new targets Personally, I don't think this transaction is going to move the target meter much on the short term. If the mill is too be completed by late 2013 then one shouldn't expect any EBITDA contribution until 2014 and full capacity won't show up until the middle of 2014. As we move closer to 2014 and the conversion timeline is confirmed with greater certainty it would then become prudent to include this EBITDA production. Another way to do it is by including the future EBITDA production but using a very high discount rate to reflect the current uncertainty surrounding project completion and the long time line.
However, I would expect as the Genuity analyst has done that's its now prudent to increase the EV/EBITDA multiples that are circling in reports. The company has proven that they are in growth mode. Currently most analysts seem to be targeting multiples around 6x for the total assets. In my opinion, this is wrong.
Landquart's competitor Del La Rue trades at 9x. Dresden is hard to find comps. Specialty paper packaging multiples hover around 5.8x. This doesn't account for the stable growth outlook though. Finally, the global specialty cellulose multiple is around 5.8x.
Given the proven growth profile of FTP and exposure to other higher multiple businessess, I think 6x -7x makes sense and that is in fact what I'm seeing this morning. Analyst are adjusting accordingly. Landquart & Dresden likely won't be valued as I've suggested any time soon as they're burried inside the FTP umbrella. However, if those businesses were eventually liquidated it will be interesting to see what they generate.