TIM 0.00% 4.4¢ timbercorp limited

TIM - My view

  1. 136 Posts.
    I read with interest a post by Alpha, on 17/06/02 regarding TIM. He said he has a small holding it must be tiny, as he continually ramps them down and the others up particularly GTP, he must have a larger holding in GTP. TIM announced good news to the ASX re olives and Alpha insinuates there must be a dark side looming. I am at a loss to know how they can win. However I am supremely confident that TIM will be the winners after June 30th 2002. Alpha talks about business models he stated that he prefers the model which is all Bluegum plantations, against TIM which has 77,000 Hectares Bluegums or approx 77 million trees and will shortly have approx 1150 Hectares of almonds and 2092 Hectares of Olives. To me this is not a business model but rather diversification. I personally prefer to diversify and not be reliant on just one product.
    In the forestry industry the are a number of companies involved in marketing Tax Affective Investments, the two main players, are TIM and GTP. The two business models that I am aware of are;

    1. Upfront and recurring cash flow Model:
    an upfront payment is made by the investor to cover establishment costs this is followed by annual rental and maintenance payments until the crops are harvested around half of the total payment is recieved upfront and half over the remaining period, this is the model used by TIM.

    2. Upfront only Model:
    A much higer fee is paid upfront to meet all establishment and maintenance costs. A small portion is paid into a reserve fund to pay for the ongoing maintenance work, this is the model used by GTP.

    This was also the model that was used by APL, they relied upon continuous product sales going forward to generate revenue and profits. In the event APL did not achieve sales, its cashflow to fund its ongoing operations was very poor. Following the large shortfall in sales in 2000-2001 year APL appointed a voluntary administrator in late July 2001 after the CBA advised that it would not extend their credit facility beyond 40 million.

    TIM business model is the opposite to GTP and generates strong annual cash-flow resulting from a recurrent income stream from a diverse mix of products (Bluegums, almonds, and olives). Even if you assumed no new investment in product sales in 2001-2002 year TIM would generate over $20 million in EBIT and cashflow.

    Timbercorp is the largest manager of forestry plantations, olive groves and almond orchids.

 
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