02.10
Acadian Timber Corp. (ADN): $6.72 – Acadian Remains in a Holding Pattern, Waiting for Recovery in US Housing
Sector Perform, Average Risk, Price Target: $8.00
Acadian reported fourth quarter distributable cash of $1.3MM or $0.08 per unit, above RBC CM;s forecast of $0.01. Distributable cash was up from a loss of $0.3MM in the prior quarter, but remained below the $5.7MM earned a year ago. On January 1, 2010, Acadian converted to a corporation. As part of the conversion, Acadian acquired $95MM of tax assets and spruce seedling technology from CellFor. expects to be able to continue to pay investors a $0.20 annual dividend, in line with the prior cash distribution. The company’s target payout ratio remains 95%. Following the distribution cut last November, shares of Acadian Timber have remained near $6.50, +/- $0.25. In the absence of a material pick-up in the US housing market, we anticipate Acadian shares will remain range-bound. We suspected that the longer-term value in Acadian, together with Brookfield’s 45% interest, would support the share price.
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