Bullboard - Stock Discussion Forum Interfor Corp T.IFP

Alternate Symbol(s): IFSPF

Forest Products Lumber & Wood Production

Interfor Corporation is a Canada-based forest products company. The Company and its subsidiaries produce wood products in Canada and the United States for sale to markets around the world. The Company operates through solid wood products segment. The Company offers its products across two categories, which include Dimension Lumber and Specialty Lumber. The Company's products include Interfor... see more

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Interfor Corp > TD Notes

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Post by retiredcf on Mar 17, 2022 10:50am

TD Notes

February U.S. Housing Starts/Permits Above Consensus Event

The U.S. Census Bureau released February 2022 U.S. housing data this morning.

Housing starts of 1.769 million units (seasonally adjusted annual rate, SAAR) were 4.1% above consensus of 1.700 million units. February SAAR starts increased 6.8% m/m, reflecting growth in single-family (up 5.7% m/m). U.S. new home construction comprises ~25% of North American lumber shipments and ~50% of North American oriented strand board (OSB) shipments.

Lumber-weighted equities: West Fraser (WFG-N,T), Canfor (CFP-T), Interfor (IFP- T), Western Forest Products (WEF-T), Resolute Forest Products (RFP-N,T).

OSB-weighted equities: Louisiana-Pacific (LPX-N), West Fraser (WFG-N,T).

Impact: SLIGHTLY POSITIVE

Aggregate starts reached the highest level since June 2006 and permits remained near recent cyclical peaks. A growing tally of started, but unfinished homes augurs caution in our view. Homebuilder commentary indicates ongoing demand strength even as supply chain issues continue to disrupt deliveries of new homes.

Details

February single-family SAAR starts of 1.215 million units grew 5.7% m/m and represented the second-highest level in the past 11 months. February single-family starts were 7.6% below the December 2020 cyclical peak of 1.315 million units (15-year high).
February building permits (SAAR) of 1.859 million units were 0.5% above consensus of 1.850 million units. Building permits moderated 1.9% versus the January 2022 cyclical peak of 1.895 million units.
Homebuilder Lennar Corp. (LEN-N, not covered) reported FQ1/22 results yesterday after market close that were ahead of consensus expectations. Q1 new home orders grew 1% y/y (decelerating pace). Q1 EPS of $2.70 (excluding investment mark-to-market) was 5% above consensus of $2.58 and also above management's mid-December guidance.
Despite very low housing inventories and encouraging February data, we believe that there are some reasons for caution going forward. As shown in Exhibit 1, the U.S. 30-year mortgage reference rate has increased 108 basis points over the past eight months to 3.85% - one of the fastest increases on recent record (affecting affordability). We also note that the gap between U.S. housing starts and completions is at its highest point in more than 35 years (460,000 units). Shortages for wood products, other inputs, and labour threatens to slow activity at some point.