Value Microcaps Motherboard

[nutsaboutgolf2001]

CFX.UN.TO Redid my numbers.

First I discovered that Canfor has raised the list price for it's pulp effective Feb 1st by $30 to $880 US a tonne. The last time NBSK list prices were at that level was for the first nine months of 2008 and during those 3 quarters, Canfor was able to generate distributable cash flows of on average 44 cents a quarter. At $880 they should be able to exceed those levels as the Canadian dollar is a little weaker and costs (energy, chips etc) are also lower. They have also initiated many projects to reduce costs so the 44 cents a quarter is probably easily achievable. At a selling price of $8.09 a share, distributions should equal or exceed $1.76 a year for a 21.7 % yield. Moreover, Canfor's selling price during those 3 quarter's of 2008 was as high as $12 a share (averaged over $10) and was in the $14 to $15 range in late 2007 as pulp prices were rising (i.e the current situation). I also believe that since many less efficient pulp producers still will lose money at $880 a tonne, that pulp prices may well rise to the $1,000 a tonne level especially if paper prices start to rise, which they should with a recovering economy. A key indicator of future pulp price direction is the level of pulp inventories; the latest figures suggest that they are at 25 days of usage down from almost twice that amount a year ago.