2022-12-21-瑞士信贷集团-Canadian_Forest_Products_Pondering_the_Pause_in_Permits_and_Pricing_8页_606kb

Equity Research Summary: Forest Products Sector Review (December 20, 2022)

• Market Overview: Recent US government statistics show a decline in housing permits under residential construction, with an approximate 11% drop in November, particularly influenced by single-family housing where the decline was 7.1%. This, along with multifamily housing declining by 17.9%, suggests challenges for lumber and forest product markets due to seasonality, weather impacts, high interest rates, inventory levels, reduced buyer traffic, and stretched housing affordability favoring rentals. Lumber pricing saw another minor pullback, as per Random Lengths reports.

• Notable Findings on Lumber Pricing: Price charts indicate fluctuations, with short-term views showing YTD trends and long-term views highlighting past price trends from 2020 to the present. Supply-side factors, including stumpage dynamics in British Columbia, impact operators.

• Company Specifics:

  • Acadian Timber Corp. (ADN.TO): Target price of C$17 with a Neutral rating. Valuation based on a 6.8% implied dividend yield, 18.2x P/E multiple, and 15.6x EV/EBITDA on 2023 expectations. Key risks include commodity prices fluctuation, capital market access, regulatory issues, management execution failures, rising interest rates, infestations or diseases, geopolitical events, weather impacts, foreign exchange changes, high customer concentration, relationships with Brookfield Asset Management, labour shortages, sustaining dividends, and tax implications.
  • Mercer International Inc. (MERC.OQ): Target price of US$18.50 with an Outperform rating. Valuation derived from a NAV approach, using multiples like 3.5x EBITDA for pulp, 8.0x for renewable energy, and 2.5x for lumber EBITDA in 2023. Notable risks are decreased demand for its NBSK products (tissue, specialty, printing & writing), significant share concentration (over 50% held by top three shareholders), potential dilution if they sell shares, and high competition, which could pressure lumber pricing.
  • West Fraser Timber Co Ltd. (WFG.N): Target price of US$100 with a Neutral rating. Valuation incorporates multiple methods: NAV from 2023e revenue with multiples of 5.5x for Lumber, 4x for Pulp & Paper, and 5.5x for North American and European EWP segments, plus implied 16.7x P/E and 6.4x EV/EBITDA multiples. Principal risks involve the housing market's volatility, continued high interest rates, fluctuating commodity prices, currency rate movements, increasing input costs, and operational risks from inherent business dynamics like regulatory shifts.

• Valuation and Risk Outline: The analysis discusses methodologies like P/E, EV/EBITDA, NAV, and relative total return expectations compared to benchmarks, all set within broader economic factors that influence each company's performance.

Disclosures Summary: The report includes extensive standard disclosures related to investment risks, conflicts of interest, market research policies, and legal constraints applicable to Credit Suisse. Key points involve potential conflicts from business relationships with companies covered, limitations on valuation accuracies, Federal/Government policies affecting shareholders and ratings, MiFID services agreements, sustainability assessment caveats, and regional-specific disclaimers.

For performance history and detailed rating definitions, refer back to company-specific data provided.