• In Q2-2023, this company reported record revenue (up 22% YoY) and EPS (up 15% YoY), beating our estimates by 0.2% and 0.8%, respectively.
    • Revenue growth was driven by higher lending rates (7.2% in Q2-2022, to 9.8% in Q2-2023), as 90%+ of mortgages are floating rate. Due to rising financial instability, and cooling inflation, we are expecting the Bank of Canada to maintain rates, or even start slashing rates within the next six months.
    • Mortgages outstanding (net) were down 2% QoQ, to $1.12B, amid dampened real estate transactions. We expect transaction volumes to pick up starting in Q4-2023, driven by lower interest rates.
    • We are maintaining our 2023 dividend forecast of $0.74/share, implying a yield of 10.1%. Anticipating a decline in rates within the next six months, we project higher appetite for high-yield stocks, such as this company.
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