Yes - there are lots of uncertainties here and I guess that they will remain until they are either borne out or overcome by TFC. That's the risks of investing in an industry pioneer.
The pricing and demand side ability to absorb a large supply wave in c. 5 years time is critical to TFC's success and something we will only get incremental visibility on over time - e.g. new supply deals, results from Phase II and III clinical studies etc.
To reference a previous hurdle that TFC has had to overcome, there was lots of discussion on HC some years ago about whether the Indian Sandalwood grown by TFC would contain enough heartwood and oil when compared to the wild grown analogues. This was a genuine concern at the time, but it would seem that at 19.6kg heartwood and 3.7% oil content (average) for TFC trees this concern may be able to be dismissed by investors. Hopefully the pricing and demand can be too, in due course.
I agree with Emde that this is a slow burn investment and will not be a ball-tearer in the ST, but instead it should be a good one to accumulate on weakness in anticipation of some large 'awakening' from investors some years down the track when harvests materially increase and (hopefully) this price/ demand vs. supply wave concern can also be dismissed.
Cheers
John
TFC Price at posting:
$1.54 Sentiment: None Disclosure: Held
