RE:RE:Target Pricing...For those who wish to see the multiples given and the thesis explained as well.
Downside Scenario $29
Our downside scenario is derived using our bear case pricing for commodity lumber prices in 2022 with W. SPF at US$450/mfbm and SYP at US$475. In this scenario, we see downside 2022E EBITDA of $378MM. Despite lumber prices here being near midcycle levels, we utlitize a lumber segment valuation multiple of 2.75x given likely sector outflows.
Price Target (Base Case) $56
Our $56/share price target is based on an EV/EBITDA multiple of 4.25x our 2022 EBITDA forecast of $650MM, plus the value of Interfor's forecasted net cash position. Our target equates to 9.5x mid-cycle EBITDA. Over the medium to long-term, we believe Interfor will continue to expand capacity through high-return capital projects across its existing Southern platform.
Upside Scenario $59
Our upside scenario is derived using our bull case pricing for commodity lumber prices in 2022 with W. SPF at US$615/mfbm and SYP also at US$615. In this scenario, In this scenario, we see upside 2022E EBITDA of $795MM. We also apply a lower multiple (3.75x) because of the unsustainably high lumber prices.