West Fraser Timber Co Ltd T.WFG

Alternate Symbol(s): WFG

Forest Products Lumber & Wood Production

West Fraser Timber Co. Ltd. is a diversified wood products company. The Company is engaged in manufacturing, selling, marketing and distributing lumber, engineered wood products, including oriented strand board (OSB), laminated veneer lumber (LVL), medium-density fiberboard (MDF), plywood, particleboard, pulp, newsprint, wood chips and other residuals and renewable energy. Its products are used in home construction, repair and remodeling, industrial applications, paper, tissues, and box materials. Its segments include Lumber, North America engineered wood products (NA EWP), Pulp & Paper and Europe EWP. Its business comprises lumber mills, OSB facilities, renewable energy facilities, pulp and paper mills, plywood facilities, MDF facilities, particleboard facilities, LVL facility, treated wood facility, and veneer facility. The Company operates approximately 58 facilities in Canada, the United States, the United Kingdom and Europe. It also offers wood preservation services.

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West Fraser Timber Co Ltd

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Post by retiredcfon Apr 25, 2022 10:52am

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Post# 34628871

TD Notes

Trees Weekly

Q1/22 Forest Products Sector Earnings Preview
Expect Exceptional Results for Most Wood-weighted Equities

Forest product equities rallied last week, led by plans for surplus captial returns to shareholders. The average share-price improvement of 3.9% for our coverage universe last week compared with declines of 3.1% for the S&P/ TSX Composite and 2.8% for the S&P 500. Gains were led by lumber and panel-weighted equities (average improvement of 6.6% last week) as investors assessed settling lumber prices and West Fraser's plans for a US$1.25 billion substantial issuer bid. Share prices for our coverage universe are still 15% below Q1/22 peaks.
We expect strong Q1/22 results for most companies in our coverage universe, led by lumber and panel producers. Despite sharp upward revisions to consensus forecasts over the past week, our Q1/22 EBITDA estimates are above consensus for six of the 10 equities. We expect sequential (q/q) earnings growth for 80% of our coverage universe. We are not making any adjustments to our estimates, target prices, or ratings with this note, given our revisions on April 12.
Lumber prices showed signs of life across some grades and regions last week. The benchmark Western SPF 2x4 price improved 3% last week to US $1,040/Mfbm — the first weekly improvement since early-March, but still 26% below the recent high a month ago. The nearest futures contract price (US$936/ Mfbm for July delivery) has improved 13% from the recent trough. The U.S. South regional lumber composite price declined another 4% last week, tempering gains in western Canada. Market reports noted buyers stepping back into the market to replenish inventories.
OSB price declines decelerate from the recent pace. The benchmark North Central OSB price declined 7% w/w to US$700/Msf. Prices in western Canada and the U.S. Southwest declined 10% and 2%, respectively. Commentary noted an improving tone to the market, especially late in the week.