Post by
SleepingGiant64 on Mar 18, 2022 7:38am
Unreal value in this company
Q1 is winding down and average pricing year-to-date is $1281 for SPF. I'm looking back at Q2 of last year when prices were about the same and it was $350m of EBT. Add in the US south mills and 5 weeks of EACOM and it's easily, $500m. If these prices hold, it's going to be something like $700m in Q2, at least... on a $2.5B company with net cash and $170m in duties on deposit. This company is insanely cheap and is buying its own shares as fast as it can (as it should).
Latest lumber comments from CIBC:
Lumber Prices Moderating: Random Lengths reported that W. SPF prices held steady W/W at $1,400/mfbm (unchanged from mid-week, +37% Y/Y), while SYP 2x4 fell 5.1% or $75 W/W to $1,393/mfbm ($40 lower than midweek). The RL Composite declined by 1% to $1,319. Lumber market prices remained conservative due to limited retail demand and persistent transportation issues. In SPF, trading remained limited with concerns over a correction. In SYP, producers sought offers and accepted triple-digit discounts in late trading. Treaters were particularly reserved. The trade magazine indicated mixed channel views on DIY sentiment. In the South, traders noted a significant decline in box store demand. Weak demand in home centers and the DIY sector are reportedly keeping treaters on the sidelines. In the West and Canada, more signs of a slowdown were noted by traders, albeit at a less dramatic pace than the pullback last year. That being said, Random Lengths noted one buyer in the West had not yet seen sufficient evidence that the box-store business will halt anytime soon, believing DIYers are no longer shocked by prices. Random Lengths International pointed to fading demand in China stemming from government mandated shutdowns. Along with troubling indicators, traders took a conservative approach and put up resistance to exporters raising prices, keeping reported prices flat across the board. The Japanese markets saw a cooling in W. SPF J-grade despite Russia sanctions. While the Tokyo lumber terminal inventory levels remained well above normal levels, shortages of plywood and other components delayed construction. The trade magazine reported a number of traders shifting to monthly contracts from quarterly to increase flexibility given economic uncertainty. Lennar Sees Resilient Housing Demand: Lennar (2nd largest homebuilder) is pointing to a strong and consistent sales pace throughout the quarter despite ongoing supply chain disruptions. Management expects demand to remain strong in the foreseeable future, noting strong traffic at its welcome home centers and website. In F2022, LEN now expects to deliver ~68K homes (+14% Y/Y), after previously guiding for 67K homes, at an average price of $470K-475K (up 11%-12% Y/Y). In FQ1/22 (ended February 28), the company’s cycle times increased by about two weeks Q/Q (and two months longer than a year ago) due to ongoing supply issues (particularly for electrical equipment, garage doors, HVAC condensers, flex ducts and cabinets). Management noted that direct construction costs are up 23% Y/Y (60% due to lumber). Community count rose by 4% Y/Y while new orders increased by 1% (with a ~5% Y/Y improvement guided for FQ2).