OTCPK:TMBMF - Post by User
Comment by
dosperroson Nov 27, 2016 11:32pm
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Post# 25520156
RE:November 21 st in Review
RE:November 21 st in Review
I agree with all.
My usual caveat: CASH IS KING. Lumber comprised $12M of $57M in earning last quarter. Under 22%.
It's the other 78% that is a new paradigm. The Street still reckons TMB is a sh*tty company that can barely make $120M a year. As Dwight Schrute says, "False". Even if lumber implodes like it was in 2010 (zero EBITDA) we should be making ~180M a year. This is power sales and being the #1 specialty cellulose producer in the world.
Apply Interfor's multiple (6x) to that and good stuff happens (target EV of 1.080 billion, implying a market cap of about 400M.) That's $4.00 a share. I suspect this makes sense -- they have a sum of parts assets valuation of close to $10/share, but we know that's not happening in the short run (or ever because this is not a sexy sector.) All you can do is sit around and generate huge earnings and smile when the analysts play 'me-too' and upgrade this to 3, 4, 5, 6, and finally 7.
IFP's multiple is too low as well. They are just a pure play commodity lumber show. TMB will have a near monopoly (well at least serious pricing power) position and non-cyclical power earnings. They should have a multiple say of 8 or so, like halfway between Norbord (7) and a utility (10 or so.) Call it 8.5x and you actually get $10.20 a share. Not everyday you get something that can return 530%.