QIN - Quintis [formerly TFC - TFS Corp] Sandalwood

[stolwyk]

June 2007 Presentation:
Page 11: Sandalwood oil: $A2200/kg!!!

http://sa.iguana2.com/cache/67c86648...TFC-365128.pdf

Vertical integration is very positive IMHO as it enables the wood to be used prior to normal maturity.

Hence, sandalwood oil is a very worthwhile addition to logs as it enables **earlier** cashflow:

14 June: http://sa.iguana2.com/cache/309b5f7d...TFC-365285.pdf
"Under the agreement, Albert Vieille will:
Conduct trials with TFS later this year to investigate bringing forward the processing of TFS’s Indian Sandalwood (santalum album) plantations, from the current projected initial harvest date of 2012".

Another big plus: Where else are ready-made irrigated lands on which to grow this wood? Plenty of water promotes fast growth.

At the moment, there are 179.1 mill shares with a SPP to come. Assume the sum total will be 186 mill shares after the SPP.
A profit of at least $A16.5 mill is forecasted for the current year:
http://sa.iguana2.com/cache/482e9653...TFC-367307.pdf

Let it be $17 mill. The **weighted** number of shares could be some 160 mill., thus the E/S will be about 10.6 cents.

Currrent price about 105 cents or prospective P/E: 9.9, a low number IMHO.

TFC has much to offer:
1. It soon will be the leading world producer due to heavy expansion and application of a favourable tax regime to tree investors.
2. The company itself owns a considerable area of land and trees, over 200 ha in 2006 with a deferred interest in another 200 ha. Total land in trees is 1200 ha. in 2007 E.
3. A staggering log price of over $A100,000 and a sandalwood oil price of $A2200/litre have been noted.

4. Excellent experienced Management.
5. The use of premium Indian sandalwood and high quality stock.
6. The stocked areas are irrigated, hence growth is speeded up.
7. Income from a number of sources, including repeated income from maintaining previously planted stock.
8. A relatively short rotation with logs being sold from 2012.

9. Vertical integration has been announced. This involves the production of oil from these trees, the advantage being that harvesting can occur earlier than 2012, hence producing additional cashflows, profits and dividends. Research is necessary.
10. An interim div of 0.9 cents was paid out. Based on expected increasing profits, a 2007 final div of 2.1 cents could be paid, making a total of 3 cents/share against 2.1 cents for 2006. Div reinvestman plan is in operation.
11. These combined positive factors ought to support the share price in a market correction, IMHO. Where else can one find a near monopoly market and premium products, underwritten by increasing profits and dividends.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

[stolwyk]

5 July 2007
INSTITUTIONAL PLACEMENT AND SHARE PURCHASE PLAN
The Directors of TFS Corporation Limited (TFS) are pleased to announce that TFS has successfully raised $15.3 million through an institutional share placement and intends to undertake a share purchase plan (SPP) for existing eligible shareholders to raise up to a further $5.0 million.

The funds from the placement and share purchase plan will be used to finance additional land purchases to expand the company’s land bank.
The placement of 17.0 million shares was undertaken at $0.90 to clients of Ord Minnett Limited. This price represents a discount of 2.37% to TFS’ 5 day volume weighted average price.

The record date for the SPP is Friday, 13 July 2007 and eligible shareholders (all those with registered addresses in Australia, and New Zealand) will be entitled to apply for a minimum of $1,000 up to a maximum of $5,000 worth of TFS shares at an issue price of $0.90 per share. Documentation for the SPP will be despatched to eligible shareholders shortly. The expected closing date for subscriptions is Thursday, 23 August 2007.

As announced on 14 June 2007, the company is experiencing strong interest in its santalum album oil and related Indian sandalwood products, given the long term sustainability and certainty of supply that TFS can offer.

This factor, combined with growing interest from investors in the company’s MIS products, provides TFS with the comfort to expand its land bank as appropriate opportunities arise, both in the Ord River Irrigation Area (ORIA) and other locations in north-western Western Australia and in the Northern Territory. The capital raising will facilitate this expansion.

In this regard TFS is pleased to advise that it has contracted to acquire 172 hectares of land in the ORIA. This purchase will bring the company’s total land bank to over 2,600 hectares.
For further information please contact:
Frank Wilson
Executive Chairman
TFS Corporation
+61 8 9221 9466
TFS

COMMENT: Landbank 2600 ha of which 1200 ha will be deemed to be planted up in 2007 (The company owns 200 ha as well as another deferred 200 ha: See previous posts.. The 2008 year, started on 1 July 2007 promises to be a good one IMHO.

[stolwyk]

Comparing apples with oranges.

That is the result when "ordinary" log prices are compared with sandalwood log prices, the latter at over $A100,000 per tonne.

In contrast, "ordinary" log prices are only a fraction of this; yet the same taxation advantages apply in both cases.

Hence, I consider the future sale of land blocks to grow sandalwood to be relatively easy to a captive investing public.

If I lived in Australia, I would certainly prefer a sandalwood block producing a high cashflow at a young age to a forest block with "ordinary" timber, say Radiata or Eucal.

Therefore, I expect excellent sandalwood land sales in the future with the overall control re growth and disposal of this wood by TFS and consequential repeated fees to be paid by tree block investors.

This company could grow into a reasonable sized entity and still own a large portion of the total planted area as well while paying good dividends at the same time.


There is some confusion about Sandalwoods.

TFC - TFS CORPORATION LIMITED plants only the vastly superior Indian Sandalwood and not the Australian variety which is worth only a fraction of the Indian wood.

If I lived in Australia, then I would buy say 0.5 ha from TFS, pay their management fees and use the tax deduction the Fed Govt allows: See this thread.

I would also buy the TFC shares which IMHO are dirt cheap at $1.10 and attend some of their annual meetings.

http://www.tfsltd.com.au/

Annual Announcement: End of Aug. Should be good, I think.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

[stolwyk]

Well positioned to regain the cents it lost.

Annual profit announcement in 3 weeks time (End of August):

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

[stolwyk]

Increases profit by 60%.


http://sa.iguana2.com/cache/fa8fa1e6...TFC-373426.pdf

Media: http://sa.iguana2.com/cache/87517023...TFC-373427.pdf

Extracts:
Increase in div to 3.4 cents for 2007 (+62%).

Extracts:
"Albert Vieille Collaboration Agreement
On 14 June 2007, TFS announced that it had concluded a Collaboration Agreement with Albert Vieille SA, a French-based essential oils and extracts company supplying the fine fragrance industry with a range of natural ingredients. Under this agreement, Albert Vieille will provide technical assistance to TFS in the establishment of a pilot processing and distillation facility at Kununurra, and will have the right to purchase 25% of the santalum album oil produced by TFS, up to a maximum of 10 tonnes per annum.

Albert Vieille is conducting trials with TFS on its trees, which will completed by the end of calendar 2007. These trials will assist in determining whether the current projected initial harvest date of 2012 can be brought forward".


“The outlook for the company is very positive, as we build on the strong performance of FY07 and capitalise on the initiatives undertaken during the year,” said Mr Wilson. “TFS remains well-placed to significantly increase its earnings over both the short and longer term, through the expansion of plantations, higher MIS sales and the progressive transformation into a vertically integrated producer.”

Reported earnings for FY08 will again be heavily skewed towards the second half of the year, when the bulk of new product sales are concluded. TFS’s current expectation is for total sales of at least 650 hectares, an increase of over 16% on FY07".

"Land Bank
On 3 November 2006, TFS announced the acquisition of Kingston Rest, a property situated 66 kilometres south of Kununurra, for $18.05 million. This property comprises a 3,000 hectare dam and 3,600 hectares of land, of which 2,400 hectares are suitable for Indian Sandalwood cultivation.

The acquisition materially increases TFS’s available land bank, which now stands at approximately 3,200 hectares and is sufficient to cover anticipated plantings through to 2011".