Highland Timber Share Discussion Threads

[ben franklin] 21/6/2002 14:53

Highland have put their Corlae forest in Scotland up for sale at £1.4 million. It's being sold by the managers Tilhill.

Originally Highland valued it at over £1.8m but serious storm damage a couple of years ago meant they took a big writedown. Book value now is probably between £1.36 and £1.4 million, so if they get the asking price they might not get another write off even allowing for disposal costs. The cash inflow would also help Highland pay off the loan stock holders next June.

[ben franklin] 30/5/2002 20:09

I too have in mind to buy as I like the idea of forestry as an investment. However, I'd first like them sort out the debt situation (maybe a share issue though this could be difficult with the company's track record) and also explain the UK plantation values rather more clearly. For example they could give details of each plantation (location/area) and split the productive area into the maturity stages in the Tilhill/Savills survey - then explain why the plantations are worth a premium. Not an onerous task and it would give new investors more confidence.

Do you know who put the www.oilstock website together - I saw the same webpage yesterday on a different URL - - the stuff about Jeremy Grantham was interesting

[energyi] 30/5/2002 19:16

BF,
The charts on my website are a bit out-of-date.
Perhaps more recent prices show improvement.
I think HTB is cheap, and could prove a takeover target
for someone seeking more exposure to the sector.

I don't own any yet however. I have in mind to buy if there is a dip

[ben franklin] 30/5/2002 19:11

It was the charts and the Tilhill survey results that made me think about Highland's UK plantation values. Highland actually revalued their plantations slightly upwards during 2001 which I couldn't understand given the shape of the timber price graphs. FIM's price index looks very similar to the Forestry Commission index, so I assume they'll be following the FC index down. This is the FC website page

The Tilhill/savills report on Uk forestry transactions is at

[energyi] 30/5/2002 18:44

It has long been at a discount, BF.
This sector is not in huge favor at the moment.
Have you seen the Charts?:

[ben franklin] 30/5/2002 18:27

Have been looking at this company trying to work out if it's as cheap as it first appears. Would appreciate help from anyone who knows the UK timber market and this company in particular.

At first glance Highland Timber seemed a promising investment - timber must surely have excellent long term potential, Highland's net asset value using the latest FIM (Highland's forest manager) valuation is just over £1 a share, yet the shares can be bought for 75p.

Why the discount? Looking at the latest accounts and at recent data on UK timber prices and plantation values threw up 2 reasons why these shares maybe aren't so cheap after all.

First is they could be heading for problems with excessive borrowings.

Forestry is an ultra long term asset but five years of near continuous losses means Highland now has £2.6m of very short term loans and overdrafts to repay in the next 2 years. That's a hell of a lot to find for a little company with no cash and only £8m of net assets.

This year they're increasing timber felling in the UK which will raise money, but it also means they're selling their timber assets at ultra low prices. The Forestry Commission's latest 6 monthly timber price series was published this week and conifer prices are down 9.5% on a year ago and are now at a near 30 year low. Not a great time to have to sell timber.

To make matters worse, most of this debt is convertible loan stock. With the shares at 75p and the conversion price well over a £1, no loan stock holder will want to convert to shares and the debt will have to be repaid.

Second reason is Highland's average UK plantation values seem very high. If so their net asset value per share may be significantly overstated.

The UK plantations were last valued at 31/12/01. However, as this week's Forestry Commission figures show, UK timber prices have fallen sharply up to 31 March this year. Highland Timber's annual report includes almost all of FIM's latest investment bulletin commentary on the state of the UK market. Only one bit, the last paragraph, didn't appear. It said that market conditions in Wales (where Highland has 3 plantations) were poor with few plantation sales!

Another forestry manager, Tilhill, publishes a UK forestry plantation sales survey every 6 months. Their latest report published this month shows that the average value of recent transactions for mature UK conifer plantations is around £2,400 per hectare. Average values for less mature plantations are lower.

Highland Timber's average value of their UK plantations at 31/12/01 is something like £3,300 per hectare. Highland may have better than average UK plantations, but £900 per hectare is a substantial premium and it assumes all their plantations are mature. If they needed to bring their UK plantation value down to the latest Tilhill average, the fall in net asset value would be over £2m - enough to wipe out the share price discount to net asset value.

[energyi] 18/2/2002 19:26

Rathbone Bros. (RAT) has a client who has bought 11%.
Not well liked on Advfn, there's a Bear Thread here:

[bocadillo] 17/2/2002 22:15

energyi: I'll keep an eye on it too! Interesting,Cheers, Boc.

[energyi] 17/2/2002 22:05

Spread is too wide... unless one is willing to take a very long
term perspective... This is the sort of company I'd like to
takeover... if only I had the cash!

[energyi] 17/2/2002 20:50

some new buyers like this stock...

15 February 2002 / HIGHLAND TIMBER PLC

The Company has today received confirmation that Rathbone Brothers Plc, through
the registered shareholdings of its subsidiary companies, is interested in
1,022,833 Ordinary 50p Shares of the Company, representing 11.58% of the issued
share capital.

The shares are held on behalf of investment management clients.

[frankspencer] 20/8/2001 20:46

Still Waiting,
I work in the timber industry and not all the companies, are or were as badly run as Brittanic Timber.

Frank

[energyi] 08/8/2001 09:22

Why do you think so, usedbook?
Do you know anything about timber?
Or do you just dislike the company?

[usedbook] 08/8/2001 04:38

They are planting trees everywhere.
Assets are 9M,the share price 5M,so they must be cheap.
No.Doesnt work that way.
Wouldnt touch with a bargepole-only thing keeping it up is director buying

[still waiting] 07/8/2001 22:15

Bring back hanging, their all bandits these timber merchants.

Have to laugh, go insane otherwise.

SW

[still waiting] 07/8/2001 18:10

I tried Britannic Timber once over on Ofex, the same was said about that one.

It went bust, be careful......

SW.

[energyi] 07/8/2001 18:05

Exactly. More info will follow. Here or on the PBB

[jouno] 07/8/2001 17:58

net assets of £8.8m or something and market cap. of just over £5m, with timber prices well low.....mmm.

[energyi] 07/8/2001 14:28

Market Cap. 5.52 m : 8.83 m shs x 62.50 p


Only 8.83 million shares O/S. Future course to be voted at 2004 AGM.

RESULTS................ -2000- -2001- -2001R -2002-
Turnover............... 1,132. 1,097. 1,097. 1,604.
Operating Profit/(Loss).. (89) ... 1.. (215). ( 84)
Exceptional item........ (409)... 46... 106.. (650)
Loss after taxation..... (672). (164). (321). (910)

PROPERTIES........... -2002->B/Sht> .Mkt. -2001-
..................... -Cost- Value. Value. MktVl
Freehold Forests (UK) 7,809. 6,795. 6,831. 7,996: sold F.w/ £896K cost
Freehold Forests (NZ) 2,306. 2,230. 2,763. 2,747
Forestry Rights .(NZ) 1,586. 1,567. 2,676. 2,217: sold F.w/ £720K cost
TOTAL Valuation..... 11,701 10,592 12,270 12,960: Sold A.w/£1616K cost
NAV per HTB share... ...... ....... 99.2P 101.2P
Term Bank Loan...... ...... . (750)
5% Conv.Unsec.LnStk. 6/03.. (1,350)
Other Creditors..... ...... (1,578)??
Net Assets.......... ....... 7,083: 8,592
Per Share (8.83mn).. ....... 80.2P: 99.2P 101.2P

One of the problems facing the Board over the next year is what recommendation
to put to shareholders when the future of the Company is determined at the
Annual General Meeting in 2004.


Website:
THE TIMBER thread:
I've also picked it up on my "Timber" thread on the PBB.
Here's the URL:
Site with Info on HTB:
TreeVest (old site):
Forests in Latvia: