::The Center for Paper Business and Industry Studies::

060616 Deutsche Bank Report - Dr. Paper's Weekly Wrap up

Deutsche Bank - Equity Research

Pulp & paper price hikes? ABY announced a $40/ton August 1st
newsprint price hike. WY joined Fraser in announcing $20/mton NBSK
July price hikes for NA. WY proposed a similar hike for Europe.
June's white paper hike is taking hold.

Recycled boxboard & folding carton markets could be turning. Moves
by Cascades & others could remove over 400K/tons of coated boxboard
capacity. Texas Pacific's acquisition of 2 leading carton producers
could trigger more FC rationalization.

Making his luck @ Bowater? Dave Patterson appears to have already
made some crucial decisions: (1) sell Korean newsprint mill, (2)
defer $200MM Thunder Bay project, (3) continue land sales effort,
(4) fresh focus on mill productivity.

WY boosted its dividend by 20%. Share repurchase activity is likely
once the white paper sale is completed.

060616 Deutsche Bank Report - Montreal Investor Tour

Deutsche Bank - Equity Research

Notes from Montreal trip
Deutsche Bank's paper & packaging team recently hosted its annual
Montreal Investor trip. We met with a variety of both public and
private companies. Among the public companies that we met with were
Abitibi, Bowater, Cascades, Catalyst and Domtar. Summary thoughts
from those meetings are listed below. Among our key take-away
thoughts:

Abitibi
Abitibi's senior management highlighted the firm's improved free
cash flow figures over the past two years. Despite higher input &
transportation costs, Abitibi has driven down C$-based unit costs in
both newsprint and commercial printing papers. Further gains are
likely. Pricing and volume? Abitibi has recently announced a
$40/mton hike for newsprint on August 1. The company also pointed
to several recent pricing initiatives in printing papers.

Bowater
Under new CEO, David Patterson, Bowater will focus on reducing debt
by at least $600MM by the end of 2007. This process will be aided
by better-than-expected land sale proceeds as well as the probable
sale of a Korean newsprint mill and the decision to defer a $200MM
coated paper conversion at Thunder Bay. We're encouraged by
Patterson's initiatives.

Catalyst
More changes (both consolidation & rationalization) appear
inevitable across the industry. While focusing most of his
attention on internal efforts, Catalyst CEO, Russ Horner, argued
that there was a need for more consolidation in the West Coast
newsprint industry as well as across the entire Canadian forest
products sector.

Cascades
Cascades is shedding noncore operations and focusing its portfolio
on packaging & tissue. We expect more changes over the next 6-12
months. Recent & prospective closures by Cascades and its
competitors could result in the elimination of 400,000/tons of
coated boxboard capacity (10+% of the industry). Discussions appear
to have occurred around the future of its Norampac joint-venture
with Domtar. Depending on the structure, Domtar's participation in
white paper consolidation could trigger changes in ownership at
Norampac.

Domtar
Domtar is tightly focused on improving its core asset: the white
paper operations. We believe that they remain keenly interested in
participating in industry consolidation & rationalization. CEO
Raymond Royer suggested that majority control was not a prerequisite
for Domtar's participation in any deal.

060616 Deutsche Bank Report - Weyerhaeuser announces 20% dividend hike

Deutsche Bank - Equity Research

Weyerhaeuser {Ticker: WY.N, Closing Price: USD 59.53, Target Price: USD
72.00, Recommendation: Buy}.

For the second straight year, WY announced an increase in its
regular quarterly dividend. As of 3Q, the dividend will be boosted
from $0.50/share to $0.60/share. This will boost WY's dividend
yield from 3.4% to 4.0%, second highest in our group to PKG,
excluding the timber REITs. While not unexpected, this is positive
on the margin as it indicates management confidence in continued
strong cash flows. If, as expected, the white paper business is
sold this summer, the company may also consider a share buyback
program.

Going forward, the big issue for WY will be its cumulative exposure
to interest-rate sensitive businesses like wood products, timber,
and real estate. In 2005, those three businesses accounted for 59%
of revenues and 88% of operating income. Wood products prices are
off sharply in the last several weeks, and this is already leading
to weaker timber prices, at least in the Pacific Northwest. Real
estate sales are also slowing. The big question remains how much
further these businesses decline.

060616 Deutsche Bank Report - What is Temple-Inlands real estate business worth?

Deutsche Bank - Equity Research

Temple-Inland {Ticker: TIN.N, Closing Price: USD 40.82, Target Price: USD
55.00, Recommendation: Buy}.

* New asset valuation of TIN's real estate assets

We recently suggested that our old asset valuation of TIN's real
estate assets was possibly $500-600MM too low. This note fleshes out
our thoughts about what TIN's real estate assets are really worth.
As detailed inside, we now think that the asset value is about
$1.74B, compared to our previous estimate of $1.22B.

* The key assumptions are about the values of developed land

For HBU land, we continue to assume just $6K/acre. For land which is
developed or under development, we assume $36K/acre for residential
lots and $108K/acre for commercial land. For land which is entitled
but not under development, we assume $18K/acre for residential and
$54K/acre for commercial.

* We may still be too cautious

In 1Q06, TIN sold 1,061 residential lots with average revenue per
lot of $48K. Even if we assume lot density of just 2/acre, average
revenue/acre was $96K - 2.7x our estimate. In San Antonio, we toured
a development where lots were selling for $45K-$65K with a density
of about 3/acre, implying value of $165K/acre.

* Valuation/risk

Our $55 price target represents premiums to group averages along
some operating metrics. For example, on an EV/EBITDA basis, our
target represents 7.7x our '07 estimate, compared to the group
median of 6.5x. However, we think the premiums are justified by
TIN's high asset value, as well as potential further cost cuts in
their corrugated packaging business. Risks include a slowdown in the
economy, a reversal in the decline of the US dollar, capacity growth
abroad, and higher energy costs.