ARJ - The Ark Fund

[mickqld]

Interesting stock this one. Major shareholder is the Rewards group who provide Agricultural investment schemes in various areas. After tax profit was $19 million for Rewards group.. Same directors of Rewards Group as The Ark Fund which buys properties and then rents them to Rewards Group for guaranteed 20 years rental returns between 10% and 12% per annum increasing each year by 2%. Arj has market cap of $8 million and holds nearly $9 million in properties with guaranteed income of $900k+ per year. Paying a quaterly dividend yield of 10.5% p/a till end 2009.
Stock is at 1.3cents and has been rated by PIR as A+ for super funds.

 

[mickqld]

Huge move up on this stock. Highest daily volume ever over 15 million traded. Highest close ever if it holds 1.5 cents up 15% today. Substantial shareholder notice today but unusually for a trade back in January of 41.6 million shares.

 

[mickqld]

Land in the Pingelly region of WA is currently on market for $1500/acre. ARJ bought their sandalwood property for $700/acre. Their lease rates are set based on the market value for the land. Guaranteed 20 year returns from Rewards group increasing by 2.8% per annum. 10 to 12% guaranteed returns per annum how good is that. Undergoing 100 to 1 share consolidation at moment but Agricultural land in the future is going to be much sought after and these guys are on the ground floor of this limited sector.
Wouldnt be surprised to see some capital raising soon for more land purchases.

 

[So_Cynical]

ARJ broke below 50 cents yesterday...and that was my cue to enter, ive been watching since January and trying with great frustration to buy some property stocks at bottom, since April....anyway ARJ has hit a new low today with a market cap of around 10 mill, so i figure we are in ridiculous territory.

For those that don't know...ARJ is a REIT with 32 rural property's in WA, NT, QLD and VIC, the property's are all leased by the Rewards group, who run agricultural investment schemes...the property's are used to grow Teak, Sandalwood, Strawberry's, Mango's and a few other things, most property's are in production and have cash flows.

Apparently Rewards group are one of the biggest growers of Mango's and Strawberry's in Australia, they also claim to have very low debt and good prospects going forward...rewards group is a private company.

ARJ have a 38 million dollar strategic debt facility with NAB and property's with a 2008 valuation of over 56 million...they also have a short but consistent dividend history....worth a punt i say, in today at 49 cents.

http://www.thearkfund.com.au/

 

[Jambely]

So Far So Good on your ARJ punt! Not a bad yield either.

Here a few other things to think about:

Iron ore and Coal are not the only commodities that are ,and will remain in short supply in China and India and a rapidy developing SE Asia (all of which are on our doorstep)

What about food, meat , feed , grain , water!

ARJ has land but also had water.

ARJ has been beaten up because Rewards is trading in the shadow of Timbercorp and Great Southern the two largest MIS players in the country. Rewards is/was number 3!

Timbercorp and Great Southern failed in my view because

1 they focussed on Bluegums! A low value bulk commodity that needs rail/road and port infrastructure that post GFC they, and their country's government, could not afford to build.

2 they bought land that up until 10 years ago had 400mm of rain per year but in the last 10 years has only had 250mm! Bluegums need 400mm! Was this bad management??

3 Timbercorp (which was better managed than GS) focussed their horticultural effort and land buying on Australia's premier region for horticulture ...the Murray Darling!! Whoops ! Bad luck or bad management..??!

Three strikes and you are out!

Rewards has NO BlueGums. No land at all in the Murrary Darling and owns water rights along with all the land it owns!

One of Ark's land holdings is black soil country in the Ord River Scheme. No water problems there and nice and handy to those SE Asian markets too. They also own the largest fruit processing facility in the region there as well!

Pity the government and more investors don't wake up to the potential there in my view.

Anyone see the news yeaterday re the Problems Mango farmers in WA are having trying to export mangoes from WA! Great markets which are counter-seasonal but no processing expertise!!??

Ark owns and runs (in Qld) the ONLY Mango processing facility in Australia approved for the export of Mangoes to Japan! Talk about fussy. I bet they don't get $2 a kilo for them either! Not that this helps Ark..... they only get their rent from the growers/Rewards i.e no extra if the growers kill the pig on the produce they grow ... but thats OK farming is a risky business ask the Ark strawberry farmers that lost 30,000 kg of fruit to the recent floods in Qld!!

If , over time, prices and export opportunities increase it simply means that Ark's rental income is that more secure and the land value goes up more! (The land is already valued at $1.08 according to the valuers who contributed to the most recent report [out a week or two ago] .. not bad for 51c or 58c per share depending on whether you look at the buyer or seller in the market as I write this blogg)

Then again there are lots of voices in Australia who despise the corporate farming sector. I think it comes from an ingrained hatred of the swattocracy among the 'battlers' who struggled valiantly to eke a living out of soldier settlment farms that were never going to be any good. Fine, but who is going to stump up the capital to build a mango processing facility for all the small farmers in WA who need one to export to Asia??

Lets face it, who goes to the supermarket and only buys the perfect fruit off the trolley that has been packed in a $5 millon facility well beyond the reach of a single family farmer. Hands up all those who are going to change their wive's buying habits so as to suit the battler farmer brigade who are still using 100 year old technology.

Australia has huge natural advantages in farming and food production and this sector will be a good one to invest in ( did you notice the news on a possible breakthrough in the Doha trade round on the weekend?? I'll believe it when I see it ....but it sounds good) Unfortunately the opportunities are not very plentiful. Ark (ARJ) is one ,in my view, does anyone know any others?

 

[So_Cynical]

That's a hell of a first post jambely...welcome to the forum

All good points and well summed up...i have a bit of forestry and agricultural experience so everything that the rewards group is doing and has done, made sense for me...the Teak plantations for example, there's only 1 practical place to grow Teak in Australia and that's exactly where rewards is growing it, and the same goes for everything there doing, it all makes sense.

Just hope there not to dependent on new AIS sign ups, cos i think it will take a while for confidence to return to the industry...i would be interested to see how well there latest scheme sold. :dunno:

 

[So_Cynical]

ARJ went into a trading halt today due to a merger proposal from the rewards group, who are of course the managers of all the Ark fund's property's....from memory i think they own about 25% of the stock.

http://www.asx.com.au/asxpdf/20091216/pdf/31mrv4j1z495jg.pdf

Anyway will be interesting to see what happens.