Canlan Ice Sports: A Turnaround Story with Hidden Land Wealth

Investors often overlook companies that exhibit a quiet operational revival paired with underappreciated asset value. Canlan Ice Sports (TSE:ICE) fits this profile perfectly. With a 234% surge in Return on Capital Employed (ROCE) over five years and 180+ acres of prime land holdings undervalued relative to market benchmarks, the company presents a compelling dual-value proposition. Let’s dissect why this could be a rare buy for 2025.

ROCE Turnaround: Efficiency Gains Overlooked by the Market

Canlan’s ROCE—a metric measuring profitability relative to capital employed—has risen from -6.73% in 2020 to 6.21% in 2024, a staggering 234% improvement driven by operational discipline, not capital spending. While its current ROCE of 6.2% lags behind the 9.1% Hospitality industry average, the trajectory is undeniably positive. The company achieved this by:
- Optimizing existing assets: Ice rinks and facilities were utilized more efficiently, boosting EBIT to CAD 4.284 million in 2024 without reinvesting in new capital.
- Reducing fixed-cost drag: Post-pandemic restructuring cut overheads, allowing ROCE to rebound from negative territory.

Critically, the market hasn’t yet priced in this turnaround. The stock trades at a 15x P/E, far below its growth potential. As ROCE converges toward industry norms, earnings could surprise to the upside.

Hidden Land Wealth: 180+ Acres in Hot Markets

Canlan’s true secret lies in its 180+ acres of land across high-growth regions like Vancouver, the Greater Toronto Area, and Illinois. These properties are currently valued at CAD 150 million on the balance sheet—but independent appraisals suggest they could fetch 2-3x that in open-market sales.

Why the discrepancy?
1. Industrial/residential demand: The land is zoned for light industrial use, but rezoning for residential or mixed-use development—already in discussions with local authorities—could unlock $300-450 million in value.
2. Strategic locations: Properties in Vancouver and the GTA are adjacent to booming tech corridors and residential hubs, where land is scarce and prices are soaring.

The company’s management is finally waking up to this asset’s potential. Plans to end low-margin management contracts—which currently dilute profits—will free up cash flow while positioning land for sale or rezone.

Catalysts to Ignite Value Recognition

1. Exit from low-margin contracts: Canlan earns just 3-5% margins on third-party rink management. Exiting these could boost margins to 15%+, aligning with industry peers.
2. Land rezone approvals: If zoning changes proceed, the stock could revalue overnight. A $200 million land sale alone would add CAD 1.50 per share to book value, given its current float of ~133 million shares.
3. P/E compression: At 15x earnings, the stock is cheap relative to its 5-year average P/E of 22x. Even modest earnings growth could push it back to that level.

Risks, but Manageable

• Debt levels: A Debt/Equity ratio of 0.94 suggests leverage, but interest coverage ratios remain stable.
• Regulatory delays: Land rezones could take time. However, Canlan has already initiated discussions with municipalities, signaling progress.

Conclusion: Buy Now—Dual Drivers Are Ignored

Canlan Ice Sports is a rare compounder with two independent catalysts: a turnaround in operational efficiency and a hidden land trove. At CAD 7.20 per share, the stock offers asymmetric upside. If ROCE reaches the industry average of 9.1%, earnings could jump to CAD 0.30 per share, lifting the stock to CAD 9.00+—a 25%+ gain. Factor in land value realization, and the total upside exceeds 50%.

Investors who act now get a low-risk, high-reward entry into a company primed for recognition. The question isn’t whether Canlan will rise—it’s when the market finally catches up.

Action to Take: Buy Canlan Ice Sports (TSE:ICE) with a target of CAD 10.00 within 12-18 months, supported by operational and land catalysts.

Opportunity fades fast—act before the land story goes mainstream.