BNS - Target still $137/share CAD
Latest Research (October 12, 2021):
OUR TAKE: Positive. WFG announced the acquisition of Angelina Forest Products' SYP lumber mill located in Lufkin, Texas for ~US$300M, subject to regulatory reviews and customary conditions.
The acquisition is financed with cash on hand and management estimates thepurchase price translates a 6.4x mid-cycle EBITDA (post-synergy / tax benefits, at full capacity) and anexpected IRR of 13%.
We reiterate our Sector Outperform rating and C$137 target.We view the pro forma return metrics as appropriate for what is essentially a de-risked greenfield project that is already running above 50% of capacity (with a trained workforce and full infrastructure in place) and is already generating positive EBITDA.