Wrong post -- here is the edited versionThe duty and housing starts that are driving lumber will eventually make an impact. Eventually.....
In the below I use $420 as breakeven based on revenues from chips and sawdust. It's probably $500 for just lumber alone.
All equal, the duty drop from 20% to 8% will increase margins by $73/MFBM, which should more than double the lumber EBTIDA.
| Duty Stuff: | | | | | | |
| | | Lumber | CAD-USD | Lumber in CAD | Duty Paid | NET |
| Case 1: 20.2% duty | | $460.00 | 0.75 | $613.33 | -$123.89 | $489.44 |
| Case 2: 8.2% duty | | $460.00 | 0.75 | $613.33 | -$50.29 | $563.04 |
| | | | | | | |
| | | | | | | |
| Implications: | | | | | | |
| | | Breakeven | Margin/MFBM | EBITDA Contribution | | Share Value
@ 6x multiple
(no debt) |
| Case 1: 20.2% duty | | $420.00 | $69.44 | $13,888,000 | | $1.77 |
| Case 2: 8.2% duty | | $420.00 | $143.04 | $28,608,000 | | $3.65 |
We know the power plant is worth money. But the lumber alone is worth $1.70/share as is, and $3.65 assuming the future duty. This is only a 6x multiple with no debt, but in reality the lumber segment has negative debt -- cash on hand.
I am buying. Not really worried about the day to day price as it'll get sorted out once there is a strategy in place. I just see the chances of idiot management ruining my return steadily diminishing so I am pleased to have a moat.
I'd be curious to see when the analysts chime in and scream buy.
Good thing sculpin2 has the insight there -- please keep the RBC briefs coming if you can even as a PM *I will owe you a beer or many*.
I did see this which is worth a read from CIBC in Jan 2020 though. "Opportunities And Stressors For The North American Forest Industry In 2020" Nothing we don't know but good to see the compelling bull case articulated.
https://westernforestry.org/wp-content/uploads/2020/01/Hamir-Patel_2020MTC-presentation.pdf Last of all, I hope Ken S is on this board. I don't know if he is Spruce Spider, who knows all the mills, or the drunken mess that is Mr Rhino. Ken, whatever the alias, as always retire and become a full time troll and haunt these boards to your hearts content. Just know nobody wants you as the CEO anymore and I will be thrilled to see you removed. And there are two exec ladies can sure take a hike. And the directors who hold no shares can go fcuk themselves. Can't wait for them to be kicked out as quickly as Hans and Brett got booted. I called that back in Dec. -- Resolute would have no use for them.