Canfor Pulp Products Inc T.CFX

So many rumours....

[Fiberman]

There are so many rumors out there in our industry with pulp assets for sale. The players know it. Several companies in the mix. Pulp mills will change hands in Canada for certain. Further pulp mills may also need to shut. The landscape will take time to set. Still, a lot seems to be cooking.

What is clear with this symbol? Any morning interest in the stock is sold at high prices. Then by mid afternoon there is a clear effort to rachet it down on minor volume. Take a look at a 3 year chart. There is a clear strategy and pattern. It's a maunfactured delcline. Clear as day. 

What I do like? CFX took a lot of forward uncertainty out by going from 4 mills to 2. If they can bring costs in line. Having a high demand NBSK product will one day create profits again. Changes and restructure may take another year. So this is a long term hold. Short term it will continue to be maniputated down. It's now at a point where they have options. They can easliy package and sell to another buyer at this price $100 million or buy out the shares and keep. Exciting.

[OmahaValue]

The current valuation doesn't make sense.  CFX is the cheapest pulp capacity on the planet.  It's trading at 10x less than the recent sell prices of Domtar Kamloops and Domtar Dryden. Resolute will sell the Thunder Bay mill in the next few months providing another proxy.   Management seems pretty focused on improving the reliability and fibre position of Northwood and

[kboorman]

Market continues to disagree, painful to see it so low. Inventories are very high at the moment. From the Q1 news release: "Relatively stable demand in the quarter was outweighed by an uptick in global pulp producer inventories, which, at the end of February 2023, were well above the balanced range, at 50 days of supply, an increase of seven days from the 43 days of supply at the end

[Fiberman]

Thanks kboorman. Yes those are the facts. Let me just give a few more facts.  The high supply of days is southern softwood and hardwood ecualyptus. NBSK which both Northwood and Intercon are actually quite tight. A few years ago when CFX was $9 we were at $550 China. Today Northwood is trading hands today at $700+. NBSK prices have stopped dropping and have actually climbed over the last two

[JayStatusUpdate]

Ok so I haven't followed the industry I just invested in this a while back without proper due diligence. But I am wondering, given that Canfor owns around 50% of the shares of this puppy, would they want to just buy the entire entity out for pennies on the dollar and amalgamate it back with Canfor? Does it serve any purpose for them to this, or to divest this entire industry out and away from

[Fiberman]

Volume super low. It's a steady death drip. Not sustainable. Nothing to do with pulp prices or pulp markets. It's Fiber, Strategy, People. Buying/Selling the company. YTD chart is a $1 dollar off each month. Does it break a dollar next month? $0.75? Then will something happen? Or does CFP just write it all off? Call it absolute value destruction? Everyone takes a massive loss. Market cap

[kboorman]

Kind of stunning that this isn't brought up on the calls, or really talked about at all besides this little forum. Suppose there was a take private or an acquirer came along, would there even be an offer that will pull most shareholders out of the red depths many are likely in? Sure, 3-4-500% premiums to market have happened before, but it seems unlikely in this case

[kboorman]

Looks like a buyer was found for Resolute's Thunder Bay mill, based on a news release issued this morning. Here is the text of the release: ------------------ "MONTRAL, May 30, 2023 /CNW/ - Resolute Forest Products Inc., a subsidiary of Domtar Corporation and a part of the Paper Excellence Group, today announced that it has entered into an asset purchase agreement to sell its

[kboorman]

Apologies for posting so many times in a row, but this info was not in the original press release by RFP: the sale was made to a US private equity group for $218.6 million USD, or roughly $300m CAD at time of writing

[Apaulson]

Using Resolute's Thunder Bay pulp mill as proxy: US $218,600,000 / 535,000 tons of capcity = US $408 / ton If we assume Canfor Pulp will have 500,000 tons of pulp capacity remaining after it downsizes to only one mill: 500,000 * US $400 *1.35 = CAD $270,000,000 / 65,000,000 shares = $4.15 $4.15 / $1.90 - 1 = 118% upside from here. If you subtract net debt at end of Q1 of $60,000,000 to be

[OmahaValue]

That is ultra conservative and values Northwood only.  After bringing in the paper business and Intercon you can see it getting up to $6+ per share. Agreed it's a cheap stock.

[kboorman]

West Fraser just announced it is selling it's UKP mill in Hinton, Alberta as well

[OmahaValue]

Instead of building a new 200,000 tonne kraft paper line for $400M euros that won't be ready until 2027 Mondi should have bought CFX (two good pulp mills and a great kraft paper business).  This would be $585M CAD. Either way it suggests CFX is significantly undervalued at a market cap of $150M.

[Catscratch]

Mondi has an equity value of CA$10B.  Maybe they will buy CFX as well. I guess nice to see that packaging producers like Mondi see value in acquiring their suppliers to vertically integrate.

[kboorman]

"Good" may be a bit of a stretch. These are old assets that are costlier to maintain, and require more down time. Not to mention the horrid fiber supply situation which doesn't look like it'll get much better in the next few years. Results released today also aren't encouraging