Industry Reports

Deutsche Bank Reports Summaries

070611 Deutsche Bank Report - Notes from Timber Summit

Deutsche Bank - Equity Research

Deutsche Bank held its third annual Timber Summit in Boston.  Joining us as presenters were five leading Timberland Investment Management Organizations (“TIMO's”), as well as 3 publicly-traded timber companies: Potlatch, TimberWest, and Deltic Timber.  The key takeaways?  (1) Timberland valuations remain robust.  (2) Sharp differences of opinion exist about whether timberlands are “overvalued” at current prices.  (3) The innovative financing structure employed by TimberStar in acquiring a portion of the International Paper timberlands is viewed as a potential “game changer” in the timberland acquisition market.  (4) Nontraditional sources of timberland revenues are drawing increased attention.  We've been skeptical about timberland valuations for the past several years and are currently rethinking our assumptions.  For the moment, higher interest rates look like the biggest challenge for timberland investors.

The bottom line?   We think the news from our third annual Timber Summit was positive for the timber-heavy stocks under our coverage: Weyerhaeuser, Temple-Inland, Plum Creek, Rayonier, and to a more limited extent, MeadWestvaco and Glatfelter.   The biggest near-term beneficiary is probably Temple-Inland.  Based on our meetings, we believe that bids for Temple's timberland could come in well-ahead of consensus expectations.  We think recent concerns about the prospective value of Temple's land and real estate are greatly overstated.  We maintain our Buy ratings on WY, TIN, and RYN.