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Hi Guvvi
I used to hold. You are probably aware of this:
https://www.reuters.com/article/us-indonesia-palmoil-tax-idUSKCN2DY0HH
CPO still looks very strong. GL
Hi all, new to this board but not the forum. Just started buying lumps of shares here this morning after spending last night reading about the business.
Looks like good risk reward given the cash balance and the likely unappreciated profits coming our way given the CPO price.
Anyone care to add anything to the opportunity here? Any significant risks other than CPO price/covid?
5 months CPO +26% on last year + 25% price increase = will be a pretty strong 1/2 year result.
It didn't mention net cash, but 3mth quarter 1 showed $142m net vs $115m at year end so could be near $165-170m.
This equates to well over £2.50 a share cash which makes the share price pretty ridiculously cheap, but as others have pointed out, I can't square up the lack of progress (need for money) on planting against paying just paltry dividends.
This would surely spotlight the ability to make cash and progress the dividend and the perhaps then, even the share price !
PAT = £38mn - superb given Covid
I do not have access to earnings pre-2014 but this is the best showing by the company in 6 years of info I have.
SP Action - previously with PAT at these levels in 2017-18 - SP ranged from 700p - 860p (no. of shares outstanding is the same) - so SP performance this year - rather subdued.
Divies - frugal indeed.
Bonus - surprisingly no dour finals words from lady chairman this time round.
Well done to the team. P.S any chance of increasing your divies pal?
Excellent TU.
For 2020 FY, could they possibly beat their 2017 results of $36.2 mn PAT?
per most recent TU, for 2020 H1 - PBT was $16.8 mn
And we know from production that FFP were pretty good for Q1 2021. My guess, with cross read on MPE is that their production was pretty abundant with CPO for H2 pretty strong.
Indonesian import levy only capped profits made from the 10th Dec 2020.
So my guess is that 2020 FY results - due in Mid May will be fairly close to 2017 results. Excellent.
Cross read from MPE
https://www.morningstar.co.uk/uk/news/AN_1607365657841784100/in-brief-mp-evans-notes-indonesian-government-change-to-export-levy.aspx
7 December, 2020
MP Evans Group PLC - producer of sustainable Indonesian palm oil - Says Indonesian government makes changes to its palm oil export levy, effective from Thursday.
"These increases had been widely anticipated in the market for some weeks and reflected in contracts for crude palm oil struck by the group," MP Evans notes.
Says the newly-announced tax increases the revenue available to the Indonesian government to implement its programme of "boosting production and consumption" of palm biodiesel.
MP Evans expects changes will have only "very limited" impact on the company's 2020 results and the longer-term prospects for both the palm oil sector and the group remain positive.
Current stock price: 640.00 pence
Year-to-date change: down 12%
By Lucy Heming; lucyheming@alliancenews.com
Information taken from SIPEF:
"In concrete terms, this means that from December 10, and based on the same reference price, for sales of palm oil from Indonesia, a combined export levyand tax of 213USD/tonne(= 180USD/tonne+ 33USD/tonne) will be charged or an increase of 125 USD/tonne."
https://www.sipef.com/media/2349/20201203-press-release-exportheffing-eng-final.pdf
CPO prices per Rotterdam
4/12/20 - USD 920 (8 yr high)
Feb 2020 (assume start of Feb since in the Feb month - CPO deteriarates due to covid) - USD 730
Financial Performance
4/12/20 - H1 excellent, best H1 for at least the last 3 years. $16.8mn (PBT)
Feb 2020 - whole year was not so robust (H1 19 - $2.1mn PBT)
Harvest
4/12/20 - robust supply of FFB as per Simon Thompson's article
Feb 2020 - too lazy to check RNS
Share Price
After H1 RNS - Price uplift from 486p to 531p (offer price) - Aug 2020
SP on 4/12/20 - 550p (joke!)
From Aug 20 to now, we get the benefit of obtaining valuable information not known in Aug 20
- information reveal of H1 20 performance
- information reveal of of Q3 2020 supply
- information reveal of CPO prices (From Aug to Dec 20 - CPO prices have shot up by circa $200)
- information reveal of little to no impact on El Nino weather on company performance
- information reveal of India coming out of lockdown - increasing demand for palm oil (a lot of used in restaurants / catering industry)
- information reveal of excellent company financials during H1, i.e. net cash, profits, cashflow etc
- information reveal of stock liquidity. In Aug 2020, PI interest was muted. Last month or so demonstrated PIs interest.
information reveal of future medium term prospects of palm oil industry - if weather holds up - pretty robust given Indonesia and Malaysian government pushing for palm oil to be used in their biofuel program.
However Aug 20 SP 531p
vs
4/12/20 SP 550p (offer price after recent fall back)
Given all the information that you know now compared to Aug 2020 - is the current SP not an absolute bargain or what!!! Dyor.
Own production up 6 per cent year to date.
¦ Crude Palm Oil average price 26 per cent higher.
Anglo-Eastern Plantations (AEP:560p) has issued a bullish third-quarter trading update that points to a major profit recovery this year, the primary reason why I included the shares, at 570p, in my market beating 2020 Bargain Shares Portfolio.
Anglo’s primary activities are crop production and processing of crude palm oil (CPO) and some rubber from 16 plantations across Indonesia and Malaysia. The company has extensive landholdings amounting to 128,200 hectares, of which 72,696 hectares is planted. CPO, together with its related product, palm kernel oil, is derived from the fruit of the oil palm and is one of the four major vegetable oils. Non-food applications include use in bio-diesel and oleochemicals.
In recent years, a combination of oversupply and competitive pricing of other vegetable oils placed significant pressure on the CPO price (ex-Rotterdam). However, I anticipated a sharp rebound in 2020 based on specific drivers including: a reduction in supply coming onto the market due to a reduction of fertiliser applications by planters; lower prices keeping a lid on industry production growth; and Malaysia and Indonesia pushing through increases in their biofuel mandates.
The Covid-19 pandemic has certainly created unexpected price volatility, but the CPO price is certainly moving in the right direction, rebounding by 26 per cent to average US$665 per metric tonne (mt) in the first nine months of 2020 and surging by 20 per cent from US$710 to US$855 per mt since the start of October. The price only averaged US$565 per mt in 2019. Likely supply shortage resulting from the moderate La Nina weather phenomenon and the surge in the price of soyabean oil, a competing peer, are supportive of strong prices holding for the remaining part of the year.
So, with Anglo’s own production of fresh fruit bunches (FFB) up 6 per cent and total CPO production holding steady at 295,000 mt in the year to date, expect annual profits to obliterate last year’s result. Indeed, first half pre-tax profit of US$16.8m was only US$2.1m shy of the total profit reported for the whole of 2019, and Anglo is now benefiting from a very strong pricing tailwind in the fourth quarter.
There are no analyst forecasts in the market, but I would not be at all surprised to see full-year pre-tax profit double to US$38m to produce earnings per share (EPS) of around 60 cents (46p). Strip out Anglo’s net cash of US$90.2m (174p a share) and my financial models suggest the shares are currently being rated on a prospective cash adjusted price/earnings (PE) ratio of 8. They also trade on an unwarranted 41 per cent discount to book value of 950p. A return to February’s share price high of 680p, and the 2017 high of 886p, is not an unrealistic possibility. Buy.
CJ66. Put it this way - CPO Rotteredam http://www.palmoilanalytics.com/price/16
is at a 8 yr high. Had a little dip in Nov but back again.
Simon Thompson's article on 16/11/20 - Investor's Chronicle mentioned all the salient details that a PI needs to determine where this stock is heading. I was actually quite excited seeing the SP had fallen so I added another tranche. IMHO, at current SP (offer price) of 545-550, is an absolute complete joke when -
1. u already know H1's result was a bumper H1
2. 9 months TU in Nov 20 informed PIs that supply was more or less robust.
3. El Nino weather - should not hamper overall revenue for plantations given if weather bad, supply lower, CPO prices higher / if weather good, supply higher, CPO prices lower - in both scenarios - revenue to individual plantations are similar (IMH but I'm no expert).
4. The company has wads of cash and has been around for yongst. No geopolitical risks.
5. When I added to my position at 491p a few months back, I was concerned about stock liquidity. That's no longer a concern given the recent volumes in the past month.
- IMHO, when u know the company is going to have a bumper financial year + bumper harvest and I expect the SP to be at least north of 780p, and the SP falls so dramatically - why wouldn't I add?
...just to add that particularly aep with a small float and trading volumes - tends to go up and down large amounts - but if the positive holds this could rocket around results time....as a cyclical stock these 2 minnows always seem to be behind the commodity curve both up and down!
Buy and hold?
Hey Rugs, tenacity or what! Well you circa 10% off. Given cpo prices (wobbled a bit of late but still holding up) + relative young estate, MPE, I reckon will do pretty well for next TU. You are a plantation man! SP's been wobbling with the recent profit taking on all stocks!
Have held MPE since june 2015. In and out a few times. Currently in at over £7 !
Also hold DKL AND RE. sold out of PAL as became bored of the pumping and dumping.
Long way for this stock still to go Rugs. CPO prices holding up. Me thinks a distinct possibility of smashing 2017's EPS where the SP touched 868p. Have you bought MPE as well?
Seems our patience has been rewarded.....
Next TU is for the full year. I am expecting for the last 1/4 of this FY to be stellar.
With :
- rosy outlook of CPO presently (demand wise)
- CPO prices at 8 yr highs
- AEP having made $19mn pre-tax for H1
- internal production for 9 months of fresh fruit bunches (ffb) being 6% up compared to last year
- current weather being conducive for strong ffb yield
I really think they are going to smash FY20 and could be best ever results for the past decade.
Simon Thompson just wrote up about AEP in investors chronicle.
If it helps anyone - this site helps u keep tabs on latest cpo prices.
https://www.investing.com/commodities/crude-palm-oil-historical-data
Thanks Rugs for DKL and REA - will look at them later. Volume up due to favourable RNS
Thanks all your input, apologies for not coming back to you sooner. Am now happy that I bought more at 480 to average down..... FYG I also hold DKL and REA, both of which are well undervalued. DKL in my view is going to move upwards when the cashew plant starts up, at least I hope so ! rgds
7/11/20
https://www.thestar.com.my/business/business-news/2020/11/07/palm-oil-price-rallies-to-eight-year-high
Note that AEP plantations are in Indonesia - hence the key highlights of this bloomberg article -
Indonesian output could be flat this year, he said.
Supply worries are emerging at a time when demand stays strong. Palm oil imports by India, the largest buyer, probably climbed to a three-month high in October as traders built up stockpiles before the Hindu festival of lights when consumption of fried food increases.
Indian purchases are expected to remain strong amid a gradual recovery in demand from bulk users such as hotels and restaurants that account for 33% of the total consumption, according to G.G. Patel, managing partner of GGN Research.
“Talks about Indonesia raising levy made consumers speeding up buying, ” Bangun said.
It appears that Indonesia is committed to its biodiesel programme, he added.
Indonesia, the world’s biggest palm oil producer, collects palm oil export levies through the Oil Palm Plantation Fund Management Agency, which in turn uses the money for biodiesel incentives. — Bloomberg
I reckon we are near the beginning of the similar SP move that AEP made from early part of 2016 - mid 2018. Highest SP at that time oct 2017 - 880p
I suppose the relative spike in volume is because Q3 TU is around the corner - prob early next week. Should be a good one given the CPO prices + limited observations on the weather hold.
Strange thing with Palm Oil was that during lockdown for India, given that they are a major importer. You would have imagined that due to the decreased demand for palm oil by restaurants / cafes etc there would be oversupply and a fall in CPO price. But no, the CPO kept going up and up! A bit like FTSE just after lockdown!!! Surprises one after another.
Rugs - I think your timing was just unfortunate -
1. last few yrs - much left to be desired w.r.t AEP performance. Only this yr, have they gone ape. This can be seen in H1 figures. This is testament that the good old times are back again.
Thus, just because CPO prices had gone up at start of yr, investors, presumably naturally sceptical.
2. C19 - the black swan event. After that, AEP was probably last of their priorities. However, the neglected fact is that the CPO prices have rocketed.
I have been keeping a keen eye on the listings of palm oil producers/plantations on the main board of the KLSE. They appear to be performing robustly.
Well 51% is owned by the Lims per stockopedia.
You've got these guys owing nearly 18% - a pension fund based in Antwerp - https://www.dnb.com/business-directory/company-profiles.nokia_bell_pensioenfonds.1725151b5301f585854824867f878d0d.html
Also, more recognisable name - Corporation of Lloyds of London owning 1.44%.
So a focus on corp governance will still be strong.
Company has been listed for ages too - so not a fly by night op.
It's crazy rugs. This stock is absurdly undervalued.
I suppose it takes a few hours for a PI to understand palm oil market. In short, charts dont lie - https://www.investing.com/commodities/crude-palm-oil-historical-data
In addition, most recent TU speaks for itself - https://www.investegate.co.uk/anglo-eastern-plant--aep-/rns/results-for-the-six-months-ended-30-june-2020/202008261200052158X/
No reason why these CPO prices can not continue for forthcoming months, possibly pass $900 potentially. I was initially concerned about the harvest of fruit bunches. However, El Nino weather, as i understand, has just started, and they have another 2 months until EoY. As mentioned before, not being an expert, but after initial research, as mentioned if weather bad, then supply limited, CPO prices go up. If weather remains good, then supply more, then CPO goes down but quantity sold by AEP + other palm oil producers go up (so revenue remains relatively stable in both scenarios).
My small purchase not even showing. As you are aware AEP is really virtually a private company run by the Lim's. So I guess Mrs Siew Kim and her family are happy just to build up the assets which as you say are far in excess of the market cap.
Scooby. I bought into AEP a year ago thinking it was undervalued then ! With CPO/PKO prices nearing record highs this share is certainly not getting the attention it deserves. I plan buy more to average down. rgds