Interfor Share Drop
Interfor Corporation shares fell 11% on November 6, according to a report by kr.investing.com, following market anxiety over a pulp manufacturer’s bankruptcy filing.
The drop on the Toronto Stock Exchange contrasted with a flat broader market.
The lumber producer saw its stock decline despite posting its fourth earnings surprise. Market consensus was beaten by 15%, kr.investing.com reported.
Celgar Mill Exposure
Investor concern centers on Interfor’s Castlegar sawmill in British Columbia. The facility supplies residual wood chips to Mercer International’s adjacent Celgar pulp mill.
Raymond James analysts maintain a Strong Buy rating on Interfor, stating the financial exposure is relatively small. The brokerage firm noted that Interfor management reduced receivables and shortened payment terms to limit counterparty risk, kr.investing.com reported.
Chip Sales Revenue
Interfor generates between C$4 million and C$6 million in annual revenue from wood chip sales to Celgar. That figure represents a tiny fraction of the roughly C$90 million in market capitalization erased during the selloff, kr.investing.com noted.
Mercer management confirmed that the pulp mill will continue operating through its restructuring process. Planned maintenance at Celgar in the fourth quarter will reduce production by about 23,000 tonnes, or under 4% of annual output, according to kr.investing.com.
Strong Operational Margins
Interfor generated industry-leading margins of roughly C$80 per thousand board feet despite depressed housing demand and high tariffs. Positive free cash flow and steady debt reduction show the company’s operational strength, kr.investing.com reported.
Raymond James noted that Interfor trades at about four times mid-cycle EBITDA. Replacement costs sit near $1,000 per thousand board feet while production capacity is valued at approximately $300, according to kr.investing.com.
Market Recovery Potential
| Metric | Value | Context |
|---|---|---|
| Share Price Drop | 11% | Recorded on November 6 on the TSX |
| Annual Chip Revenue | C$4M – C$6M | Sales from Castlegar sawmill to Celgar |
| EBITDA Valuation | ~4x | Interfor trading multiple of mid-cycle EBITDA |
Raymond James sees an upside of roughly 300% if the housing market normalizes. The brokerage added Interfor to its Analyst Current Favorites list, citing a compelling asymmetric investment opportunity, kr.investing.com reported.
Why Interfor Shares Fell and Celgar Mill Operations
Why did Interfor shares drop on November 6?
Shares fell 11% because investors worried about Interfor’s connection to Mercer International after Mercer filed for bankruptcy, kr.investing.com reported.
How much revenue does Interfor get from Celgar?
Interfor generates C$4 million to C$6 million annually from wood chip sales to the Celgar pulp mill, according to kr.investing.com.
Will the Celgar mill shut down during restructuring?
Mercer management confirmed that the plant will keep operating through its restructuring, though fourth-quarter maintenance will cut production by about 23,000 tonnes, kr.investing.com reported.
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