Q4/21 Preview & 2022-2023 Commodity Prices Deck Update: Global Equity Research

Paper & Forest Products
Q4/21 Preview & 2022-2023 Commodity Prices Deck Update

Global Equity Research
OUR TAKE: Positive. We have updated our Q4/21 EPS and EBITDA estimates to reflect
Daily Edge | After Close actual commodity prices and FX in the quarter. We also made adjustments to our quarterly
Tuesday, January 11, 2022 2022-2023 commodity price forecasts and estimates reflecting the most recent market
developments and outlook.
Analyst Team Link to ScotiaView
Our SO-rated forestry stocks are Cascades (CAS), Canfor Corp. (CFP), Interfor (IFP) and

Benoit Laprade, CPA, CA, CFA | Analyst

Scotia Capital Inc. - Canada | 514-287-3627 West Fraser (WFG).

Salik Ansari, MFin, ERP | Associate

Scotia Capital Inc. - Canada | 437-991-1471 KEY POINTS
Target Changes
New Old
Lumber. Q4/21 prices were significantly higher than previously expected, at $728 (vs $500)
ADN-T C$18.75 C$18.25 and $814 (from $500) for W.SPF and SYP (2x4, #2&Btr), respectively. We increased our Q1/22E
CFP-T C$45.00 C$40.00 forecasts to $892 (from $500) and $917 (from $500), respectively for SPF and SYP, reflecting
CFX-T C$7.00 C$8.50 strong prices in January so far. We expect prices to average $654 and $667 respectively in
CAS-T C$21.00 C$22.00 2022, supported by solid demand combined with high – albeit declining in Q1/22 – wood
IFP-T C$50.00 C$44.00 costs in B.C. and increased duty deposit rates. Our 2023 forecast shows slightly lower prices
LPX-N US$77.00 US$72.00 ($561 for both SPF and SYP) reflecting expected lower stumpages in B.C. combined with lower
This report is intended for replaceme@bluematrix.com. Unauthorized distribution of this report is prohibited.
RFP-N US$20.00 US$19.00 expected duty deposit rates combined with new capacity in the U.S. South. A wild card, in
WFG-T C$143.00 C$137.00
both 2022 and 2023 will be the potential impact of proposed harvest deferral in some old
WY-N US$40.50 US$38.00
growth forests of B.C. which could ultimately cause further lumber capacity rationalization.
Coverage Summary
Rating 1-Yr. Target Return
ADN-T* SP C$18.75 8.0% OSB (N.C. 7/16th). The Q4/21 average was $537, also meaningfully higher than our previous
CAS-T* SO C$21.00 56.1% forecast of $450. With lean inventory and robust new single-family starts expected to
CFP-T* SO C$45.00 47.0% continue for the next several quarters, we expect prices to remain healthy through the
CFX-T* SP C$7.00 11.8% forecast horizon albeit significantly below record prices witnessed in 2021. Our 2022 forecast
IFP-T* SO C$50.00 25.2%
was increased to $512 (from $450) given the strong start so far in Q1, while our 2023 forecast
KPT-T* SP C$11.50 16.9%
remains virtually unchanged at $420 (from $416).
LPX-N* SP US$77.00 5.8%
RFP-N* SP US$20.00 26.7%
SJ-T* SO C$56.00 41.2% Pulp (NBSK). NBSK pulp prices came in virtually in line with our forecast at $1,472 (vs $1,467).
WEF-T* SP C$2.75 31.6% We continue to expect prices to decline in 2022-2023. Our 2022 and 2023 forecasts stand at
WFG-T* SO C$143.00 23.2% $1,373 (from $1,363) and $1,300 (unchanged). While global demand for pulp is expected to
WY-N* SP US$40.50 5.4% remain solid on the back of continued paper for plastic substitution, new capacity from 2022
*Companies with pertinent revisions
onward is expected to put pressure on prices for the next few years.
Containerboard. Q4/21 average linerboard prices of $875 was in line with expectations. We
continue to expect ~$25/ton price erosion in mid 2022 and early 2023 on the back of new
capacity additions and expected slowing demand growth. However, it is worth noting that
producers' discipline and/or high(er) OCC prices could support stronger prices than currently
expected.
Papers (LWC, UFS, Newsprint). All paper prices came in slightly higher than expected in
Q4/21. Recently fully implemented increases led us to increase our forecasts. In 2022, we
expect LWC, UFS, and newsprint prices at $1,070 (from $1,010), $1,260 (from $1,200), and
$770 (from $750), respectively. In 2023, we expect prices of $993 (from $970), $1,170 (from
$1,140) and $710 (from $700), respectively.
Production: January 11, 2022, 18:03 ET. Dissemination: January 11, 2022, 18:13 ET.
For Reg AC Certification and important disclosures see Appendix A of this report. Analysts
employed by non-U.S. affiliates are not registered/qualified as research analysts with FINRA in
the U.S. unless otherwise noted within this report.
Daily Edge | After Close

Tuesday, January 11, 2022
Commodity
Price Forecasts and FX Assumptions Update
We have adjusted our quarterly (2021E-2023E) commodity prices and FX assumptions (Exhibit 1) to reflect actual Q4/21 average prices and
FX rates and changes to the outlook stemming from recent market developments. We made the corresponding revisions to our quarterly
EBITDA (Exhibit 5) and EPS (Exhibit 6) estimates.
The key changes to our Q4/21 forecasts are meanigfully higher-than-expected prices for wood products and sligthly higher-than-expected
for all grades of communication papers and a slightly stronger CAD. Our FX forecats is unchanged for 2022-2023.
Exhibit 1 - Commodity Price Forecast Update (US$/unit)

Source: Random Lengths; RISI; FactSet; Scotiabank GBM Estimates.
Building Products
Lumber (W.SPF, SYP)
Solid demand combined with higher duty deposit rates and high wood costs in B.C. (albeit declining in Q1/22) expected to support solid
lumber prices. After dropping rapidly from record levels reached in May, prices for both SPF and SYP have continued to rebound faster
than we were anticipating stemming in part from the BC. flooding that disrupted rail and truck service for several weeks. Prices averaged
significantly higher than expected in Q4/21 (Exhibit 2). Considering current price levels and the recent increase in duty deposit rates last
quarter, we have increased our forecasts for 2022. We have increased our Q1/22E W.SPF forecast to $892 (from $500) and SYP to $917
(from $500). We increased our 2022 forecast to $654 (from $548) and $667 (from $525 and $525) for W. SPF and SYP respectively. While
B.C. producers got some temporary stumpage relief in January (due to the lag between lumber prices and stumpage reset), this should be
relatively short-lived as we expect another increase next July 1 due to strong bid prices in 2021 in response to record lumber prices.
Robust demand is expected to continue throughout the forecast horizon in new home construction as well as in Repair & Remodel stemming
from supportive demographics, a decade of underbuilding and a very old housing stock. Households balance sheets are in great shape,
while affordability remains good by historical standards. So far, the supply response to recent record prices has been reasonable because
of continued (and increasing) fiber constraints in B.C. as well as labor availability issues in the U.S. South. Inventories throughout the supply
chain remain balanced.
Oriented Strand Board (OSB)
New home construction remains strong. Total U.S. housing starts achieved a high of 1.725 million in March 2021 and remained at 1.500+
million every month, averaging 1.584 million starts per month through November (latest data available).. This compares very favourably to
the 2007- 2020 period when starts were in the 0.554 million (2009) to 1.397 million (2020) range. Looking at Q4/21, total starts have been
1.502 million and 1.679 million for October and November respectively. Labour availability and productivity issues and the availability of
many building materials aperas to be slowing down completion, likely taking a toll on starts, hence on lumber and OSB demand.
In our opinion, the outlook for the U.S. housing market remains supportive of solid OSB and lumber demand, therefore supporting robust –
albeit much lower than recent record levels – prices.

Global Equity Research 2

In
Q4/21, prices (Exhibit 3) came in above expectations, attributable to the higher prices caused by a supply crunch throughout December.
partly due to B.C. flooding and the associated logistical problems. We therefore have increased our Q4/21 OSB price to $537 (from $450). We
also increase our 2022 and 2023 forecasts to $512 (from $450) and $420 (from $416) respectively.
Exhibit 2 - W.SPF Prices (#2&Btr 2x4) Exhibit 3 - OSB Prices (North Central 7/16")
Source: Random Lengths; Scotiabank GBM Estimates.

Source: Random Lengths; Scotiabank GBM Estimates.
Pulp (NBSK)
North American pulp markets continued to weaken throughout Q4/21, albeit at a slower pace than Q3, with list prices down $20 in October,
another $25 in November and flat in December, at $1,470. Despite the recent weakening, NBSK prices are $317 (+27%) higher on a y/y basis.
End-user demand has held firm in the U.S. and continues to exceed expectations in the Europe, while weaker Chinese demand has forced
NBSK players to agree to lower prices in Q4/21. Going forward, extended shipping challenges also would make additional spot volumes
available in the U.S., thereby maintaining the downward pressure on the spot prices. The pulp prices in the U.S. market trade at a substantial
premium to Chinese market prices, which should attract pulp supplies to the U.S. On the other hand, the recent proposal from the B.C.
government of deferring the harvest of old-growth trees can substantially exacerbate the wood fiber availability issues in the province.
Global producer inventories also rose each month (Exhibit 4), reaching their highest levels in August and October for Hardwood and
Softwood respectively compared to the whole year as China demand remains weak. The rise in inventories is a direct result of global supply
chain and logistic issues that have forced the players to hold higher levels of inventory. Additionally, for hardwood, producer inventories were
also higher on the back of weakened appetite for new orders in China due to weak end-user product demand.
In October, bleached softwood kraft pulp inventories rose 2 days, to 46 days of supply, well above the ~33 days considered to be a “balanced
market”, which is a new high in the last 18 years. Bleached hardwood kraft inventories were reported at 45 days of supply, up 1 day from
September, slightly above ~44 days average of the last two years.
As NA pulp prices have been stronger than expected in Q4/21, we increased our Q4/21E NBSK price forecasts slightly to $1,472 (from $1,467).
This has brought our 2021E average price to $1,478 (from $1,477). We also slightly increased our 2022 estimate to $1,373 (from $1,363), while
the 2023 estimate remains unchanged.


Exhibit
4 - World 20 Producer Inventories Continue to Rise
Source: Fastmarkets RISI; Scotiabank GBM.
Containerboard
Three successful increases in a row supported by strong boxes demand and input cost inflation. Containerboard producers successfully
implemented a third price increase in August ($50/ton in November 2020, US$60-US$70/ton for linerboard and medium through March
and April 2021 and US$50-US$70/ton increase for most grades of linerboard and corrugated medium in August 2021).
While we continue to expect recent and coming capacity additions to cause some price erosion in mid-2022 and early 2023, demand
remains strong and combined with significant input cost inflation (including OCC), could translate into upside potential to our forecast.
In Q4/21, linerboard prices averaged $875, in line with our forecast. We maintain our 2022-2023 forecasts unchanged at $863 and $825
respectively.
Communication Papers
Lightweight Coated Paper (LWC)
High operating rates expected to continue and support strong prices. North American coated mechanical operating rates have surpassed
100% a few times in 2021 and averaged approximately 103% for coated freesheet and 95% for coated groundwood for the year, according to
PPPC. At the end of November, inventories of coated mechanical paper have dropped 63,000 tons y/y while inventories of coated freesheet
have dropped by 209,000 tons y/y. In addition, the announced exit of Pactiv Evergreen (~180,000 tons of capacity at One Bluff) by the
end of October and downtime by Paper Excellence due to logistical issues in B.C. in December could add further pressure although Paper
Excellence’s switching back to coated mechanical from newsprint and uncoated mechanical at Port Alberni should eventually be a partial
offset. According to RISI, operating rates are expected to remain well above 90% in 2022.
LWC prices were up $60/ton in September and $60 again in November, reaching $1,070/ton. We therefore increased our Q4/21 LWC price to
$1,050 (from $1,010) to reflect the unexpected November increase. Our 2022E forecast was also increased to $1,070 (from $1,010), while our
2023 forecast was increased to $993 (from $970).


Uncoated
Freesheet (UFS)
High operating rates continue to support robust prices. After two successful increases ($60/ton implemented over March and April and
$60/ton implemented through June and July), a third increase of $80 was implemented in November. Those increases have so far been
supported by production capacity curtailments, supply chain issues, and input costs inflation and slightly improved demand compared to
the 2020 lows. However, uncertainty remains with respect to the magnitude of any further demand rebound stemming from schools and
offices reopening more fully this quarter due to Omicron.
Through November, UFS demand in NA is up 6%, or 27,000 tons year-over-year as schools, businesses and offices have slowly reopened.
Operating rates remain very high (95% through November, up from 82% in 2020) due to closures in response to COVID-19 last year.
On the supply side, while Domtar is restarting one paper machine at Ashdown to meet improved demand, Packaging Corp of America is
reported to have ceased UFS production at its Jackson mill to instead produce unbleached containerboard grades, offsetting about half of
Domtar’s restart at Ashdown, while Resolute Forest Papers announced its intention to exit uncoated freesheet production (~149,000 tons) at
Calhoun, TN in late February 2022.
We revised our UFS forecast upward, accounting for this unexpected third price increase. We now expect prices to average $1,233 (from
$1,207) in Q4/21, $1,260 (from $1,200) in 2022 and $1,170 (from $1,140) in 2023.
Newsprint
Successful fourth increase this year in October. After three successful price increases earlier this year (aggregating $140/tonne), producers
successfully increased prices again by $25/tonne on October 1. As we continue to expect the pre-pandemic secular decline trend to resume
in 2022, we expect some price erosion in 2H/22 and 2023 as discussed below.
North America newsprint demand is down 6% through November following the 2020 collapse. However, capacity curtailments are keeping
the market tight and have now resulted in very low mill inventory levels (down again 60,000 tonnes at the end of November), which
supported a fourth price increase this year in Q4. RISI continues to expect to expect capacity remaining 40% below 2019 levels through
the end of the year, with operating rates above 95% due to the switch to coated grades at Paper Excellence discussed above. However,
GreenFirst Forest Products announced plans to restart its newly acquired Kapuskasing newsprint mill, providing some relief if/when it
actually takes place.
As the secular demand decline is expected to continue, many newsprint mills will likely continue to explore alternatives – likely brown
packaging – products, which should translate into reduced newsprint production over time.
As a result, our Q4/21 price was increased slightly to $770, up from $760. Our 2022E forecast was increased to $770 (from $750) and our
2023 forecast was increased marginally to $710 (from $700)
Foreign Exchange Rates
Canadian dollar/U.S. dollar. In Q4/21, the Canadian dollar averaged slightly above our forecast, at 0.7934 (from 0.7900). Our 2022-2023
forecasts remain unchanged at 0.80 and 0.82 respectively, in line with Scotiabank GBM estimates.
Company-Specific Implications
We have adjusted our outlook for the forest products companies under coverage and have summarized the impact of the commodity price
and F/X rate adjustments on earnings, targets and, ratings in the tables below.
Please note that our revised EBITDA estimates for Resolute Forest products (RFP) are on an “after paid duty” basis to be consistent with our
estimates for other lumber producers, while our old EBITDA estimates were “excluding duty paid”, which was consistent with the company’s
financial reporting.


Exhibit
5 - Changes to Company Adj. EBITDA Estimates
Source: Scotiabank GBM Estimates.
Exhibit 6 - Changes to Company Adj. EPS Estimates

Source: Scotiabank GBM Estimates.
Exhibit 7 - Summary of Price Target, Rating, and Valuation Methodology Changes
Source: FactSet; Company Reports; Scotiabank GBM Estimates.


Exhibit
8 - Comparable Company Analysis - Building Products
Source: Company Reports; FactSet; Scotiabank GBM Estimates.
Exhibit 9 - Comparable Company Analysis - Global Pulp

Exhibit 10 - Comparable Company Analysis - Paper


Exhibit
11 - Comparable Company Analysis - Paperboard and Packaging



Pertinent Data and Revisions

Price Rating 1-Yr. Target 1-Yr. Return
ADN-T C$18.67 SP C$18.75 8.0%
CAS-T C$13.83 SO C$21.00 56.1%
CFP-T C$31.27 SO C$45.00 47.0%
CFX-T C$6.19 SP C$7.00 11.8%
IFP-T C$41.15 SO C$50.00 25.2%
KPT-T C$10.43 SP C$11.50 16.9%
LPX-N US$74.34 SP US$77.00 5.8%
RFP-N US$15.15 SP US$20.00 26.7%
SJ-T C$40.35 SO C$56.00 41.2%
WEF-T C$2.15 SP C$2.75 31.6%
WFG-T C$118.84 SO C$143.00 23.2%
WY-N US$40.73 SP US$40.50 5.4%
Acadian Timber Corp. (ADN-T; C$18.67)

Valuation: Equal Weight 16.5x EV/EBITDA; 5.75% FCF Yield
Key Risks: Lower-than-expected fibre prices; stronger-than-expected CAD/USD exchange rate; higher-
than-expected interest rates; lower-than-expected operating rates at key customers; forest fires,
diseases, and insects.
New Old
1-Yr. Target C$18.75 C$18.25
Key Data Adj EBITDA (M)23E: C$24 Adj EBITDA (M)23E: C$23
Canfor Corporation (CFP-T; C$31.27)
Valuation: 5.0x NTM EV/EBITDA 1-Year Forward + 50% of Duties Paid
Key Risks: Weaker-than-expected U.S. housing recovery, lower-than-expected prices, stronger-than-
expected C$
New Old
1-Yr. Target C$45.00 C$40.00
Key Data Adj EBITDA (M)21E: C$2,620 Adj EBITDA (M)21E: C$2,532
Adj EBITDA (M)22E: C$1,480 Adj EBITDA (M)22E: C$1,115
Adj EBITDA (M)23E: C$1,061 Adj EBITDA (M)23E: C$985
Canfor Pulp Products Inc. (CFX-T; C$6.19)

Key Risks: Lower-than-expected prices, stronger-than-expected C$
New Old
1-Yr. Target C$7.00 C$8.50
Adj EBITDA (M)22E: C$83 Adj EBITDA (M)22E: C$122
Valuation 5.0x NTM EV/EBITDA 1-Year Forward 4.5x NTM EV/EBITDA 1-Year Forward



Cascades Inc. (CAS-T; C$13.83)
Valuation: Sum-of-the-Parts
New Old
1-Yr. Target C$21.00 C$22.00
Key Data EBITDA (M)22E: C$560 EBITDA (M)22E: C$575
EBITDA (M)23E: C$607 EBITDA (M)23E: C$618
Interfor Corporation (IFP-T; C$41.15)
expected C$
New Old
1-Yr. Target C$50.00 C$44.00
Key Data Adj EBITDA (M)21E: C$1,232 Adj EBITDA (M)21E: C$1,191
Adj EBITDA (M)22E: C$1,113 Adj EBITDA (M)22E: C$673
KP Tissue Inc. (KPT-T; C$10.43)
Key Risks: Pulp and energy prices; shift in consumer preferences; execution risk; competition.
New Old
Valuation 8.25x NTM EV/EBITDA 1-Year Forward 8.5x NTM EV/EBITDA 1-Year Forward
Louisiana-Pacific Corporation (LPX-N; US$74.34)
Valuation: 6.75x NTM EV/EBITDA 1-Year Forward
expected C$
New Old
1-Yr. Target US$77.00 US$72.00
Key Data EBITDA (M)21E: US$1,973 EBITDA (M)21E: US$1,925
EBITDA (M)22E: US$1,223 EBITDA (M)22E: US$1,026
EBITDA (M)23E: US$952 EBITDA (M)23E: US$958
Resolute Forest Products Inc. (RFP-N; US$15.15)

Valuation: Sum-of-the-Parts
New Old
Key Data EBITDA (M)21E: US$827 EBITDA (M)21E: US$937



Stella-Jones Inc. (SJ-T; C$40.35)
Valuation: 10.5x EV/EBITDA (2022E)
Key Risks: Successful integration of acquisitions; railway tie and pole demand; lumber price volatility.
New Old
Key Data EBITDA (M)21E: C$399 EBITDA (M)21E: C$400
EBITDA (M)22E: C$404 EBITDA (M)22E: C$400
West Fraser Timber Co. Ltd. (WFG-T; C$118.84)

Valuation: 6.0x NTM EV/EBITDA 1-Year Forward + 50% of Duties paid
expected C$
New Old
1-Yr. Target C$143.00 C$137.00
Key Data Adj EBITDA (M)21E: US$4,671 Adj EBITDA (M)21E: US$4,535
Adj EBITDA (M)22E: US$2,763 Adj EBITDA (M)22E: US$1,963

Western Forest Products Inc. (WEF-T; C$2.15)

expected C$
New Old
Weyerhaeuser Company (WY-N; US$40.73)
Valuation: Sum of the parts
Key Risks: Weaker-than-expected U.S. housing recovery, lower-than-expected prices
New Old
Key Data Adj EBITDA (M)21E: US$4,112 Adj EBITDA (M)21E: US$3,974


Appendix A: Important Disclosures
Company Disclosures (see legend below)*

Canfor Pulp Products Inc. VS0085
Cascades Inc. I, J, N1
Interfor Corporation VS0308, VS0564
West Fraser Timber Co. Ltd. I, U, VS0086, VS0104
Western Forest Products Inc. I, U, V0170
I, Benoit Laprade, certify that (1) the views expressed in this report in connection with securities or issuers that I analyze accurately reflect my
personal views and (2) no part of my compensation was, is, or will be directly or indirectly, related to the specific recommendations or views
expressed by me in this report.
This document has been prepared by Research Analysts employed by The Bank of Nova Scotia and/or its affiliates. The Bank of Nova Scotia,
its subsidiaries, branches and affiliates are referred to herein as "Scotiabank." "Scotiabank" together with "Global Banking and Markets" is the
marketing name of the global corporate and investment banking and capital markets business of The Bank of Nova Scotia and its affiliates.
Scotiabank, Global Banking and Markets produces research reports under a single marketing identity referred to as "globally branded
research" under U.S. rules. This research is produced on a single global research platform with one set of rules which meet the most stringent
standards set by regulators in the various jurisdictions in which the research reports are produced. In addition, the Research Analysts who
produce the research reports, regardless of location, are subject to one set of policies designed to meet the most stringent rules established
by regulators in the various jurisdictions where the research reports are produced.
Scotiabank relies on information barriers to control the flow of non-public or proprietary information contained in one or more areas within
Scotiabank into other areas, units, groups or affiliates of Scotiabank. In addition, Scotiabank has implemented procedures to prevent
research independence being compromised by any interactions they may have with other business areas of The Bank of Nova Scotia. The
compensation of the Research Analyst who prepared this document is determined exclusively by Scotiabank Research Management and
senior management (not including investment or corporate banking).
Research Analyst compensation is not based on investment or corporate banking revenues; however, compensation may relate to the
revenues of Scotiabank as a whole, of which investment banking, corporate banking, sales and trading are a part. Scotiabank Research will
initiate, update and cease coverage solely at the discretion of Scotiabank Research Management. Scotiabank Research has independent
supervisory oversight and does not report to the corporate or investment banking functions of Scotiabank.
For Scotiabank, Global Banking and Markets Research Analyst Standards and Disclosure Policies, please visit www.gbm.scotiabank.com/
disclosures.
For additional questions, please contact Scotiabank, Global Banking and Markets Research, 4 King St W, 12th Flr, Toronto, Ontario, M5H 1A1.
Time of dissemination: January 11, 2022, 18:13 ET. Time of production: January 11, 2022, 18:03 ET. Note: Time of dissemination is defined
as the time at which the document was disseminated to clients. Time of production is defined as the time at which the Supervisory Analyst
approved the document.
*Legend
I Scotia Capital (USA) Inc. or its affiliates has received compensation for investment banking services in the past 12 months.
J Scotia Capital (USA) Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services in the
next 3 months.
N1 Scotia Capital (USA) Inc. had an investment banking services client relationship during the past 12 months.
U Within the last 12 months, Scotia Capital Inc. and/or its affiliates have undertaken an underwriting liability with respect to equity or
debt securities of, or have provided advice for a fee with respect to, this issuer.
V0170 Scotia Capital Inc. is acting as financial advisor to Western Forest Products Inc. in relation to the announced sale of their Non-Core
Assets.
VS0085 Research Analyst Benoit Laprade visited the Northwood Pulp Mill, an NBSK pulp mill, in September 2013. The issuer paid for a
portion of the travel-related expenses incurred by the Research Analyst to visit the site.
VS0086 Research Analyst Benoit Laprade visited sawmills and plywood, BCTMP, and NBSK pulp mills, operations in Quesnel, BC, in
September 2013. Partial payment was received from the issuer for the travel-related expenses incurred by the Research Analyst to
visit this site.
VS0104 Research Analyst Benoit Laprade visited the Armour sawmill, an operating sawmill, on October 11, 2013. The issuer paid for a
portion of the travel-related expenses incurred by the Research Analyst to visit the site.


VS0308 Research Analyst Benoit Laprade visited IFP's Perry, Swainsboro, and Meldrim sawmills, operating sawmills, on May 27 and 28,
2015. The issuer paid for a portion of the travel-related expenses incurred by the Research Analyst to visit the sites.
VS0564 Research Analyst Benoit Laprade visited Interfor's Eatonton sawmill in Eatonton, Georgia, on September 25, 2018. The issuer paid
for a portion of the travel-related expenses incurred by the Research Analyst to visit the site.


Rating and Price Target History
Acadian Timber Corp. (ADN-T) as of January 10, 2022 (in CAD)

01-03-2019 04-01-2019 09-09-2019 03-30-2020 05-06-2020 05-27-2020 02-10-2021 10-28-2021
Price: 14.85 Price: 16.43 Price: 16.35 Price: 13.36 Price: 13.80 Price: 13.80 Price: 16.80 Price: 18.25
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
Target: 19.00 Target: 18.00 Target: 19.00 Target: 18.00 Target: 17.00 Target: 16.50 Target: 17.50 Target: 18.25
22
20
18
Price (CAD)
16
14
12
10
Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22
*Represents the value(s) that changed.

Ratings Legend: FS=Focus Stock; SO=Sector Outperform; SP=Sector Perform; SU=Sector Underperform; T=Tender; UR=Under Review; CS=Coverage Suspended; DC=Discontinued Coverage
Source: Scotiabank GBM estimates; FactSet.
Canfor Corporation (CFP-T) as of January 10, 2022 (in CAD)

01-03-2019 04-01-2019 05-01-2019 07-08-2019 07-26-2019 08-12-2019 12-17-2019 02-04-2020 03-27-2020 04-09-2020
Price: 16.27 Price: 14.10 Price: 13.61 Price: 10.80 Price: 10.30 Price: 15.26 Price: 12.77 Price: 12.58 Price: 6.81 Price: 8.45
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
Target: 22.50 Target: 20.50 Target: 19.50 Target: 17.00 Target: 16.00 Target: 16.00 Target: 15.50 Target: 17.00 Target: 12.50 Target: 12.00
35
30
25
Price (CAD)
20
15
10
5
07-08-2020 07-24-2020 09-03-2020 10-02-2020 01-05-2021 02-25-2021 03-02-2021 04-06-2021 04-27-2021 05-18-2021
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
07-07-2021 07-30-2021 10-08-2021
Price: 27.87 Price: 24.09 Price: 27.62
Rating: SO Rating: SO Rating: SO
Target: 44.00 Target: 42.00 Target: 40.00



Canfor Pulp Products Inc. (CFX-T) as of January 10, 2022 (in CAD)
10-24-2018 02-21-2019 07-08-2019 07-25-2019 08-30-2019 09-25-2019 10-03-2019 10-23-2019 12-17-2019 03-04-2020 03-27-2020
Price: 24.16 Price: 18.79 Price: 10.50 Price: 10.11 Price: 9.08 Price: 9.12 Price: 8.98 Price: 9.42 Price: 8.13 Price: 6.99 Price: 4.36
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
Target: 23.00 Target: 20.00 Target: 15.50 Target: 13.50 Target: 12.00 Target: 12.00 Target: 13.00 Target: 11.75 Target: 11.25 Target: 11.00 Target: 8.50
30
25
20
Price (CAD)
15
10
0
05-21-2020 07-08-2020 10-02-2020 10-23-2020 02-08-2021 02-25-2021 03-02-2021 04-06-2021 04-29-2021 05-18-2021 07-29-2021
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
10-08-2021 12-23-2021
Price: 6.54 Price: 6.50
Rating: SP Rating: SP
Target: 11.00 Target: 8.50

Cascades Inc. (CAS-T) as of January 10, 2022 (in CAD)

01-03-2019 01-28-2019 02-28-2019 04-01-2019 07-02-2019 07-08-2019 08-09-2019 10-03-2019 11-08-2019 02-27-2020
Rating: SO Rating: SO Rating: SO Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
20
18
16
Price (CAD)
14
12
10
8
6
07-08-2020 08-06-2020 09-28-2020 10-23-2020 02-10-2021 03-02-2021 05-18-2021 07-05-2021 10-19-2021 11-11-2021
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SO Rating: SO Rating: SO



Interfor Corporation (IFP-T) as of January 10, 2022 (in CAD)

01-03-2019 04-01-2019 05-02-2019 07-08-2019 02-04-2020 03-18-2020 03-30-2020 07-08-2020 07-24-2020 08-07-2020
50
40
Price (CAD)
30
20
10
0
09-03-2020 10-02-2020 01-05-2021 02-05-2021 03-02-2021 04-06-2021 04-27-2021 05-07-2021 07-07-2021 08-05-2021
09-02-2021 10-08-2021 11-23-2021
Price: 27.45 Price: 31.25 Price: 32.62
Rating: SO Rating: SO Rating: SO

Target: 47.00 Target: 42.00 Target: 44.00

KP Tissue Inc. (KPT-T) as of January 10, 2022 (in CAD)

01-03-2019 04-01-2019 11-07-2019 01-13-2020 03-30-2020 07-08-2020 08-06-2020 10-02-2020 02-08-2021 05-07-2021 07-07-2021
Rating: SO Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
18
16
14
Price (CAD)
12
10
6
10-08-2021
Price: 10.25
Rating: SP
Target: 11.50



Louisiana-Pacific Corporation (LPX-N) as of January 10, 2022 (in USD)

01-03-2019 02-13-2019 04-01-2019 05-07-2019 05-27-2019 08-06-2019 11-05-2019 02-11-2020 03-30-2020 05-05-2020
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
80
70
60
Price (USD)
50
40
30
20
10
07-08-2020 07-24-2020 08-04-2020 09-03-2020 09-29-2020 11-03-2020 01-05-2021 02-16-2021 03-02-2021 04-06-2021
04-27-2021 05-04-2021 05-18-2021 07-07-2021 09-02-2021 10-08-2021
Price: 70.55 Price: 72.10 Price: 64.60 Price: 58.26 Price: 63.39 Price: 61.44
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP

Target: 63.00 Target: 67.00 Target: 69.00 Target: 75.00 Target: 73.00 Target: 72.00

Resolute Forest Products Inc. (RFP-N) as of January 10, 2022 (in USD)
01-03-2019 01-31-2019 04-01-2019 04-30-2019 07-08-2019 08-01-2019 08-30-2019 10-03-2019 10-31-2019 01-30-2020 03-25-2020
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
20
15
Price (USD)
10
0
07-24-2020 07-30-2020 10-02-2020 11-05-2020 01-05-2021 02-04-2021 03-02-2021 04-06-2021 04-27-2021 05-18-2021 07-07-2021
Rating: SP Rating: SU Rating: SU Rating: SU Rating: SU Rating: SU Rating: SU Rating: SU Rating: SU Rating: SU Rating: SP
10-08-2021
Price: 12.96
Rating: SP
Target: 19.00



Stella-Jones Inc. (SJ-T) as of January 10, 2022 (in CAD)

11-02-2018 08-07-2019 11-07-2019 05-08-2020 08-05-2020 11-05-2020 01-28-2021 03-02-2021 05-03-2021 09-02-2021
55
50
45
Price (CAD)
40
35
30
25
20
10-20-2021 11-03-2021
Rating: SO Rating: SO

West Fraser Timber Co. Ltd. (WFG-T) as of January 10, 2022 (in CAD)
01-03-2019 02-12-2019 04-01-2019 04-25-2019 05-27-2019 07-18-2019 08-30-2019 02-04-2020 03-04-2020 03-20-2020
140
120
100
Price (CAD)
80
60
40
20
03-30-2020 07-08-2020 07-24-2020 07-27-2020 09-03-2020 10-02-2020 02-01-2021 02-12-2021 03-02-2021 04-06-2021
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
04-27-2021 05-07-2021 05-18-2021 07-07-2021 07-29-2021 08-18-2021 09-02-2021
Price: 98.10 Price: 104.96 Price: 90.92 Price: 93.00 Price: 90.04 Price: 90.83 Price: 97.10
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
Target: 125.00 Target: 128.00 Target: 130.00 Target: 142.00 Target: 141.00 Target: 139.00 Target: 137.00



Western Forest Products Inc. (WEF-T) as of January 10, 2022 (in CAD)
11-08-2018 04-01-2019 05-02-2019 07-08-2019 08-30-2019 12-18-2019 02-04-2020 03-23-2020 05-07-2020 09-03-2020 09-16-2020
Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO Rating: SO
3.00
2.50
Price (CAD)
2.00
1.50
1.00
0.50
10-02-2020 01-05-2021 02-19-2021 03-02-2021 04-27-2021 05-18-2021

Price: 1.03 Price: 1.25 Price: 1.61 Price: 1.71 Price: 2.19 Price: 2.11
Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP
Target: 1.25 Target: 1.50 Target: 2.00 Target: 2.25 Target: 2.50 Target: 2.75

Weyerhaeuser Company (WY-N) as of January 10, 2022 (in USD)

01-03-2019 02-01-2019 07-26-2019 10-25-2019 12-17-2019 01-31-2020 03-04-2020 03-30-2020 05-01-2020 05-27-2020
45
40
35
Price (USD)
30
25
20
15
10
07-08-2020 07-24-2020 07-31-2020 09-03-2020 01-05-2021 02-25-2021 03-02-2021 04-27-2021 05-18-2021 07-07-2021
07-30-2021 10-08-2021
Rating: SP Rating: SP



Definition of Scotiabank, Global Banking and Markets Equity Research Ratings

Scotiabank has a three-tiered rating system, with ratings of Sector Outperform, Sector Perform, and Sector Underperform. Each Research
Analyst assigns a rating that is relative to his or her coverage universe or an index identified by the Research Analyst that includes, but is not
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Ratings

Sector Outperform (SO) Other Ratings

The stock is expected to outperform the average 12-month total
return of the analyst’s coverage universe or an index identified by Under Review – The rating has been temporarily placed under
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analyst. by the analyst.
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Tender rating.
The stock is expected to perform approximately in line with the
average 12-month total return of the analyst’s coverage universe or Risk Ranking
an index identified by the analyst that includes, but is not limited to,
The Speculative risk ranking reflects exceptionally high financial
stocks covered by the analyst.
and/or operational risk, exceptionally low predictability of financial
Sector Underperform (SU) results, and exceptionally high stock volatility. The Director of
Research and the Supervisory Analyst jointly make the final
The stock is expected to underperform the average 12-month total
determination of the Speculative risk ranking.
return of the analyst’s coverage universe or an index identified by
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As of April 29, 2019, Scotiabank GBM discontinued the Focus
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Ratings Distribution
As of December 31, 2021
Companies Rated Investment Banking Service Provided
in Each Category in the Last 12 Months
Rating Count Percentage Count Percentage
Sector Outperform 287 51% 100 35%
Sector Perform 245 44% 64 26%
Sector Underperform 29 5% 1 3%
For the purposes of the ratings distribution disclosure FINRA requires members who use a ratings system with terms different than
“buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our Sector Outperform, Sector Perform, and Sector
Underperform ratings are based on the criteria above, but for this purpose could be equated to buy, neutral and sell ratings, respectively.


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Paper & Forest Products

Q4/21 Preview & 2022-2023 Commodity Prices Deck Update

Benoit Laprade, CPA, CA, CFA | Analyst

Salik Ansari, MFin, ERP | Associate

Exhibit 1 - Commodity Price Forecast Update (US$/unit)

Source: Random Lengths; RISI; FactSet; Scotiabank GBM Estimates.

Lumber (W.SPF, SYP)

Oriented Strand Board (OSB)

Source: Random Lengths; Scotiabank GBM Estimates.

Source: Fastmarkets RISI; Scotiabank GBM.

Lightweight Coated Paper (LWC)

Foreign Exchange Rates

Source: Scotiabank GBM Estimates.

Exhibit 6 - Changes to Company Adj. EPS Estimates

Source: Scotiabank GBM Estimates.

Exhibit 7 - Summary of Price Target, Rating, and Valuation Methodology Changes

Source: FactSet; Company Reports; Scotiabank GBM Estimates.

Source: Company Reports; FactSet; Scotiabank GBM Estimates.

Exhibit 9 - Comparable Company Analysis - Global Pulp

Source: FactSet; Company Reports; Scotiabank GBM Estimates.

Exhibit 10 - Comparable Company Analysis - Paper

Source: FactSet; Company Reports; Scotiabank GBM Estimates.

Source: FactSet; Company Reports; Scotiabank GBM Estimates.

Pertinent Data and Revisions

WY-N US$40.73 SP US$40.50 5.4%

Acadian Timber Corp. (ADN-T; C$18.67)

Canfor Pulp Products Inc. (CFX-T; C$6.19)

Resolute Forest Products Inc. (RFP-N; US$15.15)

West Fraser Timber Co. Ltd. (WFG-T; C$118.84)

Adj EBITDA (M)22E: US$2,763 Adj EBITDA (M)22E: US$1,963

Western Forest Products Inc. (WEF-T; C$2.15)

Appendix A: Important Disclosures

Company Disclosures (see legend below)*

Rating and Price Target History

Acadian Timber Corp. (ADN-T) as of January 10, 2022 (in CAD)

*Represents the value(s) that changed.

Source: Scotiabank GBM estimates; FactSet.

Canfor Corporation (CFP-T) as of January 10, 2022 (in CAD)

*Represents the value(s) that changed.

*Represents the value(s) that changed.

Cascades Inc. (CAS-T) as of January 10, 2022 (in CAD)

*Represents the value(s) that changed.

Interfor Corporation (IFP-T) as of January 10, 2022 (in CAD)

Rating: SO Rating: SO Rating: SO

*Represents the value(s) that changed.

KP Tissue Inc. (KPT-T) as of January 10, 2022 (in CAD)

*Represents the value(s) that changed.

Louisiana-Pacific Corporation (LPX-N) as of January 10, 2022 (in USD)

Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP Rating: SP

*Represents the value(s) that changed.

*Represents the value(s) that changed.

Stella-Jones Inc. (SJ-T) as of January 10, 2022 (in CAD)

*Represents the value(s) that changed.

*Represents the value(s) that changed.

10-02-2020 01-05-2021 02-19-2021 03-02-2021 04-27-2021 05-18-2021

*Represents the value(s) that changed.

Weyerhaeuser Company (WY-N) as of January 10, 2022 (in USD)

*Represents the value(s) that changed.

Definition of Scotiabank, Global Banking and Markets Equity Research Ratings

Sector Outperform (SO) Other Ratings

analyst. by the analyst.

Focus Stock (FS)

© The Bank of Nova Scotia 2022