Looking good!We have retained our Buy recommendation, earnings...

Looking good!

We have retained our Buy recommendation, earnings forecasts and $1.50 valuation.

http://tfsltd.com.au/library/file/research-reports/Bell%20Potter_051110.pdf

We believe there are a number of events over upcoming months that may provide for the potential re-rating of the stock.

Three key events include:

Settlement of outstanding institutional sales - Settlements remain important to validate
both the cash conversion of sales as well as the shift in business model away from Managed Investment Scheme (MIS) sales. We would note that 73% of cash revenues in
FY10 were generated outside of MIS. We understand that at least $70m is due to be received in FY11, of which $10m has been received in upfront payments. Receipt of
these funds will be a strong endorsement of the new model.

Western Australia sandalwood processing trial - The Western Australia government has harvested 130 Indian Sandalwood trees that were planted in the Kununurra region 20 years ago. TFC is processing the harvest at its Mount Romance facility in Albany, testing for the quality and quantity of oil and wood produced on trees grown in the region, on a commercial basis. Successful results are expected to validate the quality and quantity
of Indian Sandalwood grown in Kununurra.

Pending phase III FDA Indian Sandalwood trial - TFC has established a conditional supply agreement with ViroXis, a Texas based pharmaceutical company. ViroXis has completed
phase II of US Food & Drug Administration (FDA) trials on a treatment for viral skin infections using Indian Sandalwood oil. A successful Phase III human trial may open
other potential applications for Indian Sandalwood oil, which may assist pricing support for Australian grown Indian Sandalwood oil. 10% EPS growth underpinned by institutional sales pipeline These key events remain important for sentiment as they are likely to remove some
uncertainty as to the quality and quantity of Indian Sandalwood oil and wood products
from TFCs plantations.

Bring on news and re rating!

SD