My take? Well I believe the underlying business is sustainable with or without the tax concessions. The tax concessions enable the company to structure the projects in a way that is more profitable to shareholders. The removal of the tax concessions will mean TIM and other companies will need to restructure their projects to make them attractive to investors which will mean the EBIT will fall as a percentage of sales.
They also will need to do more to promote and market the projects, SHV has already indicated that they have super funds investing in almond orchards so this might be one area that TIM could expand into.
As for the next 12 months, the locked in annuity style revenue and the unaffected forestry project will mean the impact this financial year should be minimal but growth will slow somewhat given the impact on new sales of projects in the horticultural areas. How this year's sales are affected really depend on whether the announced tax changes spook investors or if they see this is a now or never opportunity to get on board, only time will tell.
Regardless or the immediate impact I still see this as a good buy, this has just added a bit more uncertainty to how fast they grow.
TIM Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
