RE:RBC Capital - Conifex Timber Outperform Upgraded PT to $1.50Paul must do something to stay flexible - judo, yogo, whatever. A lesser man would break a bone or blow a knee contorting in such unnatural ways, as below.
I laugh because he can show a 50% or so gain, but there's no credible methodoligy that allows CFF to be valued that low. Of course that's the game here -- he can't have a $3.00 price target, he needs to bump up the target alongside a rising SP (therefore looking like a hero).
5.0x is stunningly low in an up cycle and implies stormy seas. His 2021 est ignores how long into 2021 where futures are +$450 and assumes $22M in earnings -- but $14 are to the power plant, so that leaves $8M for the mill which is like $33/MFBM margin ($CAD) so implies 2021 prices will be maybe US $380. Way too low given what we know now. It's also a reduced duty/tarriff envrionment then too. I didn't revense engineeer the math but I doubt it takes into account that 2020 will wipe out the debt fully, which alone is = to +$1.00/share increase.
" Our $1.50 price target is based on a blended ~5.0x EV/EBITDA multiple on our Trend EBITDA (weighted 85%) of $22MM and our 2021 EBITDA estimate (15% weighting) of $31MM. We believe that CFF should trade at the low end of the typical range for Canadian Paper and Forest Products companies (range 5.0x to 7.0x), reflecting Conifex’s smaller size, limited operating footprint, and higher relative exposure to British Columbia. Our price target supports our Outperform rating."