Hi there,Looks like brokers are intelligent enough to see...

Hi there,

Looks like brokers are intelligent enough to see through the 'cash flow timing issue' with TFC preparing land before institutional plantings coming June 2010.

Morgan expect TFC to continue to hold up well in a market that has seen many of its peers suffer. We believe there are numerous reasons for this. 1) TFCs balance sheet
remains strong providing the company with opportunities for acquisition and land sourcing, 2) market share has increased considerably on the back of key competitors
'exiting' the market, 3) TFC continues to attract significant wholesale demand which will reduce dependence on MIS sales and 4) TFC's product has an attractive real rate of return on its product, clearly placing it at the upper echelon of both MIS and wholesale product offerings. We remain Overweight

Highlights: (for ***SDE****)

- Guidance implies solid second half
- Wholesale. Of most relevance, payment for the initial sale of 350Ha (Beyond Carbon product) is on track to be received by April 2010. A further sale of 500Ha is also set to be achieved by June FY10. Importantly, future wholesale sales are to be on shorter payment terms. We view the success of this wholesale initiative as being fundamental to the potential positive re-rating of the stock as it diversifies away from the more volatile (and controversial) retail MIS market.
- Operating cash outflow was $26.7 million, driven by $44.8 million of payments to suppliers. TFC management specifies that this was largely due to the preparation of the Kingston Rest estate which now has approximately 1,400Ha of land ready for planting. Gearing (ND/ND+E) remains at a comfortable 17%. Management is targeting a
zero net debt position by the end of FY10
Management guidance is for NPAT growth of 10%+ over FY09.
- We like TFCs long term fundamentals and believe, at an FY10E P/E of 6x, it represents good value.

- We remain Overweight.

http://tfsltd.com.au/shareholders/research-reports/

SD