Thanks John and others. Agree the production side looks good with promising silviculture outcomes, monopoly characteristics and the usual asset reversion and fee benefits of the MIS structure. And agree that supply can potentially generate it's own demand as per scandium and graphene - transport infrastructure provides other examples. The difficulty I had, similar to that for modelling commodity stocks, is that virtually all research I sourced on this company used price as an assumption - the analysis was essentially supply-side driven. Some was actually quite sound and detailed. However I find most broker reports to be flawed somewhere along the line if you look hard enough - but in fairness there are so many dynamic parts to stock analysis that nobody cannot help but overlook some key piece of information or use a flakey assumption. Hence different views are important. I also sourced some consultancy reports on oil demand which I found to be rather thin once you moved beyond the executive summaries.
On investigating the price built into broker models I discovered it pertained to a company announcement of a low-volume, highly contingent, related-party transaction. The web is invaluable for examining company and ownership structures and it is often worth the time to background a company's customers. I also did some work around the pricing of similar products in response to supply increases and resultant changes in willingness to pay and also considered the volume of oil used in the various products - for some it was very small. I concluded the business case was too reliant on an uncertain future oil price, particularly given the huge forward timber supply being turbo charged by genetic and silviculture gains. As I said, this was a few years back and I haven't revisited the stock (I am only commenting as John asked for views and I value his contribution, particularly around mining and gold stocks - thanks for the regime change at Beadell) however I note the share price has subsequently declined. I also readily acknowledge that companies and their business environments are constantly evolving and future product pricing price may very well have reduced. If the price ten plus years out could be guaranteed this would be a no-brainer. Best of luck to all. I offer these comments in good spirit and in the interests of contributing to informed debate. It is the diverse views and competing analytical techniques that make the market both lucrative and dangerous!
TFC Price at posting:
$1.54 Sentiment: None Disclosure: Not Held
