GREY:FRNFF - Post by User
Post by
retsinaon Feb 07, 2011 10:28am
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Post# 18086297
$1.40 target price
$1.40 target priceI just got in this morning on this one... Wellington West targets $1.40.
Initiating coverage: Feronia Inc. (FRN-V) : 100,000 ha Brownfield Palm Oil Producer Trading at a Fraction of the Peer Group
Analyst: Greg Colman
Palm oil fundamentals appear poised for continued price strength.
Indonesia and Malaysia produce 91% of the world's palm oil and their supply is flatlining (p.1) while demand is continuing to rise (p.2&3).
FRN's brownfields start-up is trading at a fraction of the peers ...
Peers trade at 9.2x EV/EBITDA and $32,177 EV/ha. FRN's brownfields plantation is currently valued at 4.7x EV/EBITDA and $6,806 EV/ha.
… and has a call option on arable land.
Our forecasts give minimal value to emerging corporate farm that could, if successful, generate $1,500/ha yearly cash flow per $3,100/ha invested.
Initiating coverage with a Speculative Buy, C$1.40 target price.
Target is based on 10.9x 2012E EV/EBITDA or $16,150 EV/ha; could migrate to C$2.50-C$3.00 if and as FRN re-rates to peer multiples.