been accumulating WOOD at these levels from .12 to .145 .. Company showed increased profits on thier latest 10QSB... the following is a write up on WOOD by Dave T. Groves..
Happy Investing,
Israel
Recap, Recap:
This is a SEC reporting, profitable company with low debt and extensive assets that are
conservatively valued at $.50 a share book value.
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 is 708,000 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. $93,000,000 asking price.
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 a liability until the last payment, then it will be carried as an
asset. 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 started to open a web site that will sell Amazonian Herbs, remedies,
food supplements, and native arts 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.
Projected Completion Date (this has been delayed a few times, now a WHOLE month
and a half overdue!!!(causing great stress to many bashers, ya right)) is March 5 1999.
Anyone can see it now at maderaintl.com
Earnings are scheduled out this week, on March 4th, and are expected to be good this
quarter.
So SHORT TERM, we have EARNINGS and the opening of the WEB SITE to look
forward to.
A note on earnings: Last year, this quarter earnings were $.001 a share(1/10 of a cent).
Anything over this will greatly impact 12 month trailing earnings. The shares are selling at
an 11 PE right now on $.0094 12 month trailing earnings.
MID TERM, we have the LAND SALE, 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
(IMHO if 1/3 of the land deal goes in the next 6 months with out paying any attention to
the web site).
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.
Dave |
