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If DKL was half as good at producing CPO/Cashews as they are at producing shares and forward guidance, then I estimate long term holders would be just to break even on their investment.
I was going through the cashew updates the other day and there's no doubt how poor delivery has been vs expectations. I mean look at this from November 2020:
'Following the Acquisition, Dekel now holds a 52% controlling interest in the Cashew Project, which is on course to commence RCN processing operations at an initial annual rate of 10,000tpa in Q2 2021.' and
'The Cashew Project at Tiebissou is undergoing a phased development to capitalise on a major shortfall in cashew processing capacity in Côte d'Ivoire, one of the world's largest cashew growers. Phase 1 is targeting an initial annual capacity to process 10,000 tonnes of RCN. Phase 2 will involve a 50% increase in capacity at the plant to 15,000 tpa within a 24 month timeframe by increasing the number of shifts of employees at the plant from two to three per day, thereby negating the need for any extra capital outlay. Phase 3 will target a doubling of capacity to 30,000 tpa. The commissioning of the plant at Tiebissou is expected to take place in Q2 2021.'
I believe they are barely at 2500TPA runrate as of the last update - shockingly poor.
However another way to look at it is if they had executed (poorly) their plans via debt instead of equity at 5p placing, at 3.1p for further stake in cashew business etc DKL would almost certainly have been swallowed up by the debt position by now.
And they are about to post record yearly revenue and group profit almost certainly this year, the palm oil operations have improved significantly just in time to potentially get themselves out of a tricky debt situation that looked hairier earlier this year with debt maturity looming.
I'm going to go with the assumption that the board must have learnt from their mistakes, must understand at this point that it's all about focusing on the two business arms they have now, it's all about delivering stable and consistent operations and not taking their eye off the ball with other fanciful ideas.
The business is very simple - hence the initial attraction - sound solid business, build upon sound fundamentals slowly and take growing annuity type profits each year in form of expanded business footprint
2 issues scuppered us so far
- lack of delivery has resulted in numerous failed promises
- Dekel acquiring shell businesses (i.e. ideas) using significant issue of shares to BoD - and then requiring finance/debt to turn them into actual businesses - double hit
hence my ongoing point - sorry
- fixing issue 1 is critical - and i would conceded that we are starting to see more consistent positive updates - this needs to continue
- but point 1 will not be enough without evidence that we are not going to continually see more of point 2 - doesn't matter how good everything else is if this continues.
On paper everything sound simple.
If you look through the old decks the plan was to only focus on palm oil, have a second mill, second site and double production and get a sustainability certification.
Cashews weren’t on the deck. Then we heard about a third commodity and energy production. I’m addition the whole thing is also heavily reliant on debt and they haven’t turned a profit yet either (that’s the company and shareholders)… staff are being paid every month as I understand it.
If you can control the extraction rate there is a job waiting for you at any palm oil company of your choising
In many ways this is a fairly simple business to follow.
Two uncontrollables are the CPO price and cashew price. The former is the most important and continues to hold up well although stabilising closer to 4000MYR/t would make a huge difference to margins and the latter appears stable over the long term.
And two controllables, the CPO production/extraction rate and the same with the cashew project. 2023 has seen the former improving substantially and we await news on the latter next month.
Potential for a good run up into 2024 as things stand.
Recently some large million plus share deals classified as uncrossed trades where the bidder and the buyer agree on a price. So whoever is unloading is finding a ready buyer and this is preventing any further price slippage. Perhaps Miton to Aris ??
Seconded j/k you have been a sound fellow and excellent contributor on here. You deserve to be rewarded financially. DKl is very frustrating 😤 but I have met some sound fellows through it including you Cat and Rugs so there is some positivity. In hindsight most of us wouldn't have invested here bit that doesn't mean our experiences and opinions are invalid.
We are all clearly singing from the same hymn sheet on DKL, but not always in tune. Let's hope for a better 2024 and in particular a complete ramp up of the cashew facility.
On that note, a Merry Christmas and all the best for 2024 to regular DKL contributors as we head in to what must be going on around a decade of service to the DKL cause.
For clarity I should add to my comment re the situation with cash of just 212k against loans of 5.1m maturing within twelve months.
The interims also showed inventory valued at €6.6m and we've seen a huge increase in sales through H2. Positively mgmt have managed to offload the extra stock at fairly high prices. Revenue for July from palm oil alone came in at €5m for example, hence it looks like DKL will get themselves out of this mess and with much better times ahead as long as they can keep up the H2 numbers and get the cashew business sorted.
Sure jk but it wasn't me that was calling you and others stale and old, that was some other poster. All I've done is try to share the positive side, of recent operational progress and in return got called a mouthpiece for the board and a throwback amongst other things. No by you, granted, but by the poster I was responding to.
I've consistently played the ball not the man here.
In terms of who is dumping, Stacegibbs/Fundraiser has gone quiet again of late. Are you still around?
HarChris, there is surely no better case of "personalising the debate in what appears to be an attempt to stamp out alternative views" than by accusing posters of being 'stale and old', followed by telling them they should have sold up long ago.
Why would anybody sitting on a paper loss of 90%, due to a combination of factors - but mostly dilution - bother to sell?
That energy is much better spent holding the boards feet to the fire and hoping for the best (i.e. taking a punt) that things will improve in time.
I won't believe forecasts either as for example on the cashew side they went from claiming to quickly reach 50% of capacity in Feb 2022 and to be operationally cash flow positive by Q4 2022 to the latest Q3 update in 2023 which showed they're struggling to achieve 25% of nameplate capacity eighteen months after stating 50% would come quickly.
However I chose to stick for now and there has been significant strides forward on the palm oil side, so much so that we're going to easily see record yearly turnover posted for 2023 and profit too. And at just £10m mcap there's a lot of potential ground to recover.
OK fair points Harchris. There is a good opportunity here IF it works. The problem is the inconsistency of good performance and the consistency of bad perormance. Also you can't really believe a word that comes out the BODs mouth. Hiding things in reports and making up turnarounds in the last 10 days etc.
Don't get me wrong, I don't see only blue skies, I see the whole picture and recognise how much this investment is on a knife edge, short term. The biggest sell off came after the interims which revealed shocking performance from the cashew side in Q2 (which was hidden in the quarterlies) and cash of just 212k against loans of 5.1m maturing within twelve months. The slide from about 3.4p to the low of 1.8p is therefore understandable.
The risk of being unable to meet those upcoming debt repayments makes this a critical juncture. It's why I celebrated the enormous boost seen in November's palm oil numbers that continued an important streak of MoM improvements. It of course needs to continue and the same has to happen on the cashew side but get through this period without being forced into emergency fundraising and the anchor holding down the share price will be removed and we'll see a move swiftly back to at least 4/5p. Fail over this period and it'll get a lot uglier.
FK1. Well this 'stale old shareholder' is not selling at these levels although I must admit I have stopped buying more and averaging down. I really hope the cashew production is going more smoothly and that together with the much improved CPO numbers we will see the share price moving close to 3 in early 2024.
Two trades of 1 million shares each and definite sells seem to account for the fall. Perhaps some big punter has decided to switch out of a commodity stock into the wider rally. Strange at a time when DKL could be turning a corner but I think it should be pointed out for balance it is often against weak comparatives. When I first invested I expected production to ramp up to full capacity and yet 10 years later....
I am all for balance and opposing views Harchris. I said so in my post that you replied to.
The ask has fallen to 2p again so the suvkers rally seems over again. I would love this to start gaining momentum but seems like small steps forward and leaps backwards.
The bigger difference is that I wouldn't be here if I thought all was lost or that the share price wasn't, on the balance of probabilities, going to rise in the future. I'd have cut my losses and kept my frustrations to myself.
To claim i'm some sort of board mouthpiece when there is undeniable progress on the operational side is ridiculous - if I was being deluded and dressing up every failure as a positive somehow then it would be reasonable to make such an accusation but pointing out and promoting the huge year on year growth in CPO production seems reasonable and valid from an investor perspective to me.
Pardon? I happen to come at things from a more positive angle, probably because I have a far lower average than you and you come at everything from a negative, more pessimistic angle. There's room for both points of view, it's what gives balance but you are intent on personalising the debate in what appears to be an attempt to stamp out alternative views.
You do you and I'll do me.
As for NAV, usually you'd expect to command a price earnings multiple on any profit too, which I'm hoping we'll see posted soon. 3p would be a good start but somewhere between that and the broker forecast of 9.5p is my target.
Two excellent posts which I commend highly. I hate to say it on any board but Harchris and Heresandnow come across to me as mouthpieces for the board though of course entitled to their opinions. And I suppose they do add balance to the disgruntlement I and others share.
At least the ask has gone above 2p again. I got a nagging suspicion the company I.e the BOD will conjure up some issue with the cashew nuts when the next update comes. I also have a foreboding of a placing under some guise, a discounted one of course. If so it will be the last straw for me. Happy to be wrong on both counts I hasten to add.
Its what we have been saying for a while - at the risk of been a stale old timer as Hereandnow tells us - it is worthy of note for everyone
this share will change when we've had a period of not just positive updates - but sustained proof that DKL is operating on behalf of all shareholders - not just the BOD (i wont go over all the reasons again - but ive been saying this for a while now)
with regard the valuation you can definitely make the case that DKL is worth alot more than the current valuation - as Danny notes below the current valuation is basically no higher than the current net asset value!
value doesn't impact share price though if board have history ofv finding ways to focus the additional value on themselves
i know its boring and stale hereandnow and you are sick of hearing it - however how about the solution been that the board adjusts its behaviour and shows a sustained effort to reward shareholders - rather than the solution be that everyone who can't shut their eyes and close there ears should sell up and move on.
This valuation is complete fantasy.
Any share price is a valuation of the actual business.
If you look at the annual accounts is says the current assets are valued at 54 million, but there is also quite a bit of debt of 39 million. So if you were to sell it all and pay off everything you still have 15 million left. - That’s the valuation. That’s a share price of about 3p (more or less).
No there are other factors that can influence the valuation. Low interest payments on that debt or brilliant management or any unique and amazing business idea or patent that can’t be replicated easily.
None of this applies here, that’s why the share price is 2p.
Unless they are rearing chickens that can lay golden eggs this won’t change in the foreseeable future.
Please always do your research and don’t take my word for it.
And sadly back under 2p again. One month's exceptional performance was never going to be enough to underpin the SP but you would have thought there would be an absence of sellers. It is going to be a long road back to any recovery under this BOD.