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Bullboard - Stock Discussion Forum Interfor Corp T.IFP

Alternate Symbol(s):  IFSPF

Interfor Corporation is a Canada-based forest products company. The Company and its subsidiaries produce wood products in Canada and the United States for sale to markets around the world. It operates through the solid wood products segment. The Company’s product categories include Dimension Lumber, Specialty Lumber and Engineered Wood Products. Its products include Spruce-Pine-Fir, Douglas Fir... see more

TSX:IFP - Post Discussion

Interfor Corp > TD Notes
View:
Post by retiredcf on Oct 17, 2022 8:35am

TD Notes

Their targets for IFP and WFG are $39.00 and $110.00. GLTA

North American Paper & Forest Products: Q3/22 Preview

Hard Earnings Landing Expected for Wood-weighted Companies Commodity Downdraft Compounded by Downtime and Cost Pressure

Q3/22 earnings season for our forest products coverage universe starts October 26. Following exceptional — albeit unsustainable — H1/22 results, we expect that Q3/22 earnings will revert to normalized (and, in some cases, below mid-cycle/trend) levels for lumber and panel producers. Our Q3/22 estimates are below consensus forecasts this quarter for all 10 companies in our coverage universe. Larger variances are weighted to wood producers, but we also highlight pulp-producer Mercer International as a downside surprise candidate this earnings season. We forecast accelerating q/q earnings pressure for lumber and panel equities as the full impact of the wood products price collapse which began in March flows through to price realizations. On average, we expect Q3/22 adjusted EBITDA to decline 68% sequentially for this group.

Q3/22 results are expected to reflect a steep correction in lumber and structural panel prices. The average Q3/22 lumber Random Lengths framing lumber composite price of US$592/Mfbm declined 30% q/q (but was still 20% above year-ago levels). The average OSB composite price of US$449/Msf (7/16" basis) fell 44% both q/q and y/y. We believe that sequential commodity price pressure for wood products was compounded by market-related downtime (buffeted by inventory unwinding) and higher costs (inventory write-downs, inputs, and freight).

No changes in our target prices, recommendations, or commodity deck.

Earnings forecast revisions primarily reflect H2/22 volume and cost adjustments. We previously adjusted our outlook on September 19Our average adjusted trend EV/ EBITDA target price multiple increases to 4.8x from 4.7x previously.

We reiterate our sector OVERWEIGHT bias. The Canadian forest product sector arguably lacks short-term catalysts, but valuation discounts to historical norms are extremely steep. In our view, this reflects overly pessimistic assumptions around value-accretive capital-deployment initiatives. We see limited lumber/panel commodity price downside as production curtailments seem inevitable. In our view, the sector is also better positioned than previous cycles, given balance-sheet flexibility, yet it is trading at an average of 0.6x 2023E book value (lumber equities). This group is also trading at 3.0x estimated trend EV/EBITDA versus the long-term average of 5.5x. Our top picks are IFP, CFP, and WFG.

Comment by retiredcf on Oct 17, 2022 8:37am
The WFG target was USD. GLTA
Comment by retiredcf on Oct 17, 2022 8:40am
The INK Canadian Insider (CIN) Index dropped 2.4% last week as oil & gas stocks pulled back on crude oil market volatility. Despite the drop, the INK CIN remains one of the few broad Canadian market benchmarks to remain up on the year, albeit a modest 3.8% as of October 14th. Last week, stocks from the Energy sector were the biggest laggards in the Index. Baytex Energy (Sunny; BTE) fell 11.6%, ...more  
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