DJ Sandalwood Producer TFS Bulks Up Supply Deals -- Market Talk
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$1.66$1.62
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29 Feb 2016 08:25:45
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2125 GMT [Dow Jones] Sandalwood producer and distributor TFS Corp.'s (TFC.AU) new supply deals with Asian buyers appear to have made the business a far less risky proposition for investors, says Canaccord, which reiterates its buy call on the stock. News of the supply deals overshadowed TFS Corp.'s strong 1H result, which also pointed to 5-10% year-on-year growth in ebitda in FY16. That implies annual ebitda of between A$60.5 million to A$63.3 million, Canaccord says. The supply deals were agreed to at prices broadly equivalent to US$4,500/kg oil (A$6,250/kg). While not disclosed, Canaccord believes the Chinese counter-party is a large established timber manufacturer. "We expect this to yield A$130 million to shareholders (at more than 90% gross profit margins) and consider the announcement a materially de-risking event for the business and our investment thesis," says Canaccord. TFS Corp. last traded at A$1.65, well below Canaccord's A$3.24/share price target on the stock. ([email protected]; @dwinningWSJ) (END) Dow Jones Newswires February 28, 2016 16:25 ET (21:25 GMT)
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TFC Price at posting:
$1.65 Sentiment: Buy Disclosure: Held
