Combined, they controlled several interesting companies,

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moncler coats sale Who Are These Commodity Pulp Moncler Outlet Guys moncler coats sale

moncler coats for cheap Sign in / Join NowSummaryThere is a real possibility that not only will the Chinese demand for NBSK continue to grow, but replacement products are becoming less competitive and out of favor.Tissue consumption growth in developing countries is an underlying trend that fits nicely into management’s focus.Billionaire Peter Kellogg’s investment firm, IAT Reinsurance Co Ltd, owns 25% of outstanding shares.Mercer International (MERC) is a commodity pulp manufacturer with plants in Canada and Germany servicing customers in China, the Far East, North America and Europe. Small cap MERC specializes in a niche commodity market whose international demand is growing by approx. 1.7% annually, but whose center is squarely focused on China. As a commodity driven company, cheap moncler coats mens MERC is supported by market prices, and directly impacted by expanding production capacity.MERC manufactures a pulp grade Northern Bleached Softwood Kraft, NBSK, which is used in the production of tissues, fine writing paper, drip coffee filters, and specialty fiber based products. NBSK is produced from SPF (spruce, pine, fir) and cedar trees primarily grown in North Central Russia, Northern Europe, and Canada. While there are other paper products utilizing hardwood bleached Kraft, such as eucalyptus, end users who demand specific properties find it difficult to substitute NBSK. Of the total global demand for pulp at moncler womens jackets 60 million tonnes, the niche serviced by MERC is estimated at 15 million tonnes, annually. End users for NBSK can be grouped into three basic customers: Fine Printing and Writing best moncler jackets paper, Tissue, Specialty Other. With the decline in writing moncler uk outlet paper over the past 15 years, this market has lost its demand for NBSK, but has been replaced by a large increase in tissue demand, especially in developing countries. Below is a graphic from the Nov. 2017 Investor discount moncler jackets Presentation showing the changes in market use for NBSK.Overall, the company believes the underlying global NBSK demand is expanding by 1.7% annually, or an average of 236,000 tons a year. MERC’s current production capacity is 1.5 cheap moncler jackets million tonnes a year, for an estimated global market share of 10%.Leading global demand is the increasing use of tissues and paper towels in cheap moncler jackets womens developing countries, such as China and Indonesia. The company estimates that by 2020, China will represent about 35% of the total annual NBSK demand, driven by a 11% CAGR from 2000 to moncler sale outlet 2021, compared to 1.5% and 0.6% for Western Europe and North America, respectively. Currently, Chinese buyers represent about 31% of MERC’s production capacity.In an early 2017 report on global pulp demand offered by Hawkins Wright, a pulp, paper and forest products consulting firm, the long term demand for Kraft pulp can be summed up:Despite the maturity of the global paper industry, structural changes will continue to promote market pulp demand; Tissue and hygiene sectors are fairly immune to aging population and technological change; Renewable packaging demand remains positive; Declining graphic paper consumption removes a key feedstock for certain non integrated paper (tissue and packaging) mills; Viscose demand, while still relative small, is gaining in momentum. The report also offers the following graphic that clearly shows the importance of the Chinese moncler online store markets to all pulp producers:As a commodity, NBSK prices are very dependent on current production capacity and near term additions, coupled with current production retirements. Below is an interesting chart of NBSK capacity additions and NBSK Euro price going back 15 years. Management expects capacity additions of 0.41 million tonnes in 2017, 1.34 in 2018 and less than 0.70 in 2019 and 2020 combined. As shown, markets have absorbed higher annual capacity additions since 2014 and remained at an average of about $900 per tonne in Europe.A closer review of prices from MERC’s investor presentation, as measured in US Dollars, Canadian $ and Euros versus product inventory, as measured in number of days of inventory, shows since a low of around $750 in moncler outlet sale 2013, inventory days have been stable between 28 and 32 days while prices in USD climbed to $1,200 and in Canadian $ climbed to $900.Also of importance to investors is the impact of a strong USD on both global pricing and directly on MERC, as demonstrated above. The price spread between USD and uk moncler outlet Cnd$ that was virtually non existent in 2013 has since ballooned to represent almost 25%. dollar NBSK price can be influenced by changing exchange rates. According to management’s comments in the 3rd qtr conference call, with revenue stated in USD but costs occurring in Canadian $ and Euro, one tends to offset the other, especially with cheap moncler sale the impact of exchange moncler outlet online rates on the underlying commodity price of NBSK. MERC possesses a noteworthy sensitivity to changes in NBSK pricing and management reports a US$10/tonne change in NBSK list pulp prices affects operating EBITDA by roughly US$12.6m.With the importance of the Chinese market to MERC, government policy changes can impact overall pulp demand. For example, Chinese competitors to «virgin» NBSK pulp include locally sourced, but heavily polluting and inferior quality, hardwood bleached Kraft and higher grades of moncler outlet store recycled paper. In their third quarter report, MERC management made the following observations:Part of achieving the goals of its moncler outlet next five year plan, China announced a major policy shift to enhance green development by sharply reducing the imports of waste/scrap materials including recovered or waste paper. In the current quarter, China announced moncler outlet prices goals to stop imports of unsorted paper by the start of 2018 and all solid waste and scrap imports by the end of 2019. It is too early to predict how China’s new policies will evolve, be implemented and their full effect. However, a material reduction in Chinese imports of waste or unsorted paper is expected to increase pulp demand in China over the medium term.There is a real possibility that not only will the Chinese demand for NBSK continue to grow, but replacement products are becoming less competitive and out of favor. Both trends will continue to favor MERC.With volatile moncler usa commodity prices comes the potential for volatility in earnings, stock prices and valuations.A few years ago, management decided to integrate biomass power generation and chemical sales into their mill operations, using wood fiber residue and «black liquid». A major cost in pulp manufacturing is the electricity required during the production process. By integrating biomass generation internally, MERC was able to reduce its manufacturing costs by over $50 per tonne, which is substantial in a commodity business. Currently, Mercer generates moncler sale more power than it consumes, and sells the balance to third parties. Energy sales currently represent 40% of EBITDA and offer a counterbalance to the volatility of commodity pulp markets.Recently, MERC purchased the fifth largest lumber sawmill in the world, and it moncler outlet woodbury is located close to its pulp mills. Not only does this add a bit of product diversity to the mix, it also offers in house sourcing of raw materials for their pulp mills.Moody’s recently offered a credit analysis and the following insightful comments supporting their Stable Outlook for MERC:Mercer’s Ba3 CFR is primarily driven by its leading global market position in northern bleached softwood kraft (NBSK) pulp, the stability provided by material energy and chemical earnings, the diversity of three pulp mills and a sawmill, the volatility of pulp prices and expected mid cycle leverage under 4x times. Mercer’s financial performance is significantly influenced by the volatile demand and pricing for market pulp, which is strongly impacted by demand from China and new global supply. Operating margins have fluctuated significantly over the past several years due to the cyclical nature of the fragmented pulp industry, as well as foreign exchange fluctuations (with pulp sales denominated in US$ and with assets located in Canada and Germany). Mercer’s sale of the excess energy it generates represents about 40% of EBITDA and mitigates pulp price volatility. Mercer’s financial leverage is expected to be about 3.8x over the next 12 to 18 months as pulp prices decline towards long term averages.Mercer’s has strong moncler sale online liquidity (SGL 1), supported by US$157 million in cash (September 2017) and about US$180 million of unused availability under four credit facilities totaling about US$210 million (with Euro 5 million maturing 2018 and the rest maturing between 2019 and 2022). We expect break even free cash flow generation in 2018 given higher than normal capital expenditure levels. Mercer does not have any debt maturities over the next several years and we expect the company to remain well within its covenants. The company’s fixed assets are unencumbered, which might provide alternate liquidity if needed.The uk moncler sale stable rating outlook reflects our expectation that Mercer will be able to maintain good operating performance and liquidity through volatile industry conditions. Mercer’s credit protection measures are expected to weaken slightly over the next 12 to 18 months as NBSK prices decline (as the ramp up of new pulp capacity exceeds demand growth) and as Mercer’s largest pulp mill (Stendal) undergoes its scheduled maintenance outage (every 18 months).In the early years of this century, I followed the actions of two well heeled financiers and entrepreneurs: Peter J Kellogg and Michael Smith. Combined, they controlled several interesting companies, including German KHD Humboldt Wedag International (KDHNF), Terra Nova, and MFC Bankcorp (MFCB), previously known as Mass Financial and MFC Industrial. At the time, of interest in these firms was not only their iron ore royalty business in Canada but also their penchant for exotic investments, such as cobalt mining in Africa and cement manufacturing equipment and cement plant engineering. Mr. Kellogg and Mr. Smith are somewhat recluse businessmen who spun a very tangled web of spin offs and acquisitions, and seemed to always operate in a somewhat opaque fashion. I decided to exit the investments when they expanded into the natural gas drilling business in India in 2011 and a Canadian gas producer in 2012. I questioned whether this tangent into another new business would become their albatross, and I believe it eventually did. It seems Kellogg and Smith parted ways in 2014, but Smith appears to have been recently re hired cheap moncler jackets mens to run MFC again, after a few year’s hiatus.Assembled in the early and mid 1990s by acquiring various German paper facilities, MERC grew as an affiliate of then Hong Kong based Mass Financial Corp. and one of businesses run or influenced by Michael Smith, with Peter Kellogg as a major investor. While Mercer separated from Smith in 1996, Kellogg, through his ownership of Bermuda based IAT Reinsurance Co Ltd., still owns 16.4 million shares or about 25% of shares outstanding. As I was exiting the other Smith/Kellogg investments, I bought into MERC. I wrote several articles on SA a few years back, with the most recent one from 2013 «Has the Cycle Turned for Mercer, and if so, 80% Gains are Possible» moncler coats for cheap.

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