TFS Corporation Limited (ASX: TFC), an Australian sandalwood plantation manager, started the New Year off with a bang after it announced that a respected US institutional investor had taken up two of its remaining three options to invest in 399 hectares of TFS Indian sandalwood plantations.
The shares soared more than 12% to a high of $1.745 before settling back to $1.685. At that price, the shares have rallied more than 44% since bottoming out in November, although they're still sitting 24.8% below their 52-week peak of $2.24.
The plantations will be established in the Northern Territory in Q4 FY15 while settlement funds in the two tranches are expected between Q3 and Q4 of FY15. The company said "This amounts to an estimated $40m-plus life of plantation investment (excluding performance fees) in Indian sandalwood plantations through TFS' Beyond Carbon product and is the fourth and largest investment by the US investor to date."
That's certainly an encouraging sign for shareholders. Also encouraging is that UBS initiated coverage on the stock last month with a "buy" rating and giving it a target price of $2.60, as reported by The Australian Financial Review. With demand for Indian sandalwood set to continue outstripping supply however, the stock could climb significantly higher than $2.60 in the years to come.
