TSX:CUS.DB.D - Post by User
Post by
pm1231on Mar 13, 2014 12:13pm
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Post# 22318263
Great Deal - $300M in exchange for $1
Great Deal - $300M in exchange for $1 I'm rarely a fan of analyst reports - since they tend to base thier analysis on forecasted assumptions that may or may not hold (so your guess is as good as thiers if you do the analysis) - but this is Canexus is a CLASSIC value play 101 - and I found this excerpt from the CIBC research report rather interesting - at current prices - you are getting NATO (and subequent future cashflows) for FREE!
Valuation
**(the discount rate used for Sodium Chlorate, Chlor - Alkali, and Brazil - seem a bit high given the steady cashflows and dominant market position ...- but I digress - for argument sake and will use the rates used by CIBC)
North American Sodium Chlorate
Discount Rate - 8%
NPV - $586.1 Million
Per Share - $3.29
North American Chlor - Alkali
Discount Rate - 10%
NPV - $460.9 Million
Per Share - $2.58
Brazil -
Discount Rate - 8%
NPV - $162.1 Million
Per Share - $0.91
Transloading/Acid Blending
Discount Rate - 8%
NPV - $81.7 Million
Per Share - $0.46
Cash + Investments
Per Share - $0.01
Subtract - LT Debt -
Per Share - $2.49
Total - $4.76 per share (would be higher with lower discount rates for chemicals business)
Current Price - $4.68 per share
NATO
Discount Rate - 12%
NPV - $303.3 Million
Per Share - $1.70
Cost of NATO to joe shareholder at current prices - $0.00
Continue to increase my position at these prices. Even if more downside - this is far to cheap to pass up.....if you hold long. (If your time horizon is less than a few months - this is a speculative buy for you and a 50/50 coin toss). Can't help but not quote Buffet - "Be fearful when others are greedy, and greedy when others are fearful"....