Global lumber prices soaring to benefit Minho in export

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What is the possible next trend for the global market? 2020 had saw glove theme, vaccine theme, plantation theme, logistic theme and the end year steel theme play. Coming into 2021, we should be looking no further at timber theme play, at least in the 1Q 2021.

Global plywood prices had been staying up, putting up pressure for prices to increase in construction as plywood are one of the main component in construction.

Prices for 1000 bdsf of plywood are now trading above usd 600, and in my opinion, prices will continue to remain inflated above usd 500 due to several factor as highlighted below :-

1. Coronavirus pandemic had affected the supply of log wood due to the lockdown. The timber processing supply chain from upstream logging work until downstream processing are affected by worker supply issue.

2. Developed country practicing work from home are encouraging more home renovation work to be done, and also more new home sales, hence pushing up demand for plywood in construction.

3. The forest supply for raw timber log at British Columbia are affected by infestation of mountain pine beetles. Warmer weather continue to encourage their growth and infestation.

4. Forest fire burned down 15 billion board feet of timber. 

Source - After the fires, timber industry faces ‘generational’ losses and longer-term supply questions of supply (msn.com)

With all the issue that are happening, supply chain are getting damaged while demand keep pushing up higher. This will only result in higher selling prices for timber goods.

WHY MINHO IS A POTENTIAL COMPANY TO GAIN FROM THIS ?

MINHO is in the business of timber for more than 40 years. Throughout the years, the business had expanded into several categories which include

-Kiln drying and chemical preservative treatment
-Manufacturing, exporting and dealing in moulded timber and related products.
-Export of processed timber products
-Trading in logs supply and timber related products
-Exploitation of timber concessions
-Operation of a fully integrated timber complex
-Manufacturing and distribution of industrial paper bags
-Property development
-Plantation

Minho export the sawn timber goods to Germany.

Currently, Minho charting is attractive as consolidation of the chart looks good at 35 cents

The price movement suggest a maturity point where a potential break out point will trigger the share price to move with a positive upward bias based on the global event happening in the timber trading.

For Mid/long term investor, current price around RM 0.35 +/- could be a good entry as price consolidated nicely around this range.

Above information is for reading and references on the write own personal opinion on the global timber trade and how it will affect company (Minho) that is dealing with timber trading. It does not represent a buy sell or trade to your investment decision.

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