price target 1.00

summary from broker this am. :

ARW : TARGET $1.00

New Contract: ARW has secured a contract covering up to 8mlpa of biodiesel with Piacentini & Son, a WA based haulage and earth moving group. The product will be blended to a B20 level. Production from the group’s Picton plant has been constrained by slow take up from customers. Under guidance of new (WA) management we see this rapidly changes and as flagged by the company further contracts are expected over the near term. Picton capacity is expected to reach 45mlpa over the coming 12 months. We believe ramp up will be dictated by the time line of customers who do need to fit some off loading facilities. This is unlike the Adelaide plant where we expect the plant to ramp up to close to full capacity over the coming months as it completes its recent capital enhancement program that will enable it to produce from a high tallow field stock year round.
Currently no change to forecasts or expectations. We continue to rate ARW a speculative buy for investor seeking exposure to the renewable fuels sector. A key near term risk would comprise oil price weakness (although not forecast) at a time when ARW is still increasing plant utilisation and bedding down medium term feed stock requirements. These two items will assist in growing margin over the coming 6 months to a point where we believe ARW will remains cash flow robust down to a sub US$40/bbl oil price.

dyor