhibit 7: Illustration of a Hypothetical Revenue Requirement for a Particular Year
Source: Hydro One Ltd.
Regulation keeping competition limited in Ontario. When it comes to transmission services in
Ontario, the uniform transmission rates determined by the OEB have removed any incentive for
customers to seek alternative providers. Competition among transmitters is limited to bidding on
new large-scale transmission developments. Similarly, distributors in Ontario operate as
controlled monopolies within their given service territory. The only direct competition occurs near
borders of adjoining service territories, where distributors must apply with the OEB to claim the
right for providing service. With the time-limited tax incentives just introduced earlier this year,
however, we anticipate consolidation among LDCs to pick up.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
The OEB aggregates the total revenue
requirements of all transmitters and
applies a formula in order to arrive at
a single set of rates each year
Canada Research | Page 10 of 27
Hydro One Ltd.
Hydro One’s Rate-Regulated Operations
Transmission
Hydro One owns and operates 96% of Ontario’s transmission network, positioning the firm as one
of North America’s largest transmitters. Included in its $12.07 billion of assets are over 292
transmission stations and 29,000 circuit km of high voltage power lines. In 2015 the transmission
operations supplied approximately 137 TWh of energy to a customer base that included 48 LDCs,
including Hydro One’s distribution business, and 90 large industrial customers. The system is
linked to five jurisdictions adjacent to Ontario (Manitoba, Minnesota, Michigan, New York and
Quebec) through high-voltage interconnections and is part of the larger North American system
known as the Eastern Interconnection. The business consists of the transmission system operated
by Hydro One Networks and a 66% interest in B2M, a limited partnership between Hydro One and
the Saugeen Ojibway Nation in respect of the Bruce-to-Milton transmission line.
Exhibit 8: Transmission Generated Approximately 60% of Hydro One’s Operating Profit in 2015
Source: Hydro One Ltd.
As a rate-regulated entity operating under OEB’s cost service model, Hydro One’s transmission
business generates reliable and low volatility cash flows. Rates are based on monthly peak
electricity demand across the network, which explains why transmission revenues are typically
greater in winter and summer months (when demand for heating and cooling is highest). Power
and generation costs are directly passed through to the end user. Rates are collected by Ontario’s
Independent Electricity System Operator (IESO) and remitted to Hydro One on a monthly basis.
The OEB has approved a 2016 allowed ROE of 9.19% on Hydro One’s rate base of $10.56 billion
(which includes both Hydro One Networks and B2M LP). In 2Q16, Hydro One Networks will submit
an application for its 2017–2018 rates. The company is confident it will transition to a
performance-based model in 2018.
Exhibit 9: Hydro One Expects to Transition to a Performance-Based Model in 2018
Current
Methodology
Transmission
Cost of
Service
Allowed
ROE in 2016
9.19%
Approved
Rate Base
$10.56 bln
Term of Next
Application
File in 2Q16
for 2017-18
Comments
Applying for performance
based framework after 2018
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 11 of 27
Distribution
Hydro One’s distribution system delivers power to 1.3 million residential and commercial
customers through 122,000 km of low voltage lines. The network serves 57 LDCs, with 22 of them
directly connected to the transmission system. Hydro One is easily Ontario’s largest distributor
with a 25% share of what remains a relatively fragmented market (for proof consider that the
province’s 15 largest LDCs currently command a 78% market share). Its distribution system
principally serves rural communities, which inherently can lead to higher costs and greater
customer interruptions relative to urban networks. Distribution revenues include distribution
rates approved by the OEB and minor ancillary service revenues. As December 31, 2015, Hydro
One’s distribution assets totaled $9.21 billion.
Exhibit 10: Hydro One Serves 1.3 Million Users and 57 LDC Wholesale Customers
Source: Hydro One Ltd.
In December 2013 Hydro One submitted an application with the OEB to operate its distribution
business under performance-based framework from 2015 to 2019. In March 2015 the regulator
concluded the submission did not sufficiently align with the objectives of its new framework for
distributors and continued to apply a cost-of-service methodology. The OEB also directed Hydro
One to enhance its next application in the areas of outcome-based regulation, externally imposed
incentives, benchmarking, continuous improvement and value to customer. Management fully
expects the company can successfully transition to the more commonly used performance-based
model for LDCs as it enters 2018. Meanwhile, its revenue requirement for 2016 was set at $1.48
billion, based on approved rate base and ROE of $6.86 billion and 9.19%, respectively.
Exhibit 11: We Expect a Successful Transition to a Performance-Based Framework in 2018
Current
Methodology
Distribution
Cost of
Service
Allowed
ROE in 2016
9.19%
Approved
Rate Base
$6,863 mln
Term of Next
Application
File in 2017
for 2018-22
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Comments
Rates beyond 2017 likely set
under a performance-based
model
According to OEB records, Hydro
One’s distribution business has underearned in each of the last five years
Canada Research | Page 12 of 27
Hydro One Ltd.
Financial Analysis & Outlook
We forecast net income attributable to common shareholders to increase to $697 million ($1.17
EPS) in 2016, from $690 million ($1.16 EPS) in 2015. Our modest growth expectation mainly
reflects 4.2% rate base growth and foregone costs related to one-time items incurred in 2015.
These should offset an 11 bps decline in allowed ROE to 9.19%, $29 million of increased interest
expense from additional debt, $21 million of lost earnings from last year’s divesture of Hydro One
Brampton, and a higher effective tax rate. Embedded in our forecasts are strong results from
Transmission and another below-average performance from Distribution—netting over-earnings
of 70 bps from the consolidated allowed ROE of 9.19%. We assume a 7% uptick in earnings next
year (EPS of $1.25) as productivity gains bring Distribution closer to its allowed ROE.
Based on per share dividends of $0.84 and $0.88 for 2016 and 2017, respectively, our earnings
forecasts effect payout ratios of 72% and 70% that sit comfortably within the low-end of
management’s 70% to 80% target. We believe this provides management with the flexibility to
grow the dividend by more than 5% next year should Hydro One’s cost-cutting efforts materialize
earlier than originally envisioned.
Exhibit 12: We Believe There is Upside to Our 2017 Dividend Estimate Should the Distribution Business Begin Improving its Stats
Year end December 31; $ millions
($ millions, unless otherwise stated)
Selected Financial Information:
Revenues
Transmission
Distribution (net of purchased power)
Other
2013
2014
2015
2016E
2017E
% chg
14/13
% chg
15/14
% chg
16/15
% chg
17/16
1,529
1,464
61
3,054
1,588
1,484
57
3,129
1,536
1,499
53
3,088
1,622
1,548
53
3,223
1,710
1,609
53
3,372
4
1
(7)
2
(3)
1
(7)
(1)
6
3
4
5
4
5
1,154
792
2
1,948
1,194
742
1
1,937
1,110
866
(23)
1,953
1,204
875
(22)
2,056
1,270
914
(22)
2,162
3
(6)
(50)
(1)
(7)
17
n.m.
1
8
1
(4)
5
6
5
5
676
722
759
795
832
7
5
5
827
452
(7)
1,272
360
912
109
803
18
785
848
375
(8)
1,215
379
836
89
747
(2)
18
731
736
486
(28)
1,194
376
818
105
713
10
13
690
818
471
(27)
1,262
405
856
131
725
10
18
697
861
497
(27)
1,330
422
908
137
771
10
18
743
3
(17)
14
(4)
5
(8)
(18)
(7)
n.m.
(7)
(13)
30
250
(2)
(1)
(2)
18
(5)
n.m.
(27)
(6)
11
(3)
(4)
6
8
5
25
2
37
1
5
6
5
4
6
4
6
7
Weighted average number of shares (millions)
Adjusted EPS
n.m.
n.m.
477.8
$1.23
496.4
$1.16
595.1
$1.17
595.1
$1.25
n.m.
(6)
1
7
Dividends per common share
Payout ratio
n.m.
n.m.
n.m.
n.m.
n.m.
n.m.
$0.84
72%
$0.88
70%
EBITDA
Transmission
Distribution
Other
Depreciation
EBIT
Transmission
Distribution
Other
Financing charges
Income before taxes
Income taxes
Net income
Noncontrolling interest
Preferred dividend
Net income attributable to Hydro One shareholders
5
5
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 13 of 27
Our operating cash flow forecast of $1.64 billion for 2016 is sufficient to pay $500 million in
dividends and fund the sustaining portion of Hydro One’s planned capex (which we estimate at
approximately $900 mln). It even leaves enough cash to fund the equity portion of Hydro One’s
growth capex. Since the cash flow puts and takes are likely to be similar in the coming years, the
company can do away with external equity through 2020, in our opinion. As for net debt, we
currently project $10.74 billion and $11.30 billion for the end of this year and next, respectively,
up from $10.12 billion at the same time last year. This is based on Hydro One using 60% debt to
fund its projected rate base.
Exhibit 13: We Forecast Net Debt to EBITDA Ratio of 5.2x for 2016 and 2017, which is in-line with the Peer Group Average
Year end December 31; $ millions
($ mi l l i ons , unl es s otherwi s e s tated)
2013
2014
2015
Key Performance Metrics:
Rate base
Regulated equity (40% of rate base)
15,319
6,128
16,349
6,540
16,914
6,766
Return on rate base
Allowed return on equity
Excess return
12.81%
9.30%
3.52%
11.18%
9.51%
1.67%
10.20%
9.30%
0.90%
9.89%
9.19%
0.70%
9.96%
9.19%
0.77%
1,404
(11)
(18)
1,375
(2)
1,377
1,256
55
(18)
1,293
1,293
(1,253)
(208)
(13)
(5)
(1,479)
(2,810)
1,331
1,640
(18)
(5)
1,618
236
1,382
$2.17
$2.24
552
100
452
8,373
3,314
4,249
7,563
16,388
Funds from operations (FFO)
Net cash from operating activities
Change in non-cash operating working capital
Preferred dividends
Noncontrolling interest distributions
Funds from operations (FFO)
Less: Deferred income tax asset
Adjusted FFO
Adjusted FFO/share
Capital Structure:
Long-term debt payable within one year
Short-term notes payable
Less: cash and cash equivalents
Long-term debt
Preferred shares
Common shares
Retained earnings
Total capital
Net debt
Net debt/total capital
Net debt/EBITDA
n.m.
756
565
191
8,301
3,314
3,787
7,101
15,593
8,523
54%
4.4x
8,827
54%
4.6x
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
2016E
17,626
7,050
2017E
18,660
7,464
% chg
14/13
% chg
15/14
% chg
16/15
% chg
17/16
7
7
3
3
4
4
6
6
1,783
(18)
(5)
1,761
300
1,461
(6)
3
4
6
$2.32
$2.45
n.m.
3
4
6
500
1,491
94
1,897
8,224
418
5,623
3,806
9,429
19,968
500
1,500
67
1,933
8,804
418
5,623
4,021
9,644
20,799
500
1,500
49
1,951
9,351
418
5,623
4,259
9,882
21,602
10,121
51%
5.2x
10,737
52%
5.2x
11,302
52%
5.2x
Canada Research | Page 14 of 27
Hydro One Ltd.
Valuation & Recommendation
We are initiating coverage of Hydro One with an Outperform rating and a target price of $25.00,
which produces a potential annual return of 10% from current levels. To derive our valuation, we
apply a target yield of 3.5% on our 2017 dividend estimate of $0.88, which is consistent with what
both Hydro One and Fortis are currently yielding. We see Fortis as Hydro One’s closest comp on
the basis that both generate predominantly all of their earnings from rate-regulated businesses
and possess similar rate-base growth profiles.
We recommend the purchase of
Hydro One common shares
Although we believe the sustainable nature of Hydro One’s cash flows lends itself well to a yieldbased valuation methodology, we also like to use an earnings approach as a sanity check. Since
regulators concentrate on net income to judge performance, we see P/E multiples as a more
appropriate measure than EV/EBITDA multiples to value utilities. On this basis our valuation
reflects a target multiple of roughly 20.0x our 2017 estimates, which is above the peer group’s
prevailing average 19.3x. We argue that Hydro One will continue to command a premium to its
peers given its monopoly-like status in regulation-friendly Ontario and should trade range bound
with the more diversified operations of Fortis.
In summary, with practically all of its assets regulated, Hydro One ranks as the lowest-risk stock
among our Infrastructure and Construction (I&C) coverage universe. With a commanding market
position in Canada’s biggest province, multi-year visibility into 5% rate base growth and potential
for productivity step-changes in the medium-term, Hydro One also qualifies as a core holding
stock from where we sit.
Exhibit 14: We Believe Hydro One Warrants a Premium over its Peer Group Given its Above Average Risk-Adjusted Total Return Profile
P/E
Company Name
Ticker
Market
Price
Market Cap
(mln)
Ent. Value
(mln)
CU.CA
CPX.CA
EMA.CA
ENB.CA
FTS.CA
H.CA
ITC.US
TA.CA
TRP.CA
C$35.99
C$17.61
C$47.52
C$49.28
C$40.17
C$23.63
$42.59
C$5.78
C$49.67
C$9,606
C$1,695
C$7,041
C$45,547
C$11,326
C$14,062
$6,504
C$1,664
C$34,885
C$18,748
C$3,790
C$11,582
C$98,169
C$25,625
C$24,676
$10,950
C$8,076
C$73,481
EV/EBITDA
2015
2016E
2017E
2015
2016E
2017E
19.7
15.3
18.1
22.4
19.0
20.4
20.5
n.m.
20.0
19.4
18.1
16.4
19.6
21.8
18.4
20.2
20.5
n.m.
19.2
19.3
16.9
16.3
17.4
20.0
16.2
18.9
19.2
n.m.
17.3
17.8
12.1
8.2
11.4
18.8
11.2
12.6
13.3
8.4
12.6
12.1
10.5
8.0
6.1
13.8
10.2
12.0
12.8
8.0
11.8
10.4
9.8
8.1
4.6
12.9
6.6
11.4
11.5
7.8
10.8
9.3
Net Debt/ Net Debt/ Div. Yield
Cap (%)
EBITDA
(%)
REGULATED UTILITIES
CANADIAN UTILITIES LTD.
CAPITAL POWER CORP.
EMERA INC.
ENBRIDGE INC.
FORTIS INC.
HYDRO ONE LTD.
ITC HOLDINGS CORP.
TRANSALTA CORP.
TRANSCANADA CORP.
43.8
48.0
34.4
48.4
51.5
41.9
40.6
72.7
49.6
4.8
3.4
3.6
8.2
5.3
5.2
5.4
4.6
5.9
3.6
8.3
4.0
4.3
3.8
3.5
1.8
2.7
4.6
Notes:
1) Estimates for Hydro One Ltd. are from Raymond James Ltd.; all other estimates are consensus from Capital IQ.
Source: Capital IQ, Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 15 of 27
Appendix A: Financial Statements
Hydro One Income Statement
Year end December 31; $ millions
2013
Revenues
Transmission
Distribution
Other
2014
2015
2016E
2017E
% Chg
14/13
% Chg
15/14
% Chg
16/15
% Chg
17/16
1,529
4,484
61
6,074
1,588
4,903
57
6,548
1,536
4,949
53
6,538
1,622
4,998
53
6,673
1,710
5,109
53
6,872
4
9
(7)
8
(3)
1
(7)
(0)
6
1
2
5
2
3
3,020
1,106
676
4,802
3,419
1,192
722
5,333
3,450
1,135
759
5,344
3,450
1,167
795
5,412
3,500
1,210
832
5,541
13
8
7
11
1
(5)
5
0
3
5
1
1
4
5
2
1,272
360
912
109
803
18
785
1,215
379
836
89
747
(2)
18
731
1,194
376
818
105
713
10
13
690
1,262
405
856
131
725
10
18
697
1,330
422
908
137
771
10
18
743
(4)
5
(8)
(18)
(7)
n.m.
(7)
(2)
(1)
(2)
18
(5)
n.m.
(27)
(6)
6
8
5
25
2
37
1
5
4
6
4
6
7
Earnings per common share
Adjusted
n.m.
1.23
1.16
1.17
1.25
n.m.
(6)
1
7
Weighted average number of common shares
Adjusted
n.m.
595.0
595.1
595.1
595.1
Dividends per common share declared
Payout ratio
n.m.
n.m.
n.m.
n.m.
n.m.
n.m.
0.84
72%
0.88
70%
Ratios (%):
Purchased power/distribution revenue
Operation, maintenance and administration/net revenue
Depreciation and amortization/net revenue
Financial charges/net revenue
Income tax rate
NCI/Net income before NCI
Net profit margin
67.4
36.2
22.1
11.8
12.0
13.2
69.7
38.1
23.1
12.1
10.6
(0.3)
11.4
69.7
36.8
24.6
12.2
12.8
1.4
10.9
69.0
36.2
24.7
12.6
15.3
1.4
10.9
68.5
35.9
24.7
12.5
15.1
1.3
11.2
1,194
38.7
1,953
63.2
1,262
39.1
2,056
63.8
1,330
39.5
2,162
64.1
(4)
(2)
6
5
(1)
1
5
5
Costs
Purchased power
Operation, maintenance and administration (OM&A)
Depreciation and amortization (D&A)
EBIT
Financing charges
Income before taxes
Income taxes
Net income
Noncontrolling interest
Preferred dividend
Net income attributable to Hydro One shareholders
EBIT
EBIT margin (%)
EBITDA
EBITDA margin (%)
1,272
41.7
1,948
63.8
1,215
38.8
1,937
61.9
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Canada Research | Page 16 of 27
Hydro One Ltd.
Hydro One Balance Sheet
Year end December 31; $ millions
2013
Assets
Current assets:
Cash and cash equivalents
Accounts receivable
Due from related parties
Other
Property, plant and equipment (PP&E):
PP&E in service, net of depreciation
Construction in progress
Future use land, components and spares
Other long-term assets:
Regulatory assets
Intangible assets
Goodwill
Deferred income tax assets
Other
Total assets
Liabilities
Current liabilities:
Short-term debt
Accounts payable
Accrued liabilities
Other
Long-term debt payable within one year
Long-term debt
Other long-term liabilities:
Post-retirement and post-employment benefit liability
Pension benefit liability
Other
Total liabilities
Equity
Common shares
Preferred shares
Retained earnings
Other
Total Hydro One shareholder's equity
Noncontrolling interest
Total equity
2014
2015
2016E
2017E
565
923
197
373
2,058
100
1,016
224
110
1,450
94
776
191
105
1,166
67
776
191
105
1,139
49
776
191
105
1,121
15,205
1,078
148
16,431
16,222
1,025
154
17,401
16,656
1,155
157
17,968
17,675
1,155
157
18,987
18,730
1,155
157
20,042
2,636
313
133
11
43
3,136
21,625
3,200
276
173
7
43
3,699
22,550
3,015
336
163
1,636
44
5,194
24,328
3,015
369
163
1,400
44
4,991
25,117
3,015
401
163
1,100
44
4,723
25,886
31
135
654
415
756
1,991
8,301
2
173
611
377
552
1,715
8,373
1,491
155
598
253
500
2,997
8,224
1,500
155
598
253
500
3,006
8,804
1,500
155
598
253
500
3,006
9,351
1,488
845
1,585
3,918
14,210
1,533
1,236
1,746
4,515
14,603
1,560
952
671
3,183
14,404
1,560
952
651
3,163
14,973
1,560
952
631
3,143
15,500
3,314
323
3,787
(9)
7,415
7,415
21,625
3,314
323
4,249
(9)
7,877
70
7,926
22,550
5,623
418
3,806
2
9,849
75
9,901
24,328
5,623
418
4,021
2
10,064
80
10,121
25,117
5,623
418
4,259
2
10,302
85
10,364
25,886
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 17 of 27
Hydro One Cash Flow Statement
Year end December 31; $ millions
Operating activities
Net income
Environmental expenditures
Adjustments for non-cash items:
Depreciation and amortization
Deferred income taxes
Other
Change in working capital
Net cash from operating activities
Financing activities
Change in long-term debt
Change in short-term notes
Common shares issued
Dividends paid
Other
Net cash from (used in) financing activities
Investing activities
Capital expenditures
Acquisitions
Other
Net cash used in investing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
2013
2014
2015
2016E
2017E
803
(16)
747
(18)
713
(19)
725
(20)
771
(20)
597
(2)
11
11
1,404
641
10
(69)
(55)
1,256
668
(2,844)
21
208
(1,253)
699
236
1,640
732
300
1,783
585
(218)
(16)
351
(148)
(287)
40
(395)
(235)
1,491
2,600
(888)
(14)
2,954
580
9
(500)
(5)
84
547
(524)
(5)
18
(1,387)
2
(1,385)
370
195
565
(1,504)
(66)
244
(1,326)
(465)
565
100
(1,632)
(90)
15
(1,707)
(6)
100
94
(1,651)
(100)
(1,751)
(27)
94
67
(1,620)
(200)
(1,820)
(19)
67
49
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Canada Research | Page 18 of 27
Hydro One Ltd.
Appendix B: Management & Board of Directors
Management
Mayo Schmidt (CEO)
Mr. Schmidt became CEO of Saskatchewan Wheat Pool (predecessor to Viterra) in 2000 then was
named President in 2005, joined the Board of Directors, and led the company to becoming a listed
public corporation. As the architect of Viterra’s transformation from a regional agriculture and
food business to a global leader, Mr. Schmidt headed multiple transformative global acquisitions,
which ultimately more than tripled the company’s revenue to almost $12 billion. In addition to
currently siting on the Board of Directors of Agrium and the Global Transportation Hub Authority
he has been a member on multiple boards, including the Canadian Council of Chief Executive
Officers, Executive Committee Member of The Conference Board of Canada, Trustee of The
Conference Board Inc. USA, and Harvard’s Private and Public, Scientific, Academic and Consumer
Food Policy Group, and is on Washburn University’s Foundation board of Trustees.
Michael H. Vels (CFO)
As Maple Leaf Foods CFO from 2004 to 2014 Mr. Vels was responsible for overseeing the
company’s finance, mergers and acquisitions, information technology and communications
functions. He also served as the Chief Transition Officer, responsible for leading the restructuring
of management and back office functions of the company. During his tenure he drove business
transformation and productivity gains in information technology and shared services and
conducted various M&A transactions, including divestitures totalling $3 billion. He currently
serves as Director of Canada’s National Ballet School and formerly served on the board of
directors for Canada Bread Company and Country Style Food Services.
Sandy Struthers (COO)
Mr. Struthers previously served as Hydro One’s CFO and CAO, overseeing the company’s finance,
regulatory and corporate support functions. Since first joining Hydro One as a Finance Director
responsible for mergers and acquisitions in 2000, Mr. Struthers has held a number of senior
management positions including CIO, where he was accountable for the information technology
organization and strategy. Prior to joining Hydro One Mr. Struthers was a partner in the corporate
finance group of a national accounting firm.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 19 of 27
Board of Directors
Name
Mayo Schmidt
Title
President and CEO
and Director
Profile
Served as President and CEO and director at Viterra (2000-2012) and currently sits on the
Board of Directors of Agrium and the Global Transportation Hub Authority.
David Denison
Director and Chair
of the Board
Was appointed Chair of the Board of Hydro One Inc. in April 2015. Former CEO of the
Canada Pension Plan Investment Board and President of Fidelity Investments Canada.
Ian Bourne
Director
Former Chair of SNC-Lavalin Group and Interim CEO in 2012. Chair of the Board of
Directors of Ballard Power Systems and a member of multiple of Boards.
Charles Brindamour
Director
CEO and board member of Intact Financial Corporation , the C.D. Howe Institute, and of
the Insurance Bureau of Canada where he was Chair for the past four years.
Marcello Caira
Director
Director and Vice-Chairman of the Board of Directors of Restaurant Brands International
and a director of the Minto Group. Former CEO of Tim Hortons.
Christie Clark
Director
Corporate Director at Loblaw Companies and member of the Board of Directors of Loblaw
Companies, Air Canada, and Choice Properties Real Estate Investment Trust.
George Cooke
Director
President of Martello Associates Consulting and Chair of the Board of Directors of OMERS
Administration. Former CEO of Dominion of Canada General Insurance Company.
Margaret Harris
Director
Corporate Director and the Chair of the Board of Directors of the Investment Industry
Regulatory Organization of Canada (IIROC).
James Hinds
Director
Former Managing Director of investment banking at TD Securities. Past Chair of the IESO
and Chair of the former Ontario Power Authority Board of Directors .
Kathryn Jackson
Director
Corporate Director and former Senior Vice President and Chief Technology Officer of RTI
International Metals.
Roberta Jamieson
Director
Mohawk woman from the Six Nations of the Grand River Territory and President and CEO
of Indspire, Canada’s premiere Indigenous-led charity.
Frances Lankin
Director
Former President and CEO of the United Way and former Member of Provincial Parliament
for the Toronto riding of Beaches.
Philip Orsino
Director
Consultant and corporate director and the former President and CEO of Jeld-Wen.
Jane Peverett
Director
Corporate Director and former CEO and CFO of the British Columbia Transmission
Corporation.
Gale Rubenstein
Director
Partner of the law firm Goodmans LLP and a member of the firm’s Executive Committee.
Source: Hydro One Ltd., Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Canada Research | Page 20 of 27
Hydro One Ltd.
Appendix C: Risks
Regulatory
Potential changes to regulatory frameworks can negatively impact Hydro One’s operations. This is
particularly true considering that nearly 100% of its revenues are rate-regulated. Included are
risks relating to rate orders, actual performance against forecasts and capital expenditures.
Notably the allowed ROE is adjusted annually and Ontario currently has one of the highest
allowed ROE in Canada.
Weather
Severe weather and natural disasters pose a risk to Hydro One’s facilities. Weather conditions also
have an impact on its sales.
Interest rates
Given the inverse relationship between utility valuations and interest rates, share prices could
come under pressure in a rising interest rate environment.
Capital investments
If Hydro One can’t arrange sufficient cost-effective financing to repay maturing debt and to fund
capital expenditures, the company may not be able to execute plans for capital projects necessary
to maintain the performance of assets. There is also the risk that certain projects or acquisitions
could negatively impact Hydro One’s share price if not viewed positively by the market.
Labor disputes
There is no guarantee Hydro One will be able to negotiate appropriate collective agreements on
acceptable terms consistent with the company’s rate decisions.
Environmental
Non-compliance with environmental regulations, the failure to mitigate significant health and
safety risks or the inability to recover environmental expenditures in rate applications, could
negatively impact Hydro One’s operations in the future.
Pension plan
Given that Hydro One provides a defined benefit pension to its workers there exists the risk of not
being able to recover future pension expenditures in the rates and uncertainty surrounding the
future regulatory treatment of pension.
Political
Situations may arise in the future where government and public shareholders have opposing
interests. This could be problematic for shareholders given the province’s strong influence over
the company and its role within Ontario’s electricity industry.
Secondary offering
The province of Ontario currently has 85% ownership in Hydro One and plans on reducing its
ownership to 40% over time through secondary offerings. There is no assurance that sufficient
demand for Hydro One stock will exist to prevent the secondary offerings from negatively
impacting its share price.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 21 of 27
Appendix D: Ontario’s 2016 Allowed ROE Formula
Source: Ontario Energy Board
Company Citations
Company Name
Aecon Group
Agrium Inc.
Air Canada
Brookfield Infrastructure Partners L.P.
Brookfield Renewable Energy Partners L.P.
Choice Properties REIT
Intact Financial Corporation
Loblaw Companies Ltd.
Pattern Energy Group Inc.
SNC-Lavalin
Ticker
ARE
AGU
AC
BIP
BEP
CHP.UN
IFC
L
PEGI
SNC
Exchange
TSX
NYSE
TSX
NYSE
NYSE
TSX
TSX
TSX
NASDAQ
TSX
Currency
C$
US$
C$
US$
US$
C$
C$
C$
US$
C$
Closing Price
15.80
89.55
8.54
39.90
28.35
12.21
89.45
73.91
18.84
46.12
RJ Rating
2
3
4
1
2
3
2
2
2
3
RJ Entity
RJ Ltd.
RJ Ltd.
RJ Ltd.
RJ Ltd.
RJ Ltd.
RJ & Associates
RJ Ltd.
RJ Ltd.
RJ Ltd.
RJ Ltd.
Notes: Prices are as of the most recent close on the indicated exchange and may not be in US$. See Disclosure section for rating definitions.
Stocks that do not trade on a U.S. national exchange may not be registered for sale in all U.S. states. NC=not covered.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Canada Research | Page 22 of 27
Hydro One Ltd.
IMPORTANT INVESTOR DISCLOSURES
Raymond James & Associates (RJA) is a FINRA member firm and is responsible for the preparation and distribution of research created in
the United States. Raymond James & Associates is located at The Raymond James Financial Center, 880 Carillon Parkway, St. Petersburg,
FL 33716, (727) 567-1000. Non-U.S. affiliates, which are not FINRA member firms, include the following entities which are responsible for
the creation and distribution of research in their respective areas; In Canada, Raymond James Ltd. (RJL), Suite 2100, 925 West Georgia
Street, Vancouver, BC V6C 3L2, (604) 659-8200; In Latin America, Raymond James Argentina S.A., San Martin 344, 22nd Floor, Buenos
Aires, C10004AAH, Argentina, +54 11 4850 2500; In Europe, Raymond James Euro Equities, SAS, 40, rue La Boetie, 75008, Paris, France,
+33 1 45 61 64 90, and Raymond James Financial International Ltd., Broadwalk House, 5 Appold Street, London, England EC2A 2AG, +44
203 798 5600.
This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in
any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or
regulation. The securities discussed in this document may not be eligible for sale in some jurisdictions. This research is not an offer to
sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not
constitute a personal recommendation nor does it take into account the particular investment objectives, financial situations, or needs
of individual clients. Information in this report should not be construed as advice designed to meet the individual objectives of any
particular investor. Investors should consider this report as only a single factor in making their investment decision. Consultation with
your investment advisor is recommended. Past performance is not a guide to future performance, future returns are not guaranteed, and
a loss of original capital may occur.
The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell
any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such
information is accurate or complete. Persons within the Raymond James family of companies may have information that is not available
to the contributors of the information contained in this publication. Raymond James, including affiliates and employees, may execute
transactions in the securities listed in this publication that may not be consistent with the ratings appearing in this publication.
With respect to materials prepared by Raymond James Ltd. (“RJL”), all expressions of opinion reflect the judgment of the Research
Department of RJL, or its affiliates, at this date and are subject to change. RJL may perform investment banking or other services for, or
solicit investment banking business from, any company mentioned in this document.
All Raymond James Ltd. research reports are distributed electronically and are available to clients at the same time via the firm’s website
(http://www.raymondjames.ca). Immediately upon being posted to the firm’s website, the research reports are then distributed
electronically to clients via email upon request and to clients with access to Bloomberg (home page: RJLC), Capital IQ and Thomson
Reuters. Selected research reports are also printed and mailed at the same time to clients upon request. Requests for Raymond James
Ltd. research may be made by contacting Raymond James Ltd. during market hours at (604) 659‐8000.
In the event that this is a compendium report (i.e., covers 6 or more subject companies), Raymond James Ltd. may choose to provide
specific disclosures for the subject companies by reference. To access these disclosures, clients should refer to:
http://www.raymondjames.ca (click on Equity Capital Markets / Equity Research / Research Disclosures) or call toll‐free at 1‐800‐667‐
2899.
ANALYST INFORMATION
Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system.
Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including
success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from
institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in
stocks under coverage that are attributable to the analyst’s efforts, v) net revenues of the overall Equity Capital Markets Group, and vi)
compensation levels for analysts at competing investment dealers.
Analyst Stock Holdings: Effective September 2002, Raymond James equity research analysts and associates or members of their
households are forbidden from investing in securities of companies covered by them. Analysts and associates are permitted to hold long
positions in the securities of companies they cover which were in place prior to September 2002 but are only permitted to sell those
positions five days after the rating has been lowered to Underperform.
The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said
person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this
research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.
RATINGS AND DEFINITIONS
Raymond James Ltd. (Canada) definitions: Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least
15% and outperform the S&P/TSX Composite Index over the next six months. Outperform (MO2) The stock is expected to appreciate and
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 23 of 27
outperform the S&P/TSX Composite Index over the next twelve months. Market Perform (MP3) The stock is expected to perform
generally in line with the S&P/TSX Composite Index over the next twelve months and is potentially a source of funds for more highly
rated securities. Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next
six to twelve months and should be sold.
Raymond James & Associates (U.S.) definitions: Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and
outperform the S&P 500 over the next six to 12 months. For higher yielding and more conservative equities, such as REITs and certain
MLPs, a total return of at least 15% is expected to be realized over the next 12 months. Outperform (MO2) Expected to appreciate and
outperform the S&P 500 over the next 12-18 months. For higher yielding and more conservative equities, such as REITs and certain MLPs,
an Outperform rating is used for securities where we are comfortable with the relative safety of the dividend and expect a total return
modestly exceeding the dividend yield over the next 12-18 months. Market Perform (MP3) Expected to perform generally in line with the
S&P 500 over the next 12 months. Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12
months and should be sold. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to
market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances,
including when Raymond James may be providing investment banking services to the company. The previous rating and price target are
no longer in effect for this security and should not be relied upon.
Raymond James Argentina S.A. rating definitions: Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0%
over the next twelve months. Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over
the next twelve months. Market Perform (MP3) Expected to perform in line with the underlying country index. Underperform (MU4)
Expected to underperform the underlying country index. Suspended (S) The rating and price target have been suspended temporarily.
This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in
certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous
rating and price target are no longer in effect for this security and should not be relied upon.
Raymond James Europe (Raymond James Euro Equities SAS & Raymond James Financial International Limited) rating definitions:
Strong Buy (1) Expected to appreciate, produce a total return of at least 15%, and outperform the Stoxx 600 over the next 6 to 12
months. Outperform (2) Expected to appreciate and outperform the Stoxx 600 over the next 12 months. Market Perform (3) Expected to
perform generally in line with the Stoxx 600 over the next 12 months. Underperform (4) Expected to underperform the Stoxx 600 or its
sector over the next 6 to 12 months. Suspended (S) The rating and target price have been suspended temporarily. This action may be due
to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances,
including when Raymond James may be providing investment banking services to the company. The previous rating and target price are
no longer in effect for this security and should not be relied upon.
In transacting in any security, investors should be aware that other securities in the Raymond James research coverage universe might
carry a higher or lower rating. Investors should feel free to contact their Financial Advisor to discuss the merits of other available
investments.
Suitability Ratings (SR)
Medium Risk/Income (M/INC) Lower to average risk equities of companies with sound financials, consistent earnings, and dividend
yields above that of the S&P 500. Many securities in this category are structured with a focus on providing a consistent dividend or return
of capital.
Medium Risk/Growth (M/GRW) Lower to average risk equities of companies with sound financials, consistent earnings growth, the
potential for long-term price appreciation, a potential dividend yield, and/or share repurchase program.
High Risk/Income (H/INC) Medium to higher risk equities of companies that are structured with a focus on providing a meaningful
dividend but may face less predictable earnings (or losses), more leveraged balance sheets, rapidly changing market dynamics, financial
and competitive issues, higher price volatility (beta), and potential risk of principal. Securities of companies in this category may have a
less predictable income stream from dividends or distributions of capital.
High Risk/Growth (H/GRW) Medium to higher risk equities of companies in fast growing and competitive industries, with less
predictable earnings (or losses), more leveraged balance sheets, rapidly changing market dynamics, financial or legal issues, higher price
volatility (beta), and potential risk of principal.
High Risk/Speculation (H/SPEC) High risk equities of companies with a short or unprofitable operating history, limited or less predictable
revenues, very high risk associated with success, significant financial or legal issues, or a substantial risk/loss of principal.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Canada Research | Page 24 of 27
Hydro One Ltd.
RATING DISTRIBUTIONS
Coverage Universe Rating Distribution*
Investment Banking Distribution
RJL
RJA
RJ Arg
RJEE/RJFI
RJL
RJA
RJ Arg
RJEE/RJFI
Strong Buy and Outperform (Buy)
65%
57%
53%
50%
40%
21%
0%
0%
Market Perform (Hold)
33%
38%
47%
37%
15%
5%
0%
0%
Underperform (Sell)
2%
6%
0%
14%
0%
7%
0%
0%
* Columns may not add to 100% due to rounding.
RAYMOND JAMES RELATIONSHIP DISCLOSURES
Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all
companies under research coverage within the next three months.
Company Name
Disclosure
Hydro One Ltd.
Raymond James Ltd - the analyst and/or associate has viewed the material operations of Hydro One
Ltd.
Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12
months with respect to Hydro One Ltd.
Raymond James Ltd. has provided investment banking services within the last 12 months with respect
to Hydro One Ltd.
Raymond James Ltd. has received compensation for investment banking services within the last 12
months with respect to Hydro One Ltd.
STOCK CHARTS, TARGET PRICES, AND VALUATION METHODOLOGIES
Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and
quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management
effectiveness; competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to
change depending on overall economic conditions or industry- or company-specific occurrences.
Target Prices: The information below indicates our target price and rating changes for H stock over the past three years.
Valuation Methodology: We value Hydro One based on a target yield to our expected cash distribution per common share.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
Canada Research | Page 25 of 27
RISK FACTORS
General Risk Factors: Following are some general risk factors that pertain to the businesses of the subject companies and the projected
target prices and recommendations included on Raymond James research: (1) Industry fundamentals with respect to customer demand
or product / service pricing could change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors
or market shares or new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen
developments with respect to the management, financial condition or accounting policies or practices could alter the prospective
valuation.
Risks - Hydro One Ltd.
Regulatory - Potential changes to regulatory frameworks can negatively impact the company’s operations.
Weather - Severe weather and natural disasters pose a risk to the company’s facilities and could impact its sales.
Interest rates - Given the inverse relationship between utility valuations and interest rates, share prices could come under pressure in a
rising interest rate environment.
Capital investments - Cost-effective financing is required to repay maturing debt and to fund capital expenditures. Certain projects or
acquisitions could negatively impact share price if not viewed positively by the market.
Labor disputes - There is no guarantee the company will be able to negotiate appropriate collective agreements on acceptable terms
consistent with the company’s rate decisions.
Environmental - Non-compliance with environmental regulations, the failure to mitigate significant health and safety risks or the inability
to recover environmental expenditures in rate applications, could negatively impact operations.
Pension plan - There exists the risk of not being able to recover future pension expenditures in the rates and uncertainty surrounding the
future regulatory treatment of pension.
Political - Situations may arise in the future where Ontario’s government and public shareholders have opposing interests.
Secondary offering - There is no assurance that sufficient demand will exist to prevent secondary offerings from negatively impacting the
share price.
Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability
categories, is available for Raymond James at rjcapitalmarkets.com/Disclosures/index and for Raymond James Limited at
www.raymondjames.ca/researchdisclosures.
INTERNATIONAL DISCLOSURES
FOR CLIENTS IN THE UNITED STATES:
Any foreign securities discussed in this report are generally not eligible for sale in the U.S. unless they are listed on a U.S. exchange. This
report is being provided to you for informational purposes only and does not represent a solicitation for the purchase or sale of a security
in any state where such a solicitation would be illegal. Investing in securities of issuers organized outside of the U.S., including ADRs, may
entail certain risks. The securities of non-U.S. issuers may not be registered with, nor be subject to the reporting requirements of, the
U.S. Securities and Exchange Commission. There may be limited information available on such securities. Investors who have received
this report may be prohibited in certain states or other jurisdictions from purchasing the securities mentioned in this report. Please ask
your Financial Advisor for additional details and to determine if a particular security is eligible for purchase in your state.
Raymond James Ltd. is not a U.S. broker‐dealer and therefore is not governed by U.S. laws, rules or regulations applicable to U.S. broker‐
dealers. Consequently, the persons responsible for the content of this publication are not licensed in the U.S. as research analysts in
accordance with applicable rules promulgated by the U.S. Self Regulatory Organizations.
Any U.S. Institutional Investor wishing to effect trades in any security should contact Raymond James (USA) Ltd., a U.S. broker‐dealer
affiliate of Raymond James Ltd.
FOR CLIENTS IN THE UNITED KINGDOM:
For clients of Raymond James & Associates (London Branch) and Raymond James Financial International Limited (RJFI): This document
and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed, being persons
who are Eligible Counterparties or Professional Clients as described in the FCA rules or persons described in Articles 19(5) (Investment
professionals) or 49(2) (High net worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (as amended) or any other person to whom this promotion may lawfully be directed. It is not intended
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Canada Research | Page 26 of 27
Hydro One Ltd.
to be distributed or passed on, directly or indirectly, to any other class of persons and may not be relied upon by such persons and is
therefore not intended for private individuals or those who would be classified as Retail Clients.
For clients of Raymond James Investment Services, Ltd.: This report is for the use of professional investment advisers and managers and
is not intended for use by clients.
For purposes of the Financial Conduct Authority requirements, this research report is classified as independent with respect to conflict of
interest management. RJA, RJFI, and Raymond James Investment Services, Ltd. are authorised and regulated by the Financial Conduct
Authority in the United Kingdom.
FOR CLIENTS IN FRANCE:
This document and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed,
being persons who are Eligible Counterparties or Professional Clients as described in “Code Monétaire et Financier” and Règlement
Général de l’Autorité des Marchés Financiers. It is not intended to be distributed or passed on, directly or indirectly, to any other class of
persons and may not be relied upon by such persons and is therefore not intended for private individuals or those who would be
classified as Retail Clients.
For clients of Raymond James Euro Equities: Raymond James Euro Equities is authorised and regulated by the Autorité de Contrôle
Prudentiel et de Résolution and the Autorité des Marchés Financiers.
For institutional clients in the European Economic Area (EEA) outside of the United Kingdom: This document (and any attachments or
exhibits hereto) is intended only for EEA institutional clients or others to whom it may lawfully be submitted.
Raymond James Euro Equities is a French Investment Services Provider authorized by the Autorité de contrôle prudentiel et de résolution
and regulated by the Autorité de contrôle prudentiel et de résolution and the Autorité des Marchés Financiers. For non-European
exchanges, Raymond James Euro Equities operates under the name Raymond James International.
Proprietary Rights Notice: By accepting a copy of this report, you acknowledge and agree as follows:
This report is provided to clients of Raymond James only for your personal, noncommercial use. Except as expressly authorized by
Raymond James, you may not copy, reproduce, transmit, sell, display, distribute, publish, broadcast, circulate, modify, disseminate or
commercially exploit the information contained in this report, in printed, electronic or any other form, in any manner, without the prior
express written consent of Raymond James. You also agree not to use the information provided in this report for any unlawful purpose.
This report and its contents are the property of Raymond James and are protected by applicable copyright, trade secret or other
intellectual property laws (of the United States and other countries). United States law, 17 U.S.C. Sec.501 et seq, provides for civil and
criminal penalties for copyright infringement. No copyright claimed in incorporated U.S. government works.
Additional information is available upon request. This document may not be reprinted without permission.
RJL is a member of the Canadian Investor Protection Fund. ©2016 Raymond James Ltd.
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Hydro One Ltd.
EQUITY RESEARCH
HEAD OF EQUITY RESEARCH
DARYL SWETLISHOFF, CFA
Canada Research | Page 27 of 27
RAYMOND JAMES LTD. CANADIAN INSTITUTIONAL EQUITY TEAM WWW.RAYMONDJAMES.CA
INSTITUTIONAL EQUITY SALES
604.659.8246
CONSUMER
CONSUMER & RETAIL
KENRIC TYGHE, MBA
KRISZTINA KATAI (ASSOCIATE)
416.777.7188
416.777.7060
HEAD OF SALES
MIKE WESTCOTT
GREG JACKSON (ECM, BUSINESS MANAGER)
MICHELLE MARGUET ( ECM, INSTITUTIONAL MARKETING)
TORONTO (CAN 1.888.601.6105 | USA 1.800.290.4847)
LAURA ARRELL (U.S. EQUITIES)
SEAN BOYLE
JEFF CARRUTHERS, CFA
RICHARD EAKINS
JONATHAN GREER
DAVE MACLENNAN
ROBERT MILLS, CFA
BRADY PIMLOTT (ASSOCIATE)
NICOLE SVEC-GRIFFIS, CFA (U.S. EQUITIES)
NEIL WEBER
ORNELLA BURNS (ASSISTANT)
SATBIR CHATRATH (ASSISTANT)
ENERGY
OIL & GAS ENERGY SERVICES, HEAD OF ENERGY RESEARCH
ANDREW BRADFORD, CFA
TIM MONACHELLO (ASSOCIATE)
OIL & GAS PRODUCERS
KURT MOLNAR
GORDON STEPPAN, CFA (SR ASSOCIATE)
OIL & GAS PRODUCERS
JEREMY MCCREA, CFA
MICHAEL SHAW, CFA (ASSOCIATE)
SR. OIL & GAS PRODUCERS | ENERGY INFRASTRUCTURE
CHRIS COX, CFA
MICHAEL BARTH (ASSOCIATE)
403.509.0503
403.509.0562
403.221.0414
403.221.0411
403.509.0518
403.509.0534
403.509.0523
403.509.0511
MINING
BASE & PRECIOUS METALS
ALEX TERENTIEW, MBA, P.GEO
JEAN-CHRISTOPHE PARISIEN-LA SALLE (ASSOCIATE)
PRECIOUS METALS
PHIL RUSSO
KENT NEALE, CFA (ASSOCIATE)
PRECIOUS METALS
CHRIS THOMPSON, M.SC. (ENG), P.GEO
BRIAN MARTIN, CFA (ASSOCIATE)
URANIUM | JR EXPLORATION & DEVELOPMENT
DAVID SADOWSKI
SCOT ATKINSON, CFA
NICK POCRNIC
TERRI MCEWAN (ASSISTANT)
416.777.4912
416.777.7144
416.777.7084
416.777.7098
604.659.8439
604.654.1236
604.659.8255
416.777.4943
416.777.7042
FOREST PRODUCTS
FOREST PRODUCTS
DARYL SWETLISHOFF, CFA
DAVID QUEZADA, CFA (ASSOCIATE ANALYST)
604.659.8246
604.659.8257
REAL ESTATE
REAL ESTATE & REITS
KEN AVALOS, MBA
JOHANN RODRIGUES (ASSOCIATE ANALYST)
727.567.1756
416.777.7189
TECHNOLOGY & COMMUNICATIONS
TECHNOLOGY, ALTERNATIVE ENERGY & CLEAN TECH
STEVEN LI, CFA
JONATHAN LO (ASSOCIATE)
EQUITY RESEARCH PUBLISHING
SENIOR SUPERVISORY ANALYST
HEATHER HERRON
HEAD OF PUBLISHING | SUPERVISORY ANALYST
CYNTHIA LUI
TYLER BOS (SUPERVISORY ANALYST | EDITOR)
INDER GILL (RESEARCH EDITOR)
KATE MAJOR (RESEARCH PRINCIPAL | EDITOR)
ASHLEY RAMSAY (SUPERVISORY ANALYST |EDITOR)
604.659.8225
604.659.8230
604.659.8228
MONTREAL (514.350.4450 | 1.866.350.4455)
JOHN HART
DAVID MAISLIN, CFA
TANYA HATCHER (ASSISTANT)
514.350.4462
514.350.4460
514.350.4458
LONDON
ADAM WOOD
0.207.426.5612
INSTITUTIONAL EQUITY TRADING
FINANCIAL SERVICES
DIVERSIFIED FINANCIALS
MICHAEL OVERVELDE, CFA, CPA, CA
BRENNA PHELAN, CFA, CPA, CA (ASSOCIATE)
416.777.4920
416.777.4927
416.777.4929
416.777.4926
416.777.4930
416.777.4934
416.777.4945
416.777.4993
416.777.4942
416.777.4931
416.777.4928
416.777.4915
VANCOUVER (1.800.667.2899)
INDUSTRIAL & TRANSPORTATION
INDUSTRIAL | TRANSPORTATION, HEAD OF INDUSTRIAL RESEARCH
BEN CHERNIAVSKY
604.659.8244
EDWARD GUDEWILL (ASSOCIATE)
604.659.8280
INFRASTRUCTURE & CONSTRUCTION
FREDERIC BASTIEN, CFA
604.659.8232
SAMIR GHAFIR (ASSOCIATE)
604.659.8470
TRANSPORTATION | AGRIBUSINESS & FOOD PRODUCTS
STEVE HANSEN, CMA, CFA
604.659.8208
DANIEL CHEW (ASSOCIATE)
604.659.8238
416.777.4935
416.777.7172
416.777.4951
416.777.4918
416.777.6414
403.509.0509
CO-HEAD OF TRADING
BOB MCDONALD, CFA
ANDREW FOOTE, CFA
TORONTO (CANADA 1.888.601.6105 | USA 1.800.290.4847)
MARK ARMSTRONG
PAM BANKS
OLIVER HERBST
ANDY HERRMANN
ERIC MUNRO, CFA
BOB STANDING
PETER MASON (ASSISTANT)
VANCOUVER (1.800.667.2899)
NAV CHEEMA
FRASER JEFFERSON
DEREK ORAM
MONTREAL (514.350.4450 | 1.866.350.4455)
JOE CLEMENT
PATRICK SANCHE
604.659.8222
416.777.4924
416.777.4981
416.777.4923
416.777.4947
416.777.4937
416.777.4983
416.777.4921
416.777.7195
604.659.8224
604.659.8218
604.659.8223
514.350.4470
514.350.4465
INSTITUTIONAL EQUITY OFFICES
Calgary
Suite 4250
525 8th Avenue SW
Calgary, AB T2P 1G1
403.509.0500
Montreal
Vancouver
Suite 3000
Suite 2100
1800 McGill College
925 West Georgia Street
Montreal, PQ H3A 3J6
Vancouver, BC V6C 3L2
514.350.4450
604.659.8000
Toll Free: 1.866.350.4455
Toll Free: 1.800.667.2899
Toronto
International Headquarters
Suite 5400, Scotia Plaza 40 King Street West The Raymond James Financial Center
Toronto, ON M5H 3Y2
880 Carillon Parkway
416.777.4900
St.Petersburg, FL
Toll Free Canada: .888.601.6105
USA 33716
Toll Free USA: 1.800.290.4847
727.567.1000
604.659.8210
416.777.4948
604.659.8202
416.777.7173
604.659.8226
Raymond James Ltd. | 2100 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2