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Very impressive 1H 2022 Results, when you put it in perspective of current AEP market cap of £374m ($441m):
1) AEP has Net Cash of $247m with increase in Inventory of $41m = $288m
2) Profit after tax for 6 months 1H 2022 was $69m, so annualized $138m. That's a PE of only 1.1 when taking into account cash position.
3) Cash + Inventory Increase of $53.2m, annualized "free cashflow" of $106m. Or FCF ratio of only 1.4 when taking into account existing cash position.
The big unknown of course is what path new Chairman Jonathan Law Ngee Song and NED Marcus Chan Jau Chwen (Genton International Limited 51% majority shareholder) will take company now and how they will distribute and use the huge cashpile. The younger shareholders of Genton may want an income from their holdings to pursue other ventures etc.
Expansion continues with 7th mill in North Sumatera due to be complete year end ($22m capex so far) and an environmental study commenced with view of applying for permits on potential 8th mill in Kalimantan. So even with organically funding growth of the company, the huge cashpile must surely be used for significantly increased dividends in future? For the answer though we may have to wait for Final Results in May 2023, where cash pile could be near the actual market cap if we're still at same share price!
How can we be marked down on the strength of these results ?? Just look at the amount of cash we are holding.
Strangely delayed announcement considering their chair died nearly a month ago!
Don't know about double or triple the SP but cash generation and that balance is impressive!
31/12/21 - $218m
31/3/22 - $253m
June qtr would have been immense, must have close to $300m on a Mcap of $431m. With $30m/qtr the company will have cash higher than Mcap by end of 2023
Son ok Kim taking over as non Exec at board.
Business graduate. Young.
In my view, He s going to work out that the co sitting on this mountain of cash and being debt free is nonesense. Expect BIG capital rerun story.
And this will close out the massive valuation discount to peers.
This could triple from here.
In terms of ownership by Lim Siew Kim see:
https://www.investegate.co.uk/anglo-eastern-plant/rns/director-shareholding/200402021317078887U/
I gets down to her Will and family inheritance planning. For example, are the children and grandchildren interested in the family businesses, where are they tax resident and would they prefer the cash.
I would equate the Genton International Limited majority holding in Anglo Eastern as being similar to the Salomon family's 's ownership (directly and indirectly via Hansa Investment Company) of Ocean Wilsons Holdings ("OCN").
The headline I chose now looks rather unfortunate given the news of her death.
I think this is good news. It would be surprising if her replacement suddenly started producing upbeat statements and paid out the cash balance but at least there's a chance.
Why do they hold so much cash?
I would like to know what % of her wealth is in AEP. If it's an extremely high % then I can somewhat understand wanting to be conservative. It's a business selling a very volatile commodity product.
Never have I witnessed such a dour ceo as we have here. A proper eyeore… moans on about 2% drops here and 4% drops there. Before briefly mentioning that they are achieving 50% better prices!! Then goes on to say they expect that will pull back…. Such negativity over such positive trading.
It’s as if they dare not be bullish else we ask for more than a 0.0001% dividend.
A CEO should have at least some element of risk taking and bullishness about the company.
What would it take for them to say. “You know what, it’s going pretty well here”?
Trading on an incredible 90% (!) FCF Yield - with co effectively trading at CASH by year end.
At 3-4x discount to peers: Roadkill valuation just not sustainable…
Any hint of buybacks (rf MPEvans) or spec divi wd send this skyrocketing. BUY BUY BUY
"Separately, Indonesia’s Palm Oil Workers Union (SPKS) said in a statement on Thursday that prices of palm oil fruits in ten provinces were yet to recover to pre-export ban level after falling by about 75% as palm mills scrambled to sell locally to cope with the export ban.
SPKS said in some places independent palm oil farmers had to wait in line for two to three days to sell their fruits to mills."
Such a stupid, self-destructive policy from the Indonesian President. The man is an idiot.
Food is also a delicate subject at the moment. Paying out large dividends when people are struggling to feed themselves is not a good strategy
Agree with ragnar - I have been in this share for circa 30 years and she turned down an attempt back then with an offer of 50p when the price was around 45p.
I agree shes not exactly a dynamo, but has been consistent with low salaries, doing well for the workers and not overpaying for land....just needs even her to realise that this amount of cash is just too conservative when food costs are likely to remain high for some time.
I don't think it's possible to squeeze out minority shareholders or force a delisting with ~51% as long as the minority shareholders actually vote to oppose.
A scheme of arrangement requires 75% to force the sale of minority shareholders. In a crude takeover offer, 90% are required to force the sale of minority shareholders.
AIM requires 75% to vote to delist. I don't know what the number is for LSE but it's probably the same or higher.
Ragnar. I completely agree. I meant a delisting with a take out price of £5. There would be nothing we could do as she has over 51pct. Nice to be sitting on over $ 200 million in cash....
Sorry 34 yes my comment about Indonesia one of the most corrupt was a wild exaggeration. There are many Asian companies like Thailand which are below Indonesia. What I should have said was that Indonesia has a long history of troubles with corruption, particularly under the Suharto regime
She has been around in this company for such a long time I think it's unlikely she does anything now. I imagine all sorts of hedge and artbitrage funds would get involved if a low ball offer happened. I think a delisting would be more likely but I think this company has been listed for decades so don't know why it would happen now. It's not like she is paying herself a generous salary even. Take a look at the remuneration report, the directors and CEO take some if the lowest pay I've seen of any listed company. It's a funny one.
Ragnar-Malik
Maybe Mrs Lim will simply buy the remaining shares for £ 5 each. There is nothing we can do to stop her. It has happened to a couple of my past shareholdings namely Fortune Oil and more recently Zoltav Resources. I am not saying this is likely to happen here but when you have a controlling shareholder all us small private investors have very little power to change the mentality.
I should add that I bought into AEP back in 2019 and have added more a couple of times most recently in March of this year, and will continue to hold.
MP Evans increased their dividend 58% this year to give a yield of around 3% - quite a contrast to AEP who are in an even better financial position
Indonesia isn't one of the most corrupt in the world. There are dozens and dozens of countries that would rank below it.
agreed. But I compared the cashflow yield of AEP with that of MP Evans. Yield - on this basis we are 3-4x undervalued compared to them.
It’s a direct comparable I believe, with assets in Indonesia too.x
Yes there is this paragraph from the annual report which is influencing their desire to retain huge amounts of cash
In arriving at the conclusion that the Group has adequate resources to continue in operation and meet its liabilities in the next five years the Board has assumed a worst case scenario of CPO price at its lowest average of $500/mt and that demand for CPO dropped by 50%. The Board has also factored in that half of the total plantations could be shut down for six months due to infectious disease such as Covid19.
Dividend is only $2m giving a yield of 0.5%
Also cant forgot that operations are largely based in Indonesia, which is one of the most corrupt countries in the world and with enhanced risk that this disappears from investors' plates completely
Thanks for the responses.
Incredible - this will trade at more than cash as at year end if palm oil p hold up.
I am taking the punt and buying in. This has virtually no downside and enormous upside. It’s just a question of it potentially being dead money til something moves - as you say an announcement of improved return to shareholders, a takeover bid, or a change in ownership structure.
The chairperson is indeed the most cautious management I have ever seen. Read their annual report and you will discover they present in their going concern section scenarios of literally sky has fallen and even then they would survive over the five year duration - the timeframe they picked for the scenario analysis. Well not really surprising given this cash…
The Chairwoman is either the most pessimistic person in the world or she's looking for any excuse not to pay out the cash. The explanation here is just ridiculous:
"In determining the amount of dividends to be paid to our shareholders, the Board in previous years had been consistent
with a balanced approach to the requirement of funds in the Company in order to expand and enhance shareholders’ value but at the same time cognisant of shareholders’ wishes to have dividends as a form of income. As with last year
the Board continues to have regulatory obligation to ensure that the Group has adequate funds to continue as a going
concern for the foreseeable future in a near worst-case scenario because of the uncertainty due to Covid-19 and to a
lesser extent the war in Ukraine. With the rising Coronavirus cases in Europe in early 2022, the Board felt justified in
its opinion that the pandemic is far from over especially in the region where the Group’s operations are, due to the
mutations and variants more infectious than the initial virus that the world has been combating. With this in mind the
Board continues to adopt a prudent view and in the light of the exceptional profit achieved in the year has declared a
final dividend of 5.0cts per share, in line with our reporting currency, in respect of the year to 31 December 2021 (2020:
1.0cts)."