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Lumber price continue to sky rocket without stopping. These event will be turning into a golden opportunity to a lot of timber/lumber company that had been sleeping for so many years. The current spot rate had gone as high as USD 857 per 1000 bd ft. This is the highest in history on lumber prices had gone up.
A lot of timber company are worth looking at with the surging price of lumber not looking to back off until at least reaching USD 1000
My attention is towards a undervalued company - Eksons Corporation Bhd 9016, a plywood mill at Sabah which export to international market, especially Japan, Europe and US.
This company recently reported a huge losses on FYE 2020 for March 2020. One of the biggest reason is the inventory valuation at the current market price during March 2020, which is at the worst of pricing. The inventory write down RM 11.7 million due to spot price plunged below USD 300 per 1000 bd ft. This resulted in company announcing a loss of 25.6 cent per share despite higher sales revenue from timber division.
The explanation note stated on 2.5 million from property impairment and RM 11.7 million from inventory value write down.
Here is the ending spot rate for March 2020 of lumber futures. According to the delivery spot rate for LUMBER FUTURE AT MARCH 2020 is USD 276 only!!!! That is the reason for RM 11.7 million write down on inventory value.
However, the current spot price for the LUMBER FUTURE is USD 857. That is an increase of USD 581, or increase of 310% from the MARCH 2020 low point
Based on the current impairment done on EKSONS inventory, now all the TIMBER INVENTORY at EKSONS will be carrying value at 276, but current spot price of more than 800 will be giving EKSONS a very good profitable margin in the coming QR for November.
EKSONS NTA is RM 2.40, current share price RM 0.645.
NET CASH position RM 175.963 million
NET CASH PER SHARE = RM 1.07 net cash per share
How much can EKSONS share price move in the coming future?
Short term looking at RM 0.80
Mid/Long term looking RM 1.20
Above information are just for your reading resource and not a guideline to buy sell or trade.
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