Truth is stranger than fiction... $59/share???An extreme case, but one that is looking more and more possible!
Do it on a EV/EBITDA valuation basis.
We'd see a multiple of 10x. It's high for forestry, but it's very low compared to the broader market. To get this, we'd have to become a sexy industry. Cash flows do that.
So, 10x We could make $250/mfbm on 300 million board feet in El Dorado (2019), and $150/mfbm on 540 million feed (Canada, 2019).
This assumes Mackenze can't get any more volume run (I suspect they can find maybe anohter 100 million feet or 300,000 M3 of wood, but who knows). I won't assume that.
I also assume no debt. So that's likely late 2019 or early 2020 if this run continutes. And why would it not? We have a global shortage of timber and tremendous demand.
So, my math is an EBITDA of $156M @ 10x, divided by 26.44M shares. No debt. That's $59.00 per share.
Does it compute? Yes. That's only a market value (or cap) of 1.5billion -- fair for three huge lumber mills and a powerplant. Regardless, that's just the "book value" component. This and its sick cash flows are clearly worth more than the book value.
So, when Canfor or Tolko or WFT comes calling with an offer you can refuse, ask for $59/share. All good right.
Anyway, that's my good news weekend signoff.