Tambourah Metals Ord Shs T.TMB.W

Black humour. A more scathing dig into the news today.

[dosperros]

dosperros wrote:

Here is the BNS take.  My comments are in red.

OUR TAKE: After closing out F2016 on a strong note, results gave up some ground

in Q1/F17. The down tick was mostly due to scheduled maintenance undertaken in

the specialty cellulose segment and weakness in the forest products segment.We

reiterate our $1.50 target (1) and Sector Underperform rating based on the company's

high financial leverage (2) and expected limited free cash flows available for

deleveraging and/or capitalize its wood products assets  (3). In addition, the ongoing

lumber dispute adds a layer of uncertainty. 4


(1) So this updated report is based on the forecast of $173MEBITDA in 2017.  With Debt at end-of-year in 2017 being ~ $550M, this gives D+E of (550+150).  This is an EV of 700.  700/173 = 4.0 times.  Why would this be the cheapest in the forestry universe?  Nobody is trading that low.  RYAM trades at 7.0x.  BNS, seriously.  A multiple of 5.5 to 6.0 is fair in 2017.

(2) Wrong.  This was right a year ago with liquidity raising flags and <$65M.  Now it's about $160M.  Above the top end of mgmt targets.  All good; and deleveraging is progressing ahead of schedule.

(3) Wrong.  Update your narrative, guys.  You are forecasting $173M in cash equivilent in 2017.  How is that "limited"?  It's more than CFX and WEF; two firms with an equity value that is 3x and 4x TMB's.  

Thanks RhinoPower.  Interestingly, maybe you should start up the RhinoPOWERhedgeFUND or whatever it's called.  You're doing well by moving away from self-destructive stuff like shorting good companies.  Or bad companies, even, unless you know they are truely doomed.  Shorting is a mug's game.

So, I forget a 4th point on this. I'd like to revisit.

4   You are criminally ignorant to be fussed about the SLA with respect to this firm.  The SLA overhead is mission critical for Conifex and Canfor, major for WFT, minor for WEF, IFP.  It's also minor for RFP and TMB, for different reasons.  Chiefly sales mix.

It doesn't matter for the core valuation in the $8 to $10 range.  It's, like I say, 1/4 of revenue and 1/8 of profit.  It matters in terms of upside if we want to see TMB generating $300M a year, of course, but that's not germaine to the base valuation model and 200%+ returns we are expecting to see in the next 12 months.

Don't publish junk if you can't show up for the conference call.  There were only 3 guys at yesterday’s call who signed on asn asked questions: RNC, TD, and BAML.  There was no BNS.  I cannot fathom how reckless you have to be to put an "underperform" and "1.50 price target" on a company that turned a corner that you didn't even show up for the call for.  You could have asked Lopez and Co about the SLA if you were there.  You could have asked about leverage (well, deleveraging) if you were there.

And word to the wise.  If you are getting outperformed by the RHONOPOWERHEDGEFUND with it's holdings in all the key consumer staples (alcohol and prostitution) plus Tembec, you should maybe quit your day job.  I guess I just get cranky about people abusing their podium and position of power.