GTP - Great Southern Plantations

[Out Too Soon]

Representatives of the Sugar Industry In NQ were recently complaing that GTP is threatening the viability of the sugar industry buy buying up sugarcane farms to plant teak plantations!
Just something I heard on the radio & haven't been able to confirm yet, but certainly a positive sign for a co. that I'm again happily a shareholder.

 

[Jackob]

Today GTP slided 5% or 12c to $2.40.

T/O rumours are still alive or dead?

BTW, MBL dropped 10% today. Still got enough money to takeover?

 

[barnz2k]

cant climb up to $2.80 this time. Although just about everything down today so no surprise.

Heres a living in the clouds future headline "MBL assists in huge takeover for GTP. GTP breaks $3.20 and MBL reaches new highs" hahaha. I wish.

 

[Jackob]

Just let's read a short paragraph to see how GTP buys lands and at what a price.

$7000 an acre
GREAT Southern Plantations paid $5000 an acre for Ingham farmer Carlo Cavallo's 770 acre farm on the Abergowrie road. This was for the land only and did not include the house, sheds, machinery and crop. Ferry Property rural consultant Bill Micola tells me that that the sheds, machinery, crop and house would put another $2000 an acre on the farm price for Carlo, taking it from a gross of $3,850,000 for the land only to around $7000 an acre or $5,390,000 for the farm, holus bolus.

(From http://www.townsvillebulletin.com.au/article/2007/08/07/5341_talknorth.html)

 

[Nicks]

Just let's read a short paragraph to see how GTP buys lands and at what a price.

$7000 an acre
GREAT Southern Plantations paid $5000 an acre for Ingham farmer Carlo Cavallo's 770 acre farm on the Abergowrie road. This was for the land only and did not include the house, sheds, machinery and crop. Ferry Property rural consultant Bill Micola tells me that that the sheds, machinery, crop and house would put another $2000 an acre on the farm price for Carlo, taking it from a gross of $3,850,000 for the land only to around $7000 an acre or $5,390,000 for the farm, holus bolus.

(From http://www.townsvillebulletin.com.au/article/2007/08/07/5341_talknorth.html)

Thanks Jackob, just wondering what conslusions you are making from this? I read the link and it seems that farm land in this area can sell for up to $10,000 an acre, holus bolus. Seesm like they got a good deal.
I note the article also refers to the generous tax concessions from carbon emissions. This is only going to increase imo with the focus on carbon emissions and climate change which will become part of our lifestyle on an ongoing basis.

 

[pch]

re: carbon credits. Research how they work. I do not believe SP movement has had much to do with this. In April this year I asked GTP..

"I know that plantation timber will only have limited carbon sequestation capability between the time that the tree is relatively mature and when it is harvested. As a general rule, if GTP was say, incorporated in a Kyoto signatory country, would its plantations qualify for the carbon credit schemes?"

The answer was that there is opportunity for the company, however it is still to be determined how this would all work. It would be unlikely to generating anything much in the way of revenue over the foreseeable future, and would definitely not replace the primary purpose for planting i.e. woodchip production for the pulp and paper industry.

to quote:

"The landholder holds all of the cards (and obligations) when it comes to carbon credits i.e.100 year liability to maintain a bank of carbon equivalent to the one sold, which means maintaining enough standing trees to sequester carbon emissions from the atmosphere equal to the amount you sold for 100 years - a hard concept when the ultimate aim is to grow plantation timber to be chipped and used to manufacture paper."

Come back to the $7000. Notwithstanding margin pressure, if it wasn't for MIS schemes, would the land be this valuable? If they were liquidated tomorrow, would the land still be worth $7000? In 10 years time when its rotated with a new harvest, will it be worth $7000?

We know forestry from a tax concession perspective now has certainty. We know GTP only buy land because next time around they will not have to. We know that they have some time to go before they have enough land in their bank to rotate 35000 ha per annum which is their stated aim.

GTP are like a positive gearing property fanboy who has read too many Steve McKnight books but when they do reach this rotation milestone, their capital expenditure will drop hugely.

In the meantime ask yourself how well the market is going to react to the inevitable fact they they will need another large sum of money to buy more land - whether by debt or equity dilution..

 

[Kung_lou]

hey guys

Ive been a lurker for a while, particularly on this share. I wanted to share some numbers and maybe invite some comments on perhaps a silly question from those with far more experience than me.

2004 2005 2006
Operating Profit 63.70% 55.06% 38.64%

Calculated by a simple ratio of Profit without Tax/Total revenue.

Operating expenses Percent of Total Revenue
2004 2005 2006
Admin 7.21% 6.32% 6.52%
Borrowing costs 0.50% 1.50% 4.60%
Commissions 5.44% 5.26% 4.77%
Ag and MIS costs 12.64% 19.99% 33.42%
Marketing 10.51% 11.87% 11.40%
Total 36.30% 44.94% 60.71%

To me - these numbers are a result of rapid growth and the restructuring due to the MIS changes. Am I missing something? Have I messed up my numbers (shouldnt have - straight from the financial reports). Is this bad news for the future earning portential of GTP?

 

[Jackob]

hey guys

Ive been a lurker for a while, particularly on this share. I wanted to share some numbers and maybe invite some comments on perhaps a silly question from those with far more experience than me.

2004 2005 2006
Operating Profit 63.70% 55.06% 38.64%

Calculated by a simple ratio of Profit without Tax/Total revenue.

Operating expenses Percent of Total Revenue
2004 2005 2006
Admin 7.21% 6.32% 6.52%
Borrowing costs 0.50% 1.50% 4.60%
Commissions 5.44% 5.26% 4.77%
Ag and MIS costs 12.64% 19.99% 33.42%
Marketing 10.51% 11.87% 11.40%
Total 36.30% 44.94% 60.71%

To me - these numbers are a result of rapid growth and the restructuring due to the MIS changes. Am I missing something? Have I messed up my numbers (shouldnt have - straight from the financial reports). Is this bad news for the future earning portential of GTP?

Hi Kung_Lou,

Thanks for your post and welcome to this thread/forum.

I believe that your "Operating Profit" (63.70% 55.06% 38.64%) was meant to be what is commonly called "Profit margin (before tax)", which is the percentage of gross profit in the revenue. Apparently, this margin has been squeezed from 63.7% to 38.6% in the past 2 years due to escalating costs. More has to go.

If you (or anyone else) wish to have more clues on the future earnings of GTP, I would like to suggest you having the following improvements on your table.

1) Add revenue growth rates for each year on the top of the table.
2) Add earnings/share growth rate at the bottom.
3) Add an accompanying table with all numbers in their absolute $ terms.

I believe then a clearer picture on GTP's future earnings would emerge.

All the best.

 

[Kung_lou]

Thanks Jackob

That made things a little clearer. I guess that the only way to get a complete picture is to compare the numbers to their competetors.

 

[pch]

I just did some digging while watching South Park flicked thru the 07/08 PDS..

Had a wry smile because the PDS for 07/08 was for 5000 HA, much, much less than the normal amount. (So much less that they have this amount in reserve from pretty much *now*)

"The sales result of the Company to 30 June 2007 has also been impacted by the deliberate strategy to reduce the emphasis during the current year on the Company’s leading product, the Great Southern Plantations Project, for capital management purposes. However, now that the new taxation arrangements for forestry MIS projects have been enacted, the Company is currently finalising a restructure of this Project, which will result in a significantly enhanced cash position for the Company as well as delivering an enhanced investment opportunity for investors."

In other words.. "oh crap, we'd better plant the normal amount after all!"

What this means though is that it may take longer than I suspect before they have to go cap in hand after chewing through their remaining cash reserves. They have this year and next before non forestry gets restructured into more like a regular managed fund. After that they will need cash..

Kung_lou, I don't think comparing their competitors will give you that much info unless they are also buying their land supply. On top of paying much more for land than they used to, GTP went through a lot of dilution in 04 and 05 and got completely nailed by the MIS legislative changes this year. Usually they plant a heck of a lot more..

They also failed to mention the income tax rates for 45c in the dollar moving to $180k pa which won't help their cause..

 

[Nicks]

GTP up strongly last two days.

Wouldnt be suprised if at these prices the interested takeover party that we were first made aware of in June popped up suddenly.

 

[Nicks]

Ok, so I have been watching GTP over the last few days and have noticed an uptrend in share price from what it seems to be small parcells of purchases every 30 seconds to 1 minute.

Is this the big stake thats getting built up for the takeover that was first raised in June?????

 

[Rainmaker2000]

It's good to see some people actually trying to ascertain the state of the business behind the stocks......Just with GTP and to an extent TIM, from a valuation and 'earnings' perspective, my thinking is you go straight for the cashflow statement........It's tough to value a business in this 'industry' with the inherent complexity, but in addition, you can tell that GTP is a dishonest company..I think everybody in this industry already knows this...in this context, you need to question investment totally, but at the least place more emphasis on the statement of cashflows......for the record, I think GTP and TIM are both undervalued, but my pick by a country mile is TIM, even dispite the Government intervention....

 

[Nicks]

Check out GTPs balance sheet - its fantastic! One would have to think is a predator (as alluded to on June 12) well aware of this too, and hence the frequent automatic small parcels of shares being bought up constantly throughout the last few days.

 

[Nicks]

Here it comes people.

04:37:46 PM 2.350 449,000
04:10:33 PM 2.370 7,608
04:10:33 PM 2.370 1,352
04:10:33 PM 2.370 6,648
04:10:33 PM 2.370 5,495
04:10:33 PM 2.370 2,305
04:10:33 PM 2.370 3,298
04:10:33 PM 2.370 1,570

 

[barnz2k]

been watching this too and they have been holding well.
If this is the start of a takeover, how far do you think it could push the price?
And will it hold after the takeover is complete

 

[Nicks]

barnz2k
Not sure, but given that it was at $4 last year and has peaked at $3 this year, I think it could push the share price upwards of $3 comfortably.

Currently around $2.35-$2.37 and rising. Looking at this price for a comfortable 60c gain min imo if a takeover wanted to be successful, ie. around 30% gain which is also fairly standard for takeover targets with a depressed sp and solid balance sheet and p/e.

In other words now is the time for them to capitalise on the weak share price if they want this company which has been trading $3-$4.

Good luck and i'm going to hold for the upside of all this as it could be a very steady or even sharp gain.

I've seen the activity now over the last few days and the company has been hush since the June 12 announcement, so any time soon they have to comment further, and given this unusual buying pattern I think it might be very soon.

 

[nikkothescorpio]

Nicks,

Am following this too - and like you I've seen a lot of that parcel buying over the past week or so.

Having said that is a lot of smart money setting up to sell between 2.36-2.40 - serious voilume too.

Strange as being is real blood was in the water for the takeover of this one why are they looking to sell so close to the buying point?

Cheers, Nikko

 

[Nicks]

Thats easy to answer. Nerves. Some are happy at this price considering it has been lower.

But there are plenty of buyers to grab them each time as well i've noticed, hence the stagnant then rise, stangant then rise etc of SP. Classic sign.

Probably peopple getting in while they can as it becomes more apparent that there is something going on, and given the June 12 announcement and $2mill plus trades after close the only thing that seems to make sense is takeover.

 

[Nicks]

... lets not forget people that GTP was trading at $2.65 - $2.78 just before the announcement of a takeover party. This would mean that surely it would have to be trumping that vale significantly for holders to be interested. I stick by my $3+ value of a takeover offer. Thats whats its going to take if they want my shares. Else i'll happily sit with the dividends.

That same party must be even more interested now, and given the consistent buy spread occuring at a rate of around 1000 shares a minute throughout the day (and large trades after close) it looks like its well on its way.