Madera - OTC:BB symbol: WOOD - recap time again.
This is a SEC reporting, profitable company with low debt and extensive assets that are conservatively valued at $.50 a share book value.
A recent news release announced that the 4th quarter ending March 31st was the most profitable ever, closing their second in a row profitable year. They have also predicted the best first quarter ever, which will ends June 30th. This release can be viewed at: biz.yahoo.com
Their main product is lumber, thus the catchy symbol: WOOD. Their logs are ecologically harvested on their land in Brazil and Peru, and also bought from other suppliers. The logs are made into lumber at the company owned Saw Mill and then shipped to the US and Carribean and sold in US $'s.
Lumber is in demand, and from recent articles, the demand is growing. Lumber does not become obsolete. Everyone uses it, and people actually regard finished lumber as beautiful. It is held in high regard as a building and decorative material.
The majority of Madera's assets are 706,000 acres of LAND in Brazil that has been conservatively carried on the books as $40 an acre. This is a land area larger than Rhode Island. Over 1100 sq miles!! If it was a square, it would be 33 miles on a side.
When referring to this land in the last annual 10ksb (Nov. 6, 1998), they stated that "It is reasonably possible that a change in the estimate (of the Brazilian 708k acres) will occur in the near term"
In January, they put up 3/4 of this land, that they don't need for logging, for sale at $180 an acre. $96,000,000 asking price. The management of this company has many plans and the land sale will facillitate many of them.
They also have 75,000 acres in Peru that will be theirs free and clear after a $424,000 payment this year. This is 117 sq. miles. A square 10.8 miles on a side. They have been carrying it on the books as $1.5 million in assets and a $424k liability until the last payment. As before, they stated that "It is reasonably possible that a change in the estimate will occur in the near term." A bit more fore shadowing? A sale of this land at the same asking price would bring an additional $13,500,000
They have also opened a web site that started taking orders on April 10 that sells Amazonian Herbs, remedies, food supplements, and native arts jewelery,and crafts from the Indians that reside around their land.
Many think this is going to be a large revenue producer in the coming years. Natural products are a multi-billion $$ industry, and direct from the Amazon, on the internet, does have a ring to it. It has been delayed a few times, but with the recent announcement of purchasing a lab to produce these products on their own, it becomes clear that there is much more potential here and the delays could in part be attributed to the negotiations.
Harvesting the product on their own lands, processing it in their own lab, and marketing it themselves will be very profitable.
The shares are selling at an 12 PE right now on $.0089 12 month trailing earnings as of the latest quarterly report on March 2 1998.
We have the LAND SALE getting closer every day, which will greatly effect the fundamentals. Taking 20% off the asking price and deducting realtor's fees and Capital gains taxes, I expect the company to clear $60 million on the deal. Add $38 million that the remaining land in Brazil and Peru( 251,000 acres, 392 sq, miles, a square 19.8 miles on a side!) should be worth, and $10 million for the sawmill, inventory, and other assets and we see the company's assets at $ 108 million. $1.33 BOOK VALUE, $.74 OF IT CASH.
LONG TERM, the company has said that it is going to buy two Saw Mills, a plywood manufacturing plant, and a plant to make furniture parts. This in my opinion will increase earnings 6x. Regular shipping schedules have been a bottle neck for the company, which they feel will smooth out as production increases, allowing a regular schedule, and this in my opinion will account for another 2x earnings totaling between the plants and shipping, a 12X INCREASE IN EARNINGS BY THE END OF THE FISCAL YEAR 2000. The herbal supplement business will add greatly to this number in the coming times
You can look at their Ratios compared to the rest of their industry at: yahoo.marketguide.com And decide what they look like to others in their industry and what the 12x earnings would mean if you put a realistic PE on this stock.
You can see their SEC filings at freeedgar.com.
Web and lab news:
biz.yahoo.com
land deal:
biz.yahoo.com
Dave
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