The Rising Influence of Rising Affluence

[DewDiligence]

PCL held its annual Investor Day webcast yesterday—the slides (80 pages) are at http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODYyNzR8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1 .

There was nothing radically new compared to last year’s event, which featured the impetus for higher timber prices stemming from the mountain pine beetle (#msg-47898395); however, this year’s event had additional color on recent timberland values by region and the growing importance of wood exports to China. I will post more about this later.

PCL remains a simple story: fair market value for the company’s timberlands (net of liquid balance-sheet items) is at least 25-30% higher than the enterprise value implied by the current share price (#msg-43004163). While you wait for the market price to improve, you get: i) a fat dividend yield taxed at the capital-gains rate; and ii) an increasing cash flow derived from a renewable resource that's essential to The Global Demographic Tailwind.

What's not to like?