Scotia Analysts’ Recommendations

Superior Plus Corp. (SPB) Target: $12.00
Recommendation: Sector Perform Risk: High

We held investor meetings with Superior Plus management in Toronto and Montreal. Highlights of the presentations are discussed below. The 23% increase in Adj. Oper. Cash Flow (AOCF) expected in 2011 (using mid-point of 2010 and 2011 guidance) is predicated on normal winter weather conditions, the absence of one-time integration costs, and increased production and sales at the Port Edwards chemicals plant. Superior will likely make tuck-in acquisitions in its Energy Services and Building Products Distribution divisions that would have to be immediately accretive (AOCF/share) and financed with 50%+ equity in order to reach its targeted Debt/EBITDA ratio of about 3.5x. The $1.62 dividend is based on management’s assessment of the mid- to long-term earnings potential and there is no indication that this has changed for the time being. DRIP participation rate is about 20%. We reiterate our 2-Sector Perform rating. We believe the dividend is sustainable given the DRIP and the expected positive impact from the integration of recent acquisitions, non-recurrence of recent integration costs, and assuming normal weather conditions.

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