West Fraser Timber just reported that they are rebuilding their Henderson, Texas mill at a cost of $927 USD per thousand board feet.
If we take 50% of that cost and apply it to Interfor's current capacity (4.2 million board feet), Interfor would be worth $49.22.
Add in the U.S. duties on deposit at a 55% recovery is another $5.57.
Total of $54.79 (Interfor is then in theory 136% below this value). Ultra cheap at this price.
Let me know if my calculation is wrong.
| West Fraser Timber | | |
| Henderson, TX brownfield rebuild: | | |
| Estimated cost | 255,000,000 | USD |
| Capacity (million board feet) | 275,000,000 | |
| Price per thousand board feet | 927 | USD |
| USD/CAD exchange rate | 1.30 | |
| Price per thousand board feet | 1,205 | CAD |
| | | |
| Assumption Value | 50% | |
| If we value Interfor at 50% of rebuild cost | 603 | CAD |
| | | |
| Interfor | | |
| Current total capacity (board feet) | 4,200,000 | |
| Cost from above | 603 | CAD |
| Replacement cost | 2,531,454,545 | CAD |
| Shares outstanding | 51,432,296 | |
| Replacement cost per share | 49.22 | CAD |
| | | |
| Plus duties on deposit | 401,000,000 | USD |
| USD/CAD exchange rate | 1.3 | |
| Duties on deposit | 521,300,000 | CAD |
| | | |
| Est. recovery at 55% | 55% | |
| Total estimated duty recovery | 286,715,000 | CAD |
| Shares outstanding | 51,432,296 | |
| Est. duty recovery per share | 5.57 | CAD |
| | | |
| Replacement cost per share | 49.22 | CAD |
| Est. duty recovery per share | 5.57 | CAD |
| Tangible value | 54.79 | CAD |
| | | |
| Current price - Oct. 26, 2022 | 23.22 | CAD |
| Price below replacement | 136% | |