Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures T.CHE.UN

RE:Cheap on all metrics

[Kherson]

Capharnaum wrote: Excluding non-reccurent charges and prorating Q4 based on Q3, here are the results per share:

Net Earnings: $0.95 per share (PE of 10.7) - 5/10 years average is $0.44/$0.74
Cash Flow: $2.44 per share (Price to cashflow of 4.2) - 5/10 years average is $2.41/$2.42
Payout ratio: 49.2% - 5/10 years average is 49.8%/49.6%
EBITDA: $3.33 per share (Price to EBITDA of 3.1) - 5/10 years average is $3.22/$3.07
Price of share (based on yearly low): $10.16 - 5/10 years average is $15.6/$13.56

Conclusion:
The non-recurring charges they put on the earnings this year has brought down the share price to extremely cheap metrics. If they were to put the company on auction, they would easily get $15 bids. The payout over the years has been as steady as it comes at a bit less than 50% for the past 10 years. The EBITDA has been, on average, growing over the years. Lowest 5 years EBITDA was $2.9 per share and lowest 10 years EBITDA was $2.48.

In general for 2018, excluding non-reccuring charges, from Q1 to Q3, numbers have been better than 5 or 10 years average for all metrics. Yet, share price is currently well below 5/10 years average low of the year (33% to 54% cheaper).

Chemtrade has a large and diversified number of products and in some case is even the sole provider. They are part of the supply and they have signed long term contracts which shields them in part from market downturns, as seen in the steadiness of the EBITDA/payout rate. Due to their recent acquisition of Canexus and softness in some markets, the 2018 numbers can also be improved in the future.

While short-term the share price will continue to feel the effects of the non-recurring charges (as automatic share value models used on the web to evaluate stocks have lowered value for 2018 and just looking at the results without digging may seem that operations are having difficulties), med/long term it should slowly fade away and get back to or above 5/10 years average. In the meantime, the dividend is well covered so there is very little risk of a cut (they have maintained the dividend over the years even though the stock has historically been as low as $4.45 10 years ago).

A lot of misinformation purposely intertwined into this post for those investors not familar with the Chemtrade financials. The biggy here is that Chemtrade does not pay a dividend, but a distribution. Another issue that the paid pumper Carpharnaum has not even mentioned is the large debt that Chemtrade is now having issues with. Just read over the recently amended credit facilities agreement to gain an understanding of just how bad it has become!
Kherson