Counsel Corporation

Cormark Securities CXS report Oct 17-13

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d Jeff Fenwick , MBA (416) 943-6739; jfenwick@cormark.com Gavin Fairweather , CFA, Asc. (416) 943-6423; gfairweather@cormark.com FINANCIAL SERVICES October 17, 2013 Counsel Corporation Building Some Serious Street Cred Unless otherwise denoted, all figures shown in C$ Recommendation: Buy Over the last two years, Counsel Corporation has turned into one of the Target Price: $3.60 leading lenders in the broker channel for single-family residential mortgages. Counsel has achieved this success through the acquisition of Street Capital Company Statistics: in 2011, which brought in an experienced Management team with deep Stock Symbol: CXS - TSX Price: $3.00 Share Outstanding: Basic: 98.2 MM Fully Diluted: 103.7 MM Management: 21.3 MM Market Cap: $294.6 MM Market Float: $230.7 MM Long-term Debt: $26.8 MM Average Daily Trading Volume: 194,000 High – Low (52-Week): $3.00 - $0.91 industry expertise and connections along with a scalable platform. The Company Description: Counsel Corporation, through its whollyowned subsidiary Street Capital, is a financial services firm involved in the origination and sale of prime single-family mortgages. Counsel Corporation's head office is located in Toronto, Ontario. results to date have been very impressive, with Street recently ranking #3 in the broker channel. Looking forward, with the establishment of a commanding market presence, we expect Counsel to focus on building Street Capital into a much larger, more diversified lending platform, through the broadening of its product offering and expansion of the firm's funding base, backstopped by the goal of attaining status as a Schedule 1 bank. Therefore, while Street is nearing the successful completion of its initial phase of growth, we see plenty of runway for revenue and earnings to continue to grow over the next few years. We are therefore initiating coverage on Counsel Corp. with a Buy recommendation and $3.60 target price. Fiscal YE Dec. 31 Revenue ($MM) Operating Income ($MM) 2012A 2013E 2014E 2015E 112.1 143.9 158.1 169.9 26.2 35.4 44.7 $0.19 $0.19 $0.23 $0.30 ROE Disclosure statements located on pages 27 – 28 of this report 18.1 Diluted EPS 22.2% 19.0% 31.9% 33.7% Originations ($MM) 6,000 7,935 8,782 9,441

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