Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

Canfor Corp (TSX: CFP) is a softwood lumber company that also owns around half of Canfor Pulp. It is active throughout North America, with lumber mills in British Columbia, Alberta, and the Southeastern United States. It has two reportable segments: Lumber and Pulp and Paper. Kalkine’s Resource Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~62.36% of the total shareholding. Pattison (James Allan) and Pictet Asset Management Ltd.  hold a maximum stake in the company at ~­­­53.58% and ~2.17%, respectively.

1.4 Key Metrics:

The company reported decent liquidity and is clocking improvement in its cash cycle days, which is a key positive and demonstrates its strength and adaptability. On its lumber segment cumulative EBITDA from 2019 -2023 YTD, the US South region recorded the highest, followed by Europe and British Columbia. On the other hand, forecasts for US housing starts in the coming years are on the growing side.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as the announcement regarding restructuring its lumber operations and anticipating higher pricing in the European market.

2.2 Insights on FY 2023 Financial Performance:

Section 3: Key Risks:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed an upside of ~7.19% and a downside of ~2.00% over the last 1 month and 3 months respectively. Moreover, the stock is trading above the average of 52-week high price of CAD 23.99 and 52-week low price of CAD 13.41 providing an opportunity to ride the trend.

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 21, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.  

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.