Comments on: M2 Telecommunications Analysis and Valuation http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/ Fusing Fundamental and Technical Analysis with lashings of Behavioural Finance. Investing in Australia and North America. Thu, 02 Feb 2012 06:57:27 +0000 hourly 1 http://wordpress.org/?v=3.2 By: Chris Kebbell http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/comment-page-1/#comment-1207 Chris Kebbell Wed, 23 Sep 2009 19:27:33 +0000 http://www.fusioninvesting.com/?p=3432#comment-1207 And one more last thing.... The whole reason TFS / TFC is such a great opportunity is for the reasons you have actually mentioned! Most in the market are coming to quick conclusions, and concluding the picture in light of the MIS mess, Great Southern etc. That's is why the market is pricing them at PE of 5 - 6. And exactly why you need to look further as one day the market will wake up :-)and understand what is a great business. And one more last thing….

The whole reason TFS / TFC is such a great opportunity is for the reasons you have actually mentioned! Most in the market are coming to quick conclusions, and concluding the picture in light of the MIS mess, Great Southern etc. That’s is why the market is pricing them at PE of 5 – 6. And exactly why you need to look further as one day the market will wake up :-) and understand what is a great business.

]]> By: Chris Kebbell http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/comment-page-1/#comment-1206 Chris Kebbell Wed, 23 Sep 2009 18:44:15 +0000 http://www.fusioninvesting.com/?p=3432#comment-1206 Sorry one more thing....don't let your views of Great Southern etc cloud your analysis. A quick look over TFS / TFC info will not give you a full understanding of what they are and "allow you to see the sandalwood oil through the reest" Quote from the broker reports in May. All reports: http://tfsltd.com.au/shareholders/research-reports/ Ordminett: "They say the cream rises to the top, and so it shall be with TFC as major competitors collapse under the weight of flaws in their business and funding model being exposed. In the eye of the storm OML expects TFC to succees through their conservative balance sheet, high margin products, strategic positioning and wise management" NPV " 2.81 AUD" Sorry one more thing….don’t let your views of Great Southern etc cloud your analysis. A quick look over TFS / TFC info will not give you a full understanding of what they are and “allow you to see the sandalwood oil through the reest”

Quote from the broker reports in May.

All reports:
http://tfsltd.com.au/shareholders/research-reports/

Ordminett:
“They say the cream rises to the top, and so it shall be with TFC as major competitors collapse under the weight of flaws in their business and funding model being exposed. In the eye of the storm OML expects TFC to succees through their conservative balance sheet, high margin products, strategic positioning and wise management”

NPV ” 2.81 AUD”

]]> By: Chris Kebbell http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/comment-page-1/#comment-1205 Chris Kebbell Wed, 23 Sep 2009 18:35:06 +0000 http://www.fusioninvesting.com/?p=3432#comment-1205 My advice on TFC....you need to fully understand the business model and look into the numbers carefully. TFC is poles apart from the likes of great southern etc. They are also moving quickly away from the MIS investment model (although some reliance will remian) and to institutional placements. It is also not a business about growing trees and harvesting logs and getting fees for this. Growing trees is the early part of the business plan. Its about becoming a global supplier of high value sandalwood products - vertical integration. Oils sells at 2.4 mi US / tonne...and they are looking at moving into e.g. pan mouthwash market for the middle east (but one example)... Have a look at some of the broker reports on www.tfsltd.com.au My advice is don't discount TFC until you have had a good look.... Some of the cash issues are related to their dependance on e.g. MIS sales at present (leading up to June), while at other times of the year they may be in growth acquisition mode e.g. buying new land or recently Mount Romance (processor of Australian Sandalwood)...timing issues. Dean - if you have an email i can discuss further off line for your research... My advice on TFC….you need to fully understand the business model and look into the numbers carefully. TFC is poles apart from the likes of great southern etc. They are also moving quickly away from the MIS investment model (although some reliance will remian) and to institutional placements. It is also not a business about growing trees and harvesting logs and getting fees for this. Growing trees is the early part of the business plan. Its about becoming a global supplier of high value sandalwood products – vertical integration. Oils sells at 2.4 mi US / tonne…and they are looking at moving into e.g. pan mouthwash market for the middle east (but one example)…

Have a look at some of the broker reports on http://www.tfsltd.com.au

My advice is don’t discount TFC until you have had a good look….

Some of the cash issues are related to their dependance on e.g. MIS sales at present (leading up to June), while at other times of the year they may be in growth acquisition mode e.g. buying new land or recently Mount Romance (processor of Australian Sandalwood)…timing issues.

Dean – if you have an email i can discuss further off line for your research…

]]> By: Peter http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/comment-page-1/#comment-1203 Peter Wed, 23 Sep 2009 00:32:27 +0000 http://www.fusioninvesting.com/?p=3432#comment-1203 The problem with the previous Timbercorp was that they recognised revenue upfront, and it all gets dumped into receivables from MIS investors. Therefore there is a cashflow lag. Which is okay by itself. What is not okay is that the company kept paying dividends, even though its borrowings are not even sufficient for capex. So the company borrowing short and lending long. Which is still okay, except that the lending are all reflected as loans to either investors or growers. So guess what happens in a downturn when loans are not repaid, and the bankers come howling?? So whenever I see cashflow lagging profits, and yet dividends are still being paid, I steer clear. The problem with the previous Timbercorp was that they recognised revenue upfront, and it all gets dumped into receivables from MIS investors. Therefore there is a cashflow lag. Which is okay by itself. What is not okay is that the company kept paying dividends, even though its borrowings are not even sufficient for capex. So the company borrowing short and lending long. Which is still okay, except that the lending are all reflected as loans to either investors or growers. So guess what happens in a downturn when loans are not repaid, and the bankers come howling??

So whenever I see cashflow lagging profits, and yet dividends are still being paid, I steer clear.

]]> By: Dean Morel http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/comment-page-1/#comment-1200 Dean Morel Tue, 22 Sep 2009 07:47:15 +0000 http://www.fusioninvesting.com/?p=3432#comment-1200 There could be opportunity in the sector, like Peter my instant reaction was no way. Having thought I was oh so clever avoiding GTP shares and schemes and warning friends off them, I'm still reeling from my stupidity at buying the TREES debt. Yes, there's a small chance GTP TREES will end OK and I have learnt a lot about administration and receivership, but it wasn't worth the admittance fee. The yearly statement <a href="http://asx.com.au/asxpdf/20090820/pdf/31k5yjpvz2k6wf.pdf" rel="nofollow">http://asx.com.au/asxpdf/20090820/pdf/31k5yjpvz2k6wf.pdf </a> shows some promise, like the low P/E, but there's a number of entries I'd need to read the notes on. Increase in cash of $22M after borrowing of $33M doesn't look great. Growers $29M? There could be opportunity in the sector, like Peter my instant reaction was no way. Having thought I was oh so clever avoiding GTP shares and schemes and warning friends off them, I’m still reeling from my stupidity at buying the TREES debt. Yes, there’s a small chance GTP TREES will end OK and I have learnt a lot about administration and receivership, but it wasn’t worth the admittance fee.
The yearly statement http://asx.com.au/asxpdf/20090820/pdf/31k5yjpvz2k6wf.pdf shows some promise, like the low P/E, but there’s a number of entries I’d need to read the notes on. Increase in cash of $22M after borrowing of $33M doesn’t look great. Growers $29M?

]]> By: Peter http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/comment-page-1/#comment-1199 Peter Tue, 22 Sep 2009 01:38:29 +0000 http://www.fusioninvesting.com/?p=3432#comment-1199 Just had a quick look at TFC. First thing that comes to my mind is Timbercorp and Great Southern, but I should keep an open mind, so had a quick look. Impressive looking NPAT increases, lots of big CAP announcements. Had a look at the last half-yearly, and yup, profit and loss shows profit, but cash-flow statement shows negative cashflow. And yet, the company pays a dividend (as Rove would say: "what the???"). Yuckity yuck. Good luck. Just had a quick look at TFC. First thing that comes to my mind is Timbercorp and Great Southern, but I should keep an open mind, so had a quick look. Impressive looking NPAT increases, lots of big CAP announcements. Had a look at the last half-yearly, and yup, profit and loss shows profit, but cash-flow statement shows negative cashflow. And yet, the company pays a dividend (as Rove would say: “what the???”).

Yuckity yuck. Good luck.

]]> By: Dean Morel http://www.fusioninvesting.com/2009/09/m2-telecommunications-analysis-and-valuation/comment-page-1/#comment-1196 Dean Morel Mon, 21 Sep 2009 10:14:45 +0000 http://www.fusioninvesting.com/?p=3432#comment-1196 Thanks Chris, I'll add TFC to my work list. Thanks Chris, I’ll add TFC to my work list.

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