Hi Everyone, it's been a while. Thought I might revisit and...

Hi Everyone, it's been a while. Thought I might revisit and throw a few thoughts out there:

Revenues:
1. We know FY17 will be a cracker as the 2016 harvest of ~300t is processed and sold.
2. The following half decade is subject to a bit of variation as a strict harvest schedule will see a theoretical decline in harvest proceeds in FY20/FY21...however I note Cannacord's Sep 2015 research note indicates a 'likely to be smoothed' process somehow (Page 13), maybe TFC buying up everything available and doing a little early selective harvesting of +2020 planted trees?
3. I guess we can reasonably safely assume the Plantation business will continue to fill its available book each year as mgt expands investor marketing activity...even a recession coming in the next year or so should still see Institutions and HNW's looking for solid investments
4. Big swing factor will be price of ISO...is +$US4,500/kg a floor, a cap, what do HC punters think??
5. In FY22 revenues should boom as harvest proceeds ramp up again (noting Point 4)
6. Also further beyond FY22 if Santalis/Viroxis are successful harvest proceeds will again be massively leveraged by end-market pharmaceutical sales

Costs
1. Anyone catch Frank Wilson's Eureka interview? He commented (from what I recall) a likely FY17 EBITDA in the $80's of millions vs +$91.8m from Cannacord's September research
2. I feel rather comfortable with FY17's revenue outlook, so does this imply higher costs?
3. TFC now owns 100% of Santalis/Viroxis....and clinical trials for new prescription formulations aren't cheap. These acquisitions offer massive EPS accretion if longer-term successful (checkout the earnouts from the 18 June release) but their costs are only likely to increase over the next few years as trials get underway
4. Also increasing plantation ownership will see costs rise. But I think we can all agree this is a veeery sensible shareholder wealth creation strategy
5. Interest costs to fall in FY19 or earlier as notes are rolled over...a potential meaningful cost reduction.

So would it not be unreasonable to assume FY17 profits could represent a plateau for the following 4-5 years? On Cannacord's forecast this implies a cash PER of ~17.6x which doesn't appear too demanding...but what will the share price be in a few years if investors are a bit tired of flat earnings and a ~2% dividend?

BTW, I notice all the broker reports on TFC's website have very vigorous price targets. However these 12 month price targets are driven by free cash flows that are forecast to materialise in FY23 and beyond....is the market that efficient? All one needs to do is look at the glorious mining boom/bust to see the duration of average ASX investment time horizons.

My perspective then is at current prices any shorter-term investor may not find the risk-return profile especially compelling on a 1 year timeframe (that's why I've now got a Hold sentiment). However a long-term superannuation-style investor (like me) can still see plenty of annualised appreciation potential.