Thursday, August 31, 2006

TFS Corporation Recommendation

One stock I have recently purchased is TFS Corporation.

Company Overview

TFS Corporation Ltd (TFS) is the parent company of the TFS Group, a participant in the Management Investment Scheme (MIS) sector. The Company is an Indian Sandalwood plantation with in excess of 500 hectares located in the Ord River Irrigation Area (ORIA) in northern Western Australia. The TFS nursery has the capacity to raise Indian Sandalwood and host seedlings to plant an area of 125 hectares per annum. The Company has four subsidiaries. TFS Properties Ltd owns the land for the plantations. Tropical Forestry Services Ltd is the responsible entity for the East Kimberley Sandalwood Project 1 and is the project manager for all MIS projects since their inception. Arwon Finance Pty Ltd provides finance for approved applicants in all the MIS projects. TFS Leasing Pty Ltd leases the land to growers that it has leased from TFS Properties Ltd.


They have had some sensational results recently and the latest full year results are as good as anything. They are at a very low PE of approx 5 and will be paying a 1.4c dividend which works out to be approx 3.5% yeild fully franked.

The chart of the stock is trending sideways and it is currently at the bottom of these sideways movment. I am looking for a 10% - 30% increase in the share price in the next few months.

I like this company as they have a prodct which has supply restricted. They will not be hurt by the over production of wood chips as they are in a specialised niche of the industry.

There are a few risks such as weather and no proven track record but the numbers are stacking up and it is better to be in early on this than to miss the boat. This is a good long term stock regardless of how you look at it. There is major upside and the share price is currently depressed due to a few political issues.

I bought in at 39c but would have been happy to pay up to 40c.

Good Luck

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