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In sept 2020 - here goes
Anglo Eastern Plantations delivers tenfold profit surge
When I suggested buying Anglo-Eastern Plantations (AEP:524p) shares, at 570p, in my 2020 Bargain Shares Portfolio it was predicated on a strong profit recovery this year. The Covid-19 pandemic may have created uncertainty, but the company is clearly delivering. Importantly, Anglo’s plantations and mills have been able to operate close to normal levels, so output has not been negatively impacted.
In fact, buoyed by a 23 per cent increase in the average crude palm oil (CPO) price to US$648 per metric tonne (mt), albeit that’s below US$878 per mt at the start of the year, and 9 per cent higher production of fresh fruit bunches, Anglo’s first half revenues surged by 26 per cent to US$123m. Pre-tax profit increased tenfold to US$16.8m in the six-month trading period, only US$2.1m shy of total profit reported for the whole of 2019. The CPO price has recovered to US$700 per mt since the start of the second half, although low crude prices and higher seasonal crop production may lead to some downward pressure later this year.
However, that’s more than priced in with Anglo’s shares trading on a rolling 12-month price/earnings (PE) ratio of 10 and on a 30 per cent discount to book value. That seems overly harsh given that net cash of US$89m covers total liabilities of US$53m and property assets of $355m (£269m) are worth 27 per cent more than Anglo’s market capitalisation of £211m. On a bid-offer spread of 512p to 524p, Anglo’s earnings recovery is underrated. Buy.
The Crude Palm OIl price is getting closer to a 5-yr high (I have not even checked back before then). Yet the share price is languishing. Unbelievable value at these prices. https://www.investing.com/commodities/crude-palm-oil-historical-data
Simon Thompson of Investor's Chroncle has written up regarding this stock twice this year. Interim results were excellent. In fact, best they have been for quite a while.
Completely underappreciated, backed up with robust financials with a commodity price that has rocketed over the past few months. C19 does not negatively affect demand or supply.
Supply wise - From reports, El Nino weather has just started. From my understanding, a cycle of every 5 yrs where the weather gets super hot. For palm oil, from what I see, if supply is impacted due to the weather, the CPO price goes up (due to limited stocks). If the weather leads to increased supply (e.g. super hot weather potentially leading to higher yields of palm bunches), more quantity and CPO likely to fall to compensate for higher supply quantity. All in all, from my research, El Nino weather does not really affect the overall revenue made by palm oil producers in the short term.
Check out the share price action - a few yrs back - the SP was £7-£8 region. I reckon FY20 is going to be one of the best years for AEP despite C19. H1 they made $16.8mn PBT.
The only issue with this stock - is volume. Unfortunately, it does not have broker coverage despite its size. Hence, a lot of investors follow follow their competitor MPE (LSE listed) which has broker coverage.
This seriously offers compelling value for investors.
The Commission also freeze his bank accounts
Senior Independent Non-Executive Director of AEP, Lim Tian Huat is under Malaysian Anti-Corruption Commission investigation for corruption in Malaysia. You certainly do not want a board of director who act with no integrity and ethics.
willing buy my holding at 5.23 so prices heading upwards.
out today. Surprised to see no trade or price rise. What do holders want ?
Outlook
FFB production for the three months to March 2020 was 3% higher against the same period in 2019 mainly due to the increase in production from Bengkulu region. It is too early to forecast whether the production will be better for the rest of the year.
The CPO price ex-Rotterdam opened the year at $878/mt and averaged about $725 for the first three months of 2020. CPO prices and export demand suffered temporary setback following the outbreak of Coronavirus in China which has since spread to many parts of the world. Depending on the length of economic lockdown amongst the major consumers of palm oil, the common consensus amongst the industrial experts is that CPO prices are expected to be fairly better for 2020 due to higher demand from palm biodiesel mandates in Indonesia and Malaysia, on top of a potential shortfall in FFB production due to the dry weather in 2019 and the lower application of fertiliser. New planting in palm oil industry has also slowed from 2015, partly due to a forest moratorium imposed by the Indonesian government that limits the conversion of forests and peat land for oil palm development which also help to cap supply.
The reported lower soybean output in United States in the coming year further reinforced the positive sentiment for
palm oil price.
A rising CPO price may however discourage discretionary uptake as cost of blending palm biodiesel may be more expensive than the traditional fossil fuel. It is likely that at some point forward, some demand may shift back to soybean oil as China’s relationship with United States improves and the demand of soybean meal picked up as it recovered from the culling of hog population due to the African swine flu.
The rising material costs and wages in Indonesia are expected to increase the overall production cost in 2020. The Indonesian government recently announced the 2020 national minimum wage increase averaging 8.5%. These wage hikes will raise overall estate costs and may erode profit margins.
Nevertheless, barring any unforeseen circumstances, the Group is confident that CPO demand will be sustainable in the long-term and we can expect a satisfactory trading outturn and cash flow for 2020.
This isnt much of an article,but fwiw
https://finance.yahoo.com/news/shareholders-look-hard-anglo-eastern-050818933.html?.
This share will rebound soon, I'm surprised that the share price is so low. The company has net cash of $77m and their property assets are worth $350m, together these are worth around £350m while the current market cap is only £180m. There has been no operational issues, palm oil prices are volatile some exports have slowed down to the covid-19 pandemic but picking up. I don't see a material change to company revenue and profitability and fundamentals remain unchanged. This will recover quickly IMO.
If this can hold above $600 this could be the turnaround.
I hope so as I have bought a few back that I sold a year ago.
With fairly fixed overheads the commodity price multiplies profits on both the ups & downs massively.
Don't know if any chartists out there can give an opinion on this one?!
Palm oil prices have now dropped over 25% from the $678 and today sit below the $500.
This will hurt with a reasonably fixed cost base as AEP has acknowledged, despite a 9% increase in production.
As a cyclical commodity, this should be somewhere near the bottom as profits become wafer thin.
AEP is well cushioned with cash in the bank, and I stand by the below for longer term, but it's going to take some while for the earnings to turn the share price again (despite the slightly bizarre 7p increase on basically a profit warning today!).
9 month trading update noted a 24% increase in FPO sales, 5% higher selling price, but the real indicator of profitability is the increase in net cash of 38 million dollars in 9 months, for a total 110m dollars or equivalent of some 2 pounds of the price per share being cash. With the earnings per share looking to come in around 75p. Biased as a holder for some 20 years, but originally buying in around 50p a share - I can confirm this is about as stable (despite being Indonesia) and uncovered low key share you can get. Not quite Trump proof as it works in dollars, but certainly Brexit proof!
Hello Yamsel, There are very few private shareholders in this Company. Over 50% held by one shareholder. In my opinion the shares are worth several times the current price
A good and financially very strong company, ,how ever it is another matter as to when the undoubted value will be released.
Is there another chat room for this share as nobody is here, must be talking somewhere?
No posts since 2012 ?
The Interim results are due in 10 days!
I continue to believe that this company is very undervalued now and even more on a three year view! The "market size" is only 300 shares and consequently very difficult to build up a worthwhile holding.
The shares in AEP. have had a welcome rise but would still seem to have some way to go to catch up with other Palm Oil producers. AEP P/E 12.54 Kuala Lumpar Kepong (KLK:MK) P/E 22.25 MPE P/E 19.38 REA (RE) P/E 14.71 SiME Darby (SIME:MK) P/E 75.32 WILMAR (WIL.SP) P/E 19.03 Does anyone have any views on the above?
AEP has got phenomenal earnings growth, and palm oil prices are shooting up! I'm aiming for 950p, which is just over 10x next year's earnings forecast. Any thoughts anyone??
I have a good size holding too - AEP should pay off quite well over the next year or so
I bought anglo-eastern plantation today. CPO prices are going up!
again! See link http://www.bloomberg.com/apps/news?pid=20602013&sid=aaRaT3QYbnwA&refer=commodity_futures Palm Oil companies to research: MPE, NBPO and this one!