EACOM Timber Corporation: First Look

Here are my notes from a cursory analysis I did of this business. It is traded on the Canadian venture exchange under the symbol ETR. All numbers below are in Canadian dollars.

• Current price .075/shr -- i.e. 7.5 cents
• NCAV: 0.111/shr
• Book: 0.31/shr
• Current discount to NCAV: 67%
• Had a fire at a plant, lost everything there, but insurance covered it, minus a deductible. Will see that impact in Q4 numbers
• Receivables cover 40% of current assets-- very high!
• Inventories cover 46% of current assets-- very high!
• Not much cash on hand for a rainy day
• Management has been relying on equity raising and credit facility
• Cash flow positive because of equity raising done in April, 2011
• 19% shareholder dilution was done
• I don't like the over reliance on sizzling overpriced Canadian housing manufacturing sector

This one truly is a cigar butt style investment. It is selling close to Graham's famous 66.6% of NCAV. But there may be hidden value here in terms land and timber ownership-- I need to investigate that some more.


Frankly, I am not impressed with the balance sheet and cash flow statements. But, if I can find hidden value on the balance sheet, the stated book value would be a gross understatement of the actual book value.


Does this look like an interesting opportunity to the readers of this blog?


Full Disclosure: None