'Nuclear is taking centre stage in Canada': Sytchev

Added: 2026-05-23

[00:00:00]Time for hot picks and today we are zeroing in on three plays in the industrials sector. Our next guest is highlighting some work in nuclear. For more on this, let's get uh Maxim Sichev in here, managing director of industrial projects at National Bank. Maxim, thank you as always for joining us.

[00:00:17]My pleasure. Okay, uh let's get right to it. Atkins Réalis, uh nuclear is having a little bit of a renaissance, isn't it?

[00:00:24]Yeah, absolutely. Even though the share price is actually down uh 8% year-to-date as uh the market is somewhat concerned um about how AI could potentially impact the engineering business. Uh but we do strongly believe that, you know, when people make a parallel to software, for example, it's not uh the same sort of dynamic as with civil engineering.

[00:00:44]Um and what's exciting right now with Atkins is the fact that um I mean, you would have seen the federal government is going uh ahead with uh its uh uh electricity plan. And uh by extension, nuclear is taking uh center stage uh in Canada. And right now, uh Atkins derives roughly uh 25% of its top line from nuclear, but more than 40% of its value uh as a percentage of uh net asset value is driven by uh this end market. And when you look at Ontario alone, we think that uh both OPG in in West Lovell and Bruce C uh will be selecting uh technology later this year. And we do strongly believe it's going to be CANDU uh reactors.

[00:01:24]Uh and by extension, uh Atkins is going to be in a prime position uh to develop uh this, you know, very safe um uh non-enriched uh uh uranium uh technology, which is also indigenous to Canada. I'm still actually kind of bewildered by, you know, some of the news flow right now where people are uh you know, speculating that maybe another technology could be selected. Uh for us, uh you know, clearly that CANDU uh is is the right one. Uh and ATRL is the major beneficiary of um uh of of building out that capacity.

[00:01:56]And with going back just to the AI emit I mean all these industries a lot of them managed to they they incorporate new things. I mean I just think the CAD I mean when they brought computers in for engineering I'm sure everybody thought that was the end of a bunch of things then but you you incorporate don't you?

[00:02:11]Roger you make such a very good point. I mean engineering consulting has been evolving for many years. I mean we've seen as you correctly mentioned you know CAD parametric design etc. What actually is happening on the ground right now is that you get a better product ultimately delivered by the consultants which enables you know better sensitivity modeling for the clients better forecasting and ultimately faster and and high quality delivery. So we are do you know agree on on that on that point even though the market is is still somewhat undecided in terms of how the business model of engineering is going to evolve over time. All right now let's get into building things Acon.

[00:03:01]Yeah absolutely. To be honest it's the same sort of thematic exporter. So nuclear is 28% of the company's top line utilities another 18. So basically anything if you think about sort of electrification for the next decade plus you know more than 50% of the company's top line stems from this very important vertical. Obviously Acon is dramatically when you get today basis it's up 50% has come off somewhat recently but we do view it as a buying opportunity and historically it was also business that has had some run-ins when it comes to execution.

[00:03:40]What has happened over the last couple of years at the procurement methodology has evolved dramatically for the government projects. So we think that the possibility of potential cost of runs is just much less and if you look at the percentage of contracts which are not fixed price for Acon, it's it's more than 70%. So, the business has evolved, you know, in a positive direction. Market exposure is is very positive, and when you look at the valuations of US peers such as Quanta and Mastac, which are trading at 20 25 times EBITDA, Acon's 25 times PE valuation actually looks like a bargain in comparison. So, we we we are extremely bullish on construction, and to your point around, you know, AI being a potential sort of question mark when it comes to engineers, construction entities actually viewed as a sort of safe from AI plays, and hence the share price performance on a year-to-date basis. And if you're going to build things, you need things to build those things. Finning International.

[00:04:45]Yeah, exactly. So, you need you need the equipment. And so, when you look right now in Canada for the longest time, we're sort of shying away from a development of commodities. And right now, you took look at the narrative change around pipelines, LNG, etc. So, 50% of the company's top line is driven by Canada, and we do think that on a prospective basis, the outlook is dramatically better. Copper, which is part of Latin American business for Finning, is 40% of the top line. And I mean, obviously, copper's in a very healthy position right now. We do expect more projects coming to market.

[00:05:20]Argentina, which could be another interesting way to to participate in the development there. It's only 5% of top line right now, but we think it could be as much as 10% prospectively driven by lithium, etc. But I mean, ultimately, it's a dramatically better execution under the relative new CEO, Kevin Parks, and you have when you look at actually the ROI generation, it's up from 13% in 2019 to north of 20% uh right now. So, uh massive uh turnaround in terms of uh actual fundamental performance. And all Oh, I think we're having uh some technical difficulties, Maxim. I don't know if you can hear me, but we have lost your audio there. We apologize for that. Uh we're almost out of time, but uh thank you as always for joining us.

[00:06:13]And hopefully we can get that uh issue fixed. That was Maxim Sitchev, managing director of industrial projects at National Bank.