CP: Highlights from the RBC Canadian Industrials Conference

Research evidence excerpt

CP: Highlights from the RBC Canadian Industrials Conference

llas–Southeast service via a CSX partnership is now being ramped up. We see the long-term Mexico revenue

opportunity as a multi-year compounding growth driver that the market continues to undervalue.

Port of Saint John

Continue to see opportunity on the East Coast. Management described the pace of growth at the Port of Saint John as strong,

flagging a need to potentially calibrate capacity against demand given the ramp trajectory. Hapag-Lloyd's aggressive build-out at

the port points to a step-function increase in international freight volumes by 2027 in management's view, a timeline we find

credible given the port's recent success and unique inland connectivity to the Toronto and Montreal corridor. Furthermore, the

addition of an Americold cold-storage facility further diversifies the revenue stream into temperature-sensitive commodities. We

see Saint John as an increasingly important growth platform for CPKC that is not yet fully reflected in consensus estimates.

Automotive still in innings 3–4 — more OEM wins to come

Auto outperformance still has legs. The automotive franchise's closed-loop model — moving vehicles from Mexico to Canada

and back to the U.S. — has fundamentally differentiated CPKC from any border hand-off alternative and is directly addressing

OEM supply chain uncertainty. Management's characterization of this story as being in innings 3–4 is, in our view is an indication

that the volume and revenue upside here remains substantial. With more OEMs yet to be converted to the model, we continue

to see automotive as one of CPKC's most durable growth vectors and expect further market share gains in the segment over the

medium term.

Bulk franchise well-diversified; Jansen a medium-term catalyst