Bullboard - Stock Discussion Forum Canfor Corp CFPZF

Primary Symbol: T.CFP

Forest Products Lumber & Wood Production

Canfor Corporation is an integrated forest products company. The Company operates through two segments: lumber segment and pulp and paper segment. The Company’s solid wood products include dimension lumber, specialty lumber and engineered wood products. The dimension lumber products include Spruce Pine Fir (SPF), Southern Yellow Pine (SYP), Douglas Fir Larch (DFL) and Canfor Red. The specialty... see more

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TSX:CFP - Post Discussion

Canfor Corp > We believe the company should trade below the low end

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Post by carbide on Nov 02, 2023 1:04am

We believe the company should trade below the low end

Canfor Corporation

Valuation

Our price target of $27 supports our Outperform rating. We value Canfor based on a 4.25x blended valuation multiple using our Trend EBITDA estimate of $875MM (85% weighting) and our 2024 EBITDA estimate of $415MM (15% weighting). We believe the company should trade below the low end of the typical range for Canadian Paper and Forest Products companies (5.0x to 7.0x),

due to the company’s heavier exposure to BC and an uncertain capital allocation strategy.

-Paul Quinn, RBC

The company is bleeding cash in BC, and all the M&A is draining cash from company coffers.

Quinn has a more upbeat appraisal of West Fraser, where he notes:

"strong operational performance, a solid balance sheet, and an emphasis on returning capital to shareholders"

The contrast in management performance and capital allocation is not lost on analysts.

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