Thanks for the feedback, mystikiel. I am glad my posts and those of others helped you to avoid an unnecessary loss-making sale.
The results last week, and the associated product sales deals, confirms my views that TFC is undervalued and has one of the best business models (looking forward) around. TFC has proven it can sell all it produces without suffering any price drop. Cannacord predicts that market balance (demand) will steadily rise from around 30,000 tonnes of heartwood to around 50,000 tonnes within 10 years, while TFC will have a monopoly supply of up to 5,500 tonnes in 10 years. That is around 11% of predicted demand, and will ensure that TFC is in a very strong bargaining position in any negotiations with future new buyers. The past average annual price rise of around 15% should continue.
According to Cannacord, TFC's asset based is worth around $3B if the current oil price is used, rather than the $2B based on the much lower oil price currently used for valuation. A $1B undervaluation?
The deals also confirm Cannacord's prediction that cash EBITDA next FY will be over $90M, compared to just over $60M this FY. Plus all the non-cash additions to NPAT of course (forest revaluations etc). This cash can increasingly be used to buy back more forest from early MIS investors, without tapping the debt market. TFC has the scale, cash flow and the profitability to command respect and signal to the shorters that they are better off looking elsewhere. If they do not, and succeed in driving the price down again, I will be looking to boost my holding at a bargain price.
TFC Price at posting:
$1.65 Sentiment: Buy Disclosure: Held
