Pacific Trader: Can Wall Financial build its way back?

One Wall Centre

Credit: Sheraton Wall Centre. You can’t miss One Wall Centre in downtown Vancouver, but the company headquartered there keeps a surprisingly low profile

You can’t miss One Wall Centre in downtown Vancouver, but the company headquartered there keeps a surprisingly low profile

The real estate developer has had a lousy pandemic, but earnings are rebounding

The stock: Its properties literally have a high profile in the Vancouver skyline, but Wall Financial Corp. (TSX:WFC) is a public company that behaves like a private one in many respects. It publishes the bare minimum of disclosure on its corporate website. Ukraine-born entrepreneur and philanthropist Peter Wall, who co-founded the company as Wall & Redekop in 1969, is simply listed as a controlling shareholder, appearing on neither the board of directors nor senior management. His nephew Bruno Wall serves as president and CEO, but you get a sense the old man is still calling the shots.

The drivers: Wall Financial’s revenues took a massive hit in fiscal 2021, thanks to a combination of timing around condo sales from its various projects and COVID-19’s impact on its two hotels, the Sheraton Wall Centre in downtown Vancouver and the Westin Wall Centre Vancouver Airport. Results for fiscal 2022, which wrapped up January 31, are expected any day now.

The company has three operating divisions: hotels, residential development for sale and apartment rentals. Though the hotels are set for a rebound as the pandemic recedes, rising interest rates could spell trouble for a company as deeply indebted at WFC. Its most recent, third-quarter statement showed its non-current liabilities rising over the previous nine months while asset values declined. However cash flow showed a big positive turnaround, to $13.9 million in net earnings for the nine-month period (42 cents a share) versus a $5.5-million loss (16 cents a share) for the same period in 2020.

The stock has seen a bit of a bounce so far in 2022, though it took a tumble Tuesday to $14.58 on the Toronto Stock Exchange, possibly related to the B.C. government’s announcement of new rules allowing home buyers a “cooling-off” period during which they may reconsider their purchase offers.

Word on the street: The company’s extremely concentrated property portfolio—it only operates in the Lower Mainland—and gnomic personality have earned it indifference on Bay Street, but the financial blog Simply Wall St. took a stab at the stock March 23 and gave it a cautious thumbs-up. “Wall Financial is growing its EBIT [earnings before interest and taxes] faster than former Australian PM Bob Hawke downs a yard glass, boasting a 351 percent gain in the last 12 months,” the blog noted, meaning it has the cash flow to easily cover its otherwise daunting debt load.

Coming and going: ImmunoPrecise Antibodies (TSXV, NASDAQ:IPA) is assuming control of a group of Belgian bioinformatics companies, BioStrand, BioKey and BioClue, in return for €20 million ($27.7 million) plus a potential earn-out consideration. The acquisition bolsters IPA’s capabilities and commercialization opportunities, the Victoria-based firm said.