Stock Analysis & Valuation E Split Corp. (ENS.TO)

• Previous Close: $14.97
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	168.20	1024
Intrinsic value (DCF)	34.56	131
Graham-Dodd Method	24.85	66
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

E Split Corp. (ENS.TO) is a Canadian balanced mutual fund launched by Middlefield Limited and managed by Middlefield Capital Corporation. Focused on real estate and e-commerce sectors, the fund was established on October 7, 2020, and is domiciled in Canada. Operating within the financial services sector, specifically investment banking and investment services, E Split Corp. provides investors with exposure to a diversified portfolio of high-quality real estate and e-commerce assets. The fund aims to deliver stable income through dividends while capitalizing on growth opportunities in these dynamic sectors. With a market capitalization of approximately CAD 316 million, E Split Corp. is listed on the Toronto Stock Exchange (TSX), offering investors a unique blend of income and growth potential in the Canadian market. Its strategic focus on real estate and e-commerce aligns with long-term trends in digital transformation and urbanization, making it a compelling option for income-focused investors.

Investment Summary

E Split Corp. presents an attractive investment opportunity for those seeking exposure to the real estate and e-commerce sectors with a focus on income generation. The fund's diluted EPS of CAD 6.4 and a dividend per share of CAD 1.56 highlight its ability to deliver consistent returns. However, investors should be mindful of the fund's total debt of CAD 245.7 million, which could pose risks in a rising interest rate environment. The fund's beta of 0.872 suggests lower volatility compared to the broader market, making it a relatively stable option. With no capital expenditures and a solid operating cash flow of CAD 15.5 million, E Split Corp. demonstrates efficient capital management. The fund's performance will largely depend on the continued growth of the real estate and e-commerce sectors, making it suitable for investors with a medium to long-term horizon.

Competitive Analysis

E Split Corp. competes in the crowded investment fund space, differentiating itself through a focused strategy on real estate and e-commerce sectors. Its competitive advantage lies in its specialized portfolio, managed by Middlefield Capital Corporation, which has expertise in these high-growth areas. The fund's ability to generate stable dividends and its lower beta compared to the market make it an appealing choice for risk-averse investors. However, its relatively small market capitalization (CAD 316 million) may limit its ability to scale compared to larger, more diversified funds. The fund's performance is closely tied to the health of the real estate and e-commerce sectors, which are susceptible to economic cycles and interest rate fluctuations. While its niche focus provides differentiation, it also exposes the fund to sector-specific risks. Competitors with broader mandates may offer more diversification, but E Split Corp.'s targeted approach allows for deeper sector insights and potentially higher returns in favorable market conditions.

Major Competitors

• FirstService Corporation (FSV.TO): FirstService Corporation is a leader in property services and real estate franchising, offering a more diversified portfolio compared to E Split Corp.'s focused approach. Its strengths lie in its established brand and extensive service offerings, but it lacks the e-commerce exposure that E Split Corp. provides. FirstService's larger market cap and broader geographic reach give it a competitive edge in stability and scale.
• Canadian Apartment Properties Real Estate Investment Trust (CAR.UN.TO): CAPREIT is a major player in the Canadian real estate market, specializing in residential properties. Its strengths include a large and diversified property portfolio, providing stable income. However, it lacks exposure to the e-commerce sector, which is a key differentiator for E Split Corp. CAPREIT's size and focus on residential real estate make it less volatile but also less growth-oriented compared to E Split Corp.
• Shopify Inc. (SHOP.TO): Shopify is a global leader in e-commerce platforms, offering high growth potential but with higher volatility compared to E Split Corp.'s balanced approach. While Shopify provides pure-play e-commerce exposure, it lacks the real estate component and income-generating focus of E Split Corp. Shopify's strengths lie in its technology and scalability, but it is more susceptible to market sentiment and competitive pressures.