turnaround

On the company website www.sterlingbiofuels.com there is a research report by BBY on Sterling which includes a comparison with other biodiesel producers/hopefuls. SBI is a standout buy on their figures on a multiple of 2.0X 2009 estimates. SBI forecast looks similar to prospectus estimates (and similarly MBT) but the estimates look conservative for ARW and ABJ. In the short term the SBI price has reflected the falling oil price and biodiesel production problems in Australia (and producer problems elsewhere including disastrous hedging in the UK). In the medium term cash flow generation will sort out respective values which will commence for SBI and MBT in mid-2007. It's easier to be optimistic when the plant is not yet operational (and teething problems have not yet appeared) but enough plants are operational globally to state that operational/production risk should not be a major factor. See also the chairman's address for MBT at www.missionbiofuels.com.au. in which he reveals that a saving of one month in construction timetable will add $3m of cash flow. Similar optimism ar ARW has seen an immediate share price turnaround on good volume.
Share prices in the sector may reflect current problems at ABJ and ARW but the solution of those problems will provide a reward for all companies in the sector.

I hold ABJ, ARW and SBI and expect spectacular returns by 2008.