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Gold/Mining/Energy : CGI Group (GIB.A) -

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To: Jean-Robert Grenier who wrote (248)	2/3/1998 10:06:00 AM
From: The Coz	Read Replies (3) of 1673

Hi! Jean-Robert, Here is my assessment of the situation. The reason why CGI has a PE of 65.76 is because the EPS shown is calculated from 4 consecutive quarters. So this means March 97 + June 97 + Sept 97 + Dec 97 . Based on this, the true EPS reflecting the recent acquisition will only be visible in the Sept 98 Annual results. But meanwhile, you will see the EPS gradually increase (including more and more of the current year earnings). What I had said in my previous note (131) was that if they improve the net profit rate to about 5%, CGI will be at 78$ (before the Dec15th 97 split). So this means 34$ after split. Well......we're only a few dollars away!!! But that's because of the recent news about the Bell Sygma acquisition. When that kicks in, and their annual revenues jumps to 1$ billion, their EPS should be around 1$. I even remember reading in the Globe and Mail not to long ago that a Brokerage firm (I think it was Desjardins Securities) revised CGI 1999 EPS estimate to 1.15$. So let's use that: 1.15$ x 50 (PE ratio - lower than what I used last time)= We get a stock value of 57.50$. This excludes any other acquisition that could take place before that time. Remember that the only market where they don't have a solid presence is the USA. And when that happens, they will obviously pay in part with CGI stocks. We all know that Bell wants to keep its level of participation in CGI and avoid being diluted. So what will they do? Buy more stocks from the treasury !!!! Oh yes!! It's part of their agreement with CGI. It will be nice to see how this unfolds. Let's hope that they deliver the goods and don't go through any growing / integration pains. Best Regards

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