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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: bruwin who wrote (66489)	2/9/2021 7:24:17 PM
From: E_K_S	Read Replies (1) \| Respond to of 78814

Re: RFP - I pass on RFP and instead been buying CFX.TO Only one year in 5 w/ positive earnings (2018). EBITDA a bit better probably because they depreciate their Trees/lumber RFP Income Statement- 5 years 2016-2019 I have been buying CFPUF (CFX.TO) a similar company; headquartered in Canada w/ properties in US including tree farms. This was suggest by a few Value Investors on this page. I have been accumulating shares w/ avg price of $6.14/share. Plan to Buy up to BV=$CAN 8.03 = $US 6.18 Canfor Pulp Products Inc produces and sells northern bleached softwood kraft pulp, or NBSK pulp and paper. The company also generates and sells electricity from biomass out of its pulp plants in Western Canada. The firm organizes itself into two segments based on product: pulp and paper. The pulp segment generates the majority of revenue. Canfor Pulp's NBSK pulp customers are typically manufacturers of tissue paper, specialty paper, and printing and writing paper. Most of Canfor Pulp's revenue comes from Asia. The majority of the company's shares are owned by Canfor Corporation. Note only 1 year of losses (2019) but positive EBITDA in last five years Also pays $0.25/year dividend or 2.7% yield NOTE: Second quarter of 2019 reported operating loss of $50 million• Operating loss of $5 million after adjusting for duties, restructuring costs and reversal of inventory provision• Adjusted shareholder net loss of $12 million, or $0.10 per share - link to 2019 Q2 Report CFX.TO Income Statement- 5 years 2016-2019 (Income Statement in $CAN) These Ratios are in $CAN where appropriate

To: bruwin who wrote (66489)	2/9/2021 7:52:25 PM
From: FIFO_kid2	1 Recommendation Recommended By E_K_S Read Replies (2) \| Respond to of 78814

Bruwin- Resolute Forest products is the new restructured name from the Abitibi Bowater bankruptcy assets years ago. I think there still remains a perception the book value of the company was always overstated after its bankruptcy restructuring coupled with its melting ice cube newsprint assets and consistent operating failures from past managements. They finally have one that is working hard to transform its business away from those niches at risk of obsolescence. Ironically, RFP sold some paper assets for a hefty gain (not at a loss)in 2018 paid a one time $1.50 special dividend so maybe the large discount to book value is not accurate but I would agree the business transformation from a competent management is a larger catalyst here. Subsequently, the firm purchased more lumber assets with the proceeds after the last lumber price spike at a stink price (10% of its replacement value) doubling its capacity so now its total sales eventually will be approximately 60-65% attributable to lumber. So now it is a different company more predisposed to the lumber cycle as opposed to the melting ice cube paper business. A portion of its new purchase lumber assets remains idled and should be put into production in 2021. The free cash flow the company generated last quarter was substantial. So don't look at the loss as a reason to sell as they did after the Q4 report. The firm performed a buyback of 8% of the shares during 2020 and recently restructured its LTD from 375 to 300 million at an interest rate 1% lower with an extension of 3 years and received a rating upgrade with the credit agencies. Besides the strength in lumber prices which I think is more related to the restriction of total supply. Pulp prices has risen about 40% during the current quarter from Q4 2020 numbers . The company still has its underfunded risks with its defined benefit pension plan. I also don't think they have enough scale in its tissue business but it is working on it with acquisitions. This is speculation but maybe the future of the lumber business will have supply quotas and will also start to receive carbon credit revenue so the future lumber business may transform into a consistently high margin one.