Midway Limited (ASX: MWY) provides forestry services. The Company offers wood fibre and chips to producers of pulp, paper, and associated products such as fabric (rayon). The company manages its activities of plantations in the lands held in the varied regions of Victoria, Australia. The company via its subsidiaries manages plantations in various countries such as Australia, Cambodia, and Laos. The group manages the plantations over 90,000 ha of plantation estate. The firm has got its core competence in the verticals of procurement, processing, handling, marketing and export of wood fibre. The company has been strategically acquiring firms & has thus recently acquired a 25% stake in the ADDCO fibre group of New Zealand and Plantation Management partners in the Year 2017.
As per the latest ASX release, the company has stated that it has been successful in securing a substantial price rise of 11% for delivering Woodchips to the Chinese importers. The contract negotiations were successful & the customers agreed for the rise of the export volumes which will be supplied in the first half of the 2019 calendar year. This would lead to an average realization price of US$182 per bone dry tonne for Eucalyptus globulus woodchips, which is considered to be the company’s premium product offering for the year 2019. As the company’s two-thirds of total volumes are exported to the Chinese market, this price rise would significantly impact the firm’s bottom-line and the margins in a very positive manner for the upcoming second half profits in the 2018-19 financial year.
The majority of Japanese customers which account for almost one-third of the total volumes exported by the company paid an average of US$164.50 per bone dry tonne Eucalyptus globulus woodchips for the 2018 calendar year. The price negotiation with these set of customers will also begin in a very short time, i.e. early next year.
The company’s Managing Director Mr. Tony Price stated that the recent price hike was on account of the short supply of the wood fibre in Asia and the rising demand for the same in the regions such as China for a variety of paper products such as the cardboard used for packing purposes and the rayon used in the clothing. He also emphasized that the price rise and the rising demand is highly encouraging and positive sign for future developments.
Meanwhile, the share price of the company has risen by 30.25 percent in the past six months as on 13 December 2018. MWY’s shares traded at $3.40 (up by 9.677% intraday) & with a market capitalization of circa $270.29 Million as on 14 December 2018.
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