wiseowl valuation $2.73 12mtn target $1.58!

Hi team,

Keep your head, don't listen to the knockers or your uninformed emotions. The market is dumb, wise and patient investors will be rewarded big time IMO :-)

Time running out to pick up more shares in this airship - not sinking ship!

SD

https://www.wise-owl.com/images/user/TFC%20Update%20HY10.pdf

- As the basic fundamentals of the company remain unchanged, we see a compelling investment case at current prices. Taking into account both the MIS and Beyond Carbon sales for this year, management are expecting earnings growth of 10% compared to FY09. The only issue overhanging the stock is the timing of the cash flows from Beyond Carbon and how much will be accounted for this year into
their FY results. Management remain quietly optimistic on hitting their targets for FY10.
We share their confidence, and have also factored in a 10% increase in earnings per share into our valuation. Our valuation remains at $2.73 with our 12 month target set out in August 09 also remaining at $1.58 based on an earnings multiple of 7 times/ Valuation provides significant upside at current prices. TFC remains an
attractive investment case considering its strong balance sheet, superior product compared to its peers, and the global take up of Beyond Carbon.
- A dividend of 1.25 cents has been declared by management.
Considering the financial environment and the negative sentiment in the forestry industry, the dividend policy reflects the financial strength of TFC

- Bye Bye MIS. Successful take up of Beyond Carbon proves TFC will be non-reliant on MIS and possess sustainable non MIS channels. This alone should re-rate the stock with TFC free from the shackles of MIS
- A clear signal of TFCs operational ramp up in preparation for 2H2010 has been the 22% increase in operating costs to $18.5m in its most recent half. Labour and forestry costs accounted for the bulk of the
increase, as the company prepares a larger plantation area. As more trees are planted and its land bank increases, associated costs are expected to rise.
- Quiet achiever. TFS Corporation (TFC) in readiness for an exciting second half.
- Global hunger for sandalwood increases. Agreement with US
pharmaceutical developer, Viroxis could open doors to the extremely lucrative pharmaceutical industry
- Australian sandalwood domination. New revenue stream in the MIS sector to come online through the offer of Australian Sandalwood to investors. This will allow TFC to gain and dominate a significant market share in both species
- The success of Beyond Carbon and the related cash inflow should provide investors with the confidence that the product is real withgenuine interest from overseas institutions. Beyond Carbon will not only
provide TFC with secure earnings and cash flow but more importantly,
prove that TFCs future business model can succeed without the need
for MIS, an area that is still reeling from the Great Southern and
Timbercorp fallout.
The cash flow soon to hit TFC should serve as a timely reminder for investors who may have questioned the companys future beyond MIS. Beyond Carbon is beneficial in a number of ways such as diversification of revenues, superior early cash flow and the ability to establish greater transparency for the developing secondary market.