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Friday, February 23, 2007

Harvest Energy Trust has Outperform Rating from Royal Bank Financial

On Febraury 20, 2007 Royal Bank Financial placed an outperform rating on Harvest Energy Trust (HTE.UN-T). They now have a $28 target price.

What makes this rating interesting is that RBC Financial has the lowest ratings and target prices on all the Canadian Energy Trusts. They are very conservative on their assumptions.

They have done a detailed analysis of their refinery operation at Come-By-Chance Newfoundland.

Harvest presently pays $0.38 per month distribution which annualizes to a 16.3% yield at the $28 target price.

On my previous post I forecasted a distribution cut. However, their last press release indicated that their 2006 distributions were 100% taxable. This is interesting because for the next 4 years Harvest must payout 100% of their taxable income or they will attract the full corporate tax rate on any taxable retained earnings. Therefore, they may not cut their distribution that much in 2007.

You can read RBC's report by following the link provided.

Please perform your own due diligence.

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