Essentials

TFC stands for Tropical Forestry Services. It was founded in 1997 and listed on ASX in December 2004. The company has steadily garnered over 30 years of forestry knowledge and skills to create, manage and partly own the largest area of Indian Sandalwood plantations in the world.

Read our full report:

TFS Corporation Limited (TFC) - 26 march 2013 - RussellResearch.pdf

Half-year Performance & Estimates - TFC

Year-end June	1H12A	FY12A	1H13A	FY13A	1H14A	FY14E	FY15E
Sales, $m	44.5	98.5	27.4	118.8	34.8	129.0	134.0
EBITDA, $m	18.6	34.4	13.7	46.4	15.2	53.8	56.2
EBIT, $m	16.4	29.6	11.5	40.3	12.0	46.3	47.9
Report NPAT, $m	6.0	10.2	4.9	5.3	3.2
Adj. NPAT, $m					3.2	21.0	22.9
Reported EPS, ¢	2.00	3.00	2.00	2.00	1.00
Adjusted EPS, ¢					1.00	6.85	6.60
EPS %FY/Growth	67%		100%	-33%	-50%	243%	-4%
Dividend, ¢	0	0	0	3.0	0	3.00	2.95
Franking, %	-	-	-	100%	-	100%	100%
EBITDA Margin	0	35%	50%	39%	44%	41.7%	41.9%
NPAT Margin	0	10%	18%	4%	9%	16.3%	17.1%
ROE, %	0	4%	2%	2%	1%
EBIT/Interest	0.0	3.2	2.4	3.7	1.6
Net Debt / Equity	0	0.34	0.34	0.33	0.39
CashFlow/Sh, ¢	-11.9	-21.8	1.1	7.8	1.5	6.4	7.7
Y/E Shares, m	279.7	279.7	279.7	279.7	282.2

Notes

Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns except the first half years which show their percentage of full year EPS. In a handful of cases, unadjusted share splits, or changes between positive and negative values, may give strange changes in ratios.

Recent News Highlights

Russell Research in the media

Stock Picks for The Bull.com.au -  29 July 2013

BUY TFS Corporation (TFC)

From its Ord River base in WA, TFS has created, manages and partly owns the largest area of Indian sandalwood plantations in the world. It produces sandalwood oil valued for its fragrance and medicinal use. As Indian sources diminish rapidly, timber and oil prices continue to rise, giving TFS major growth prospects. Consider investing now, as results and an initial harvest reduce risk margin and build profits.

Wave Chart

Company Overview

TFC is vertically integrated, from nurseries, planting and maintenance to managing cropping and processing timber into Sandalwood oil. This is guided by extensive in-house research and conservative financing from internal, Managed Investment Schemes (MIS) and large global investors.

Sandalwood is special: Valued for its fragrance, medicinal and spiritual uses for millennia, Indian Sandalwood sources are rapidly diminishing. Alternative sources are few and inferior. The Western Australian government initiated some planting in the Ord River Irrigation Area about 1982. Since 1999 this has been progressively developed and extended by TFC with significant improvements in genetics, survival and yield. Planted areas have risen five-fold, to over 6,500ha. The acquisition and improvement of a processing facility has given TFC full control of quality oil production.

TFC survived the demise of several timber companies from other MIS schemes that did not deliver value to Growers. It was (and will continue to be) underpinned by the rising price of Sandalwood in contrast to pulp prices, but it also ensured that each scheme's sales funded their planting and growth, while funding its own growth conservatively from capital raisings. Post the MIS collapse, TFC paid off debt with new capital and sought wholesale funding globally ? a success that now provides strong growth despite TFC also rebuilding its name in MIS based on strong investment fundamentals.

TFC has expanded its plantation footing from WA into NT and Queensland. It is now preparing for its first harvest, in the last quarter of 2013. We expect this to confirm its research findings as to yield, quality and costs. If sale prices of the oil achieve the prices TFC expects, its FY14 profits should swell and MIS Growers will be well rewarded. That should set TFC up for continuing strong growth and yield in the years ahead as it builds and harvests its own plantations and adds even more value to those it manages for its many MIS and its international wholesale investor clients globally.