MIS sector surprises

Managed investment scheme sales have ended the year in better-than-expected shape after a last-minute rush by investors.

Research house Adviser Edge reported sales for 2008 MIS projects finished above earlier expectations to reach $1.13 billion.

While the outcome exceeded forecasts of between $900 million and $1 billion, it was still 10 per cent lower than last year's result.

Adviser Edge managing director Shane Kelly said the result was surprising in the face of considerable market adversity this year.

He said one of the key features of the year has been the re-distribution of market power in the forestry sector.

This is evidenced by the performance of FEA, Willmott Forests and WA's TFS Corporation, which together accounted for 37 per cent of timber sales, up from just 17 per cent in the 2007 financial year.

"There are now five or six fairly mainstream players; in the past its mainly been Great Southern and Timbercorp," Mr Kelly said.

Forestry projects accounted for 63 per cent of total investment, raising $719 million this year, exceeding last year's sales level of $698 million.

Sales of non-forestry MIS are estimated at $416 million.

WA project managers had a mixed year, with the majority recording a decrease in sales revenue.

Great Southern Ltd has reported sales for its 2008 MIS projects of $315 million, down 24 per cent on last year.

Its high-value timber project was a standout performer, increasing sales by 40 per cent to $84 million.

Great Southern maintained its position as the sector's leader, with its market share at more than 30 per cent.

Futuris Ltd subsidiary ITC Ltd also posted a significant decline in sales revenue this year, with sales down almost 40 per cent on last year at $37 million.

WA sandalwood player TFS Corporation Ltd was one of the MIS sector's better performers, upping sales of its Indian sandalwood project by 44 per cent.

The company generated sales for 808 hectares of sandalwood, with sales revenues of about $54.2 million ex-GST.

TFS chief financial officer Quentin Megson said a combination of an increased marketing focus and strong product offering resulted in the favourable outcome.

"It's a good product. We believe the sandalwood story holds up pretty well," he said.

"At the end of the day it gives good returns to investors and they recognise that there's a good underlying principle to investment."

With 1,750ha of sandalwood in the ground, and a further 808ha to go in from this year's sales, TFS manages the biggest Indian sandalwood plantation in the world.

Australian Agricultural Contracts Ltd also recorded a strong sales result, raising $40 million in new sales of its grain co-production project in 2008 and almost doubling its 2007 raising.

Perth-based Arafura Pearls Ltd raised $4.3 million for its 2008 Australian south sea pearls project, just more than half of its 2007 raising.