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Indebted companies issue shares, that’s a simple fact. Further back there was more dilution because of placings, if DKL had instead chosen to take on more debt through loans back then they would have folded by now, your shares would be worth zero … actually I’ll go a step further. The big problem is they’d didn’t raise enough in the last placing at 5p a share, if they had doubled that issue and raised £6m they’d be in a far healthier place right now.
My choice of Jan 2022 was to show that in recent times dilution has slowed dramatically which is a good thing as the share price has sunk to these lows. What we need to see now is cash generation and profit and with it a big move north in the share price… if that were to happen then the ‘dishing out of shares’ here and there would create even less dilution because it would require far fewer shares to cover the same payouts.
You’re frustrated but blaming it on dilution is (and I’m repeating myself) nonsense. The share price is where it is because of poor operational performance, turn that around and return to profitability and the share price will take care of itself.
I see the palm oil price has just breached 3800…we need more of that and for the cashew operation to be sorted asap - then all of a sudden those broker targets come back into focus.
Its staggering really
25% dilution in 3 years and 37% in 4 years
and then to say this has nothing to do with the share price performance!!
HarChris, you've clearly picked a point in time (January 2022) that fits your narrative, so let's look at the data:
Total issued share capital:
2016 - 154,326,632*
2017 - 295,995,774
2018 - 299,471,369
2019 - 353,341,082
2020 - 423,895,851
2021 - Can't find data.
2022 - 537,098,441
2023 - 559,404,153
Source: dekeloil.com / dekelagrivision.com
* 1,543,266,322 before 10x consolidation on a 10 for 1 basis in June 2016.
That looks like a lot more dilution than the 0.15% you mentioned last week and 4% earlier today.
Good posts above. J/k good afternoon I can answer your question. There is no nadir at which the board would not issue shares. Using cognitive dissonance where the acceptance in a related transaction is always sold to us as a vote of confidence means the number issued is irrelevant or maybe even the higher the number the more pleasing it is to issue the shares in the board's view. It also looks like another fund manager must have moved on as in DKL world this can only be the reason for a fall and not sheer incompetence...
Well we would have to agree to disagree then HarChris - the dilution over 10 years is exactly why the SP is where it is - shares in issue up 5 fold, market cap up 50% - long term holders down 70%+
If its not this - can you please explain your theory on why the share price is where it is? is there anyone here that doesn't think over the next year or 2 that the cashew operation will improve, cash flow will get better, revenues and profits will increase? - so to say the share price is down based on delays to the cashew operation i would question! if it was just this people would be mad not to buy in on the back of latest positive monthly updates and negative share price movements! - so to Danny's point why aren't they!
4% over 21 months i think is excessive - and what was this dilution for? what value add activity have we seen for an additional 20m shares - if share incentive schemes actually work what has happened at DKL? if these are incentivising the directors all we can assume if they aren't competent enough to act on the incentive as performance is woeful.
and its interesting you pick 21 months - what dilution did we see just before that on the back of the 'cashew acquisition'
the major dilutions have been on the back of 'related party transactions' and i expect if you then add up all of the further nonsense dilutions e.g payment for services, salaries for directors, share incentive schemes i expect they alone would be a further 15% + dilution
If the company continues to operate as it does then none of us make a return.
lets put is this way - if every 21 months we see a 4% reduction - in 5 years there will be 12% reduction from now, over 600m shares (going from a 5 fold increase in shares in issue to 6 fold from 10 years ago) - small percentages on what is now very big numbers add up.
Nothing of what anyone is writing here will have any influence on the share price!
What is does do is influence retail investors. An investor is someone who effectively lends a company money and expects a return.
Now look back and tell me when an investor made a return on this in the last 10 years? - if you were lucky and traded at certain periods maybe yes, otherwise a big big no.
Just a few month ago at over 3p the consensus was that it can only go up (together with a deluded 9.5p valuation). Today the sp is 2.3p… so anyone who has urged caution should be applauded. This has potentially saved any retail investor a lot of stress, money and aggravation. - Fact!
Is it now low enough to risk an investment? If you look how many shares the directors are buying the answer is a big no. They are happy to issue new shares for free, but not risk their own money to buy 2.3p shares that are apparently worth 9.5p right now … this tells you all you need to know.
I was one of those people who challenged you on this 'ongoing dilution' narrative because it's nonsense, although I don't think I described it as deramping, just silly.
Going back to January 2022 I see there were 537,098,441 shares in issue.
Today, 21 months later, there are 559,404,153 shares in issue.
So in 21 months shareholders have been diluted 4%... you will struggle to find many, if any, AIM companies that have diluted less than that over the same period.
This is not the reason the share price is where it is, not even a minor factor.
Yes to claim we are de-ramping is totally counter intuitive.
If it wasn't constantly called out it would continue (as indeed it has continued to date) and none of us would see any return - old or new shareholders.
Dekel should and can be successful (don't forget DKL Market Cap is up 50% over the past 10 years - yes ok its not stellar all - but it is up) - it's only retail S/Hs who are down, and down significantly - by calling this out and trying to get change - we are actually doing the best we can for the stock price for retail s/hs
if we can influence the board and make it known we see the self interest and what has happened over the past 10 years - and help ensure that they cannot profit from this ongoing behaviour - perhaps we can influence change and we can collectively be successful.
ignore it and allow it to continue - and we will all continue suffer - the board would happily just keep funnelling the reward to themselves - and if we all kept ramping based on improved production, revenue etc we'd just be helping them
Totally correct dbentley, the issue is as the dilution occurs in dribs and drabs, some holders/passers by are taken in by 0.15% here and there, as if it doesn't matter.
They even claim that we are "deramping" by constantly complaining about it.
It's also always done at a premium to yesterdays close, which in itself is lower due to previous dilution. Well here's the thing, the SP is down at 2.4p - how much further can they realistically dilute?
Thanks Stacegibbs,
some interesting comments there and i sense some of the feedback is starting to register.
the comment 3rd party transactions and them not liking them, only done because Ghana fell through, is nonsense - the purchase of 100% of the palm oil operation was also done in similar fashion to cashews (unless i am recalling incorrectly)
The large sale due to a fund manager change - they do rotate stocks but they get rid of the dross - the shares not performing and where can see no change - i get they would like to gloss over it but that is the reality - DKL did not make the grade so it was released.
overall my view hasn't changed - i like to think some of the things we are saying is been taken note of - however nothing will change here now without action been taken to firmly demonstrate DKL is run in the interest of all S/Hs - not just the board - i don't think increasing production, revenue, profitability will be enough on its own - every increase simply met with dilution.
- DKL needs to visibly show that the days of issuing shares out for anything and everything are done - lets see them make an easy and small statement on this - get rid of the payment to a dir in shares - bin it at the earliest point - stop pretending its about confidence in the company (its a tax concession to a board member - everyone can see it and its not good)
- make it clear the drive to either share re-purchase or dividends - give us a timeline and lets see progress towards it.
- until performance and share price hit a certain level - say 5/6p (still significantly under the 9.5p they all claim is fair value) there will be no more share incentive schemes dished out to the board that further dilute the retail holders.
i guarantee the above will move the share price more than the monthly production numbers.
DKL needs to gain credibility - lose the self interest and start operating on behalf of all owners.
Seconded Rugs. The sheer nerve linking SP weakness to a Fund being wound down rather than their own incompetence. I reiterate if it is so undervalued they should be falling over themselves to buy stock in the open market and send us and the market a signal.
Jk. Many thanks for all your input on the call. Much appreciated.
DannyQSee, you're correct on most points, but the cashews should be at break even by the end of this current Q4.
They're at 13k-14k tonnes now, even with all the issues, so 20k break even point sounds easily plausible within 8-10 weeks. 24 months later than expected, but it is what it is.
Thanks jk, I know I am now out but they still swerved the director buying question. If they see it returning to the 3-4p swiftly then why are they not leading the way with their own purchases from their own pockets?
If I see that I may well look again but how do they expect others to believe in them if they don’t believe enough themselves
Just to complete the parish notices, this is what I missed earlier:
Continuing to sell at the nursery to increase capacity in the region for future years.
9.5p target price is based on the projected 40k-45k CPO tonnage.
All essential components are on site at cashew facility but if there's a problem with one part (i.e. shelling/peeling) then it has a knock on.
At this stage, while the cashews are ramping up the reporting will remain quarterly, but yes once the cashews reach a steady stage of production we see that shareholders like the monthly results and aim to move to monthly reporting of cashew numbers and provide even further KPI information on the cashew business.
FAO: dbently, your question on related party transactions - when it was first started to be acquired a number of years ago, the cashew business, people don't like related party transactions. The answer from our point of view is we completely understand and agree, this was more oportunistic than our strategy at that point. The initial goal was to move in to further palm oil companies and we were trying to acquire a company in the west of Ghana (stacegibbs, you will no doubt remember Norpalm?) and that transaction fell through, palm oil prices dropped. We saw a need for the business to diversify and scale, the cashew business made a lot of sense, we bought it at I think 1/10th of the valuation by PKF and we are seeing this business at a really critical part of the next phase of growth in terms of both revenue line and profitability, particularly it seems next year.
FAO: Rugs. Question about big trades in September
That is correct, the stock price was sitting around 3.3p and there were some big trades that unfortunately brought it back to 2.6p
We are now aware of what that is, our understanding is that it was a fund where the fund manager left his position and the new fund manager did what new fund managers do and that is to remove all the small holdings of the previous incumbant. So that stock was sold on, given the size of the trade the price held up relatively well. Obviously back at 2.6p is disappointing, but hopefully presents a value opportunity and we've been at these levels before and moved back to 3p-4p so hopefully with this presentation this week, people will see this as an opportunity as we move in to cash flow positive on cashews and high season for palm oil in the coming months.
(No mention of director buying.)
The missing line about share buy back was "At this point in the current macro weakness and lack of liquidity in AIM stocks probably I think a buy back may be a more positive mechanism [than dividend] but the focus at the moment is on reducing our overall debt level."
We think the WH Ireland valuation target is reasonable [at 9.5p].
Significant organic growth in the cashew business to come.
Finally given up with Dkl - 7 months of continuous improvement in revenue and sales and the price continues to drop. If we get any unexpected bad news then it would be a disaster rather than a blip. Good luck to all who stay strong and hold. I see no movement for at least the next 12 months
The bid is 2.50 and the ask is 2.70 and 760,000 goes through at 2.70 surely LSE could work out that it was a purchase....
LT holder here. Don’t often get a chance to post. Thanks to those who follow the company more closely and report back on here. I share the frustration at the stubborn refusal of the SP to respond to the recent good news. Stepping back I think a large part is nervousness as regards leverage in a high interest rate environment. Net Debt at Interims was c. Euro 30m. Market cap is a paltry £15m in comparison. Whether using multiples of leverage as a % of mkt cap or net debt / ebitda it’s clear the picture does not look pretty. But start paying it down, as hopefully the company is about to start doing thanks to positive cash flow and you will get more than a 1 for 1 benefit. What I mean is that every £m of debt paid down has the potential to transform the high risk perception of the company and become more than £1m in mkt cap. I would argue that we are at the moment of capitulation around DKL. Mkt has given up. But actually there is really light at the end of tunnel. By end of 2025 with a meaningful chunk of that debt paid down there is no reason why this should not be closer to broker target rather than 3p ie don’t despair. And if you’ve come this far I definitely wouldn’t bail out now
Ekel Agri-Vision has now provided its Q3 2023 production numbers for the Ayenouan palm oil project in Côte d’Ivoire and the cashew processing plant at Tiebissou, Côte d’Ivoire. Charlie, what were the key highlights in your opinion?
The palm oil business continues to stand out this year, with both volumes and pricing at strong levels setting up what is likely to be close to a record performance in this business for FY2023.
How do you see the outlook for the company?
With the company taking proactive steps on the cashew project to get their plant running at full capacity, we see the long term outlook for the business as strong. With two fully invested projects in operation, the group be should strongly cash generative and in a position to reduce its debt balance in the near future.
Mc of 14m odd Is cheap - new business will be fully online 2/3 months and at break even !
Easy easy hold
After the podcast ?
At 0930 this morning I could buy 100,000 at 2.70 but only sell 10,000 at 2.50
At 1330 this afternoon the max I could buy was 10,000 at 2.50 but I could sell 100,000 at 2.415
These are for internet dummy trades. Mm's seem to be more interested in buying than selling at the moment.
The 9.5p valuation was pants years ago and won’t be achieved anytime soon which makes it completely meaningless.
Palm oil capacity won’t be at 100% for years (never mind the second mill that was promised years ago).
Cashew production nowhere near break even (let alone making a profit).
No dividend or buy back for 2-3 years.
Do your own research, but I know where I’m going to look for a return for my money (not here!!)
Part 2/2
Third commodity?
Pretty sure that Lincoln just repeated that this won't be financed by any further issuing of shares. One to check.
Extra Capex for the new shelling machines?
"Fairly modest."
Any further diversification?
Nothing new here. Clean energy, etc. All attention on cashew business for now.
Send any further questions to the usual channels and they will answer. Shareholders know that questions are answered usually within a day.
Interesting and exciting next 3-6 months.
"Light at the end of the tunnel". Looking forward to the next 3 months. SP has been harmed unnecessarily by a large seller recently.
Thanks to Shai and Lincoln for their time.
Part 1/2
Highlights from the conference call for those unable to attend. As usual DYOR and the video is usually posted on the website at some point.
Shai and Lincoln both present, no sign/mention of Youval despite the RNS stating otherwise.
Starting off by just summarising the results. For the purpose of this commentary, will bypass this as it's all in the RNS's and concentrate on the Q&A's, of which there are a few!
Palm oil performing well, cashew "not to the level" we were expecting. Significant organic growth potential in 2024 and 2025.
Cashew expect to achieve operational cash flow positive results towards end of Q4 2023.
RSPO certification ready and waiting audit on palm oil. BRC Global food standard assessment completed on cashew operation.
Positive results of internal feasibility study for third commodity project.
On to Q&A now.
Palm oil:
Why are we still operating at half capacity?
We are operating around 65% of full capacity. Continuing programme of fertiliser - working well. Still dependent on small holders. Able to keep our market share of the business, consider it as a success.
40k-45k probably the expected tonnage and optimum level we can achieve, not 60k tonnes in next 2-3 years anyway.
Cashews:
Why has it taken longer than expected?
Definitely a delay in ramping up. Two reasons, contractor delays with COVID, etc. Shelling and peeling issues with equipment. Learning all the time.
Peeling showing significant improvement now in performance. Next few months will sort peeling issue. With shelling, they have ordered 10 additional machines to arrive in next few weeks and installed more or less immediately.
Moving up to 13-14 tonnes a day now, breakeven point is 20 tonnes a day.
Frustrated with the supplier, doing everything they can to take control of issues. Ordering of additional shelling machine a good example of that.
Why no financial calendar?
Much more difficult for smaller companies reliant on auditors concentrating on blue chips.
No other palm oil companies reporting monthly, we're very transparent.
Dividends/buy back?
Priority is to clear debt sensibly over next 2-3 years. Not currently on the agenda, but will be back on agenda at some point. Mentioned something about buy back being more preferable, but missed the end due to interruption.
Third party transactions (dbentley)?
Sorry, I missed this answer due to interruption so will need to check back.
Share price?
Sorry, I missed this answer due to interruption so will need to check back.
WH Ireland 9.5p valuation, is it too low?
Sorry, I missed this answer due to interruption so will need to check back.
RSPO certification situation?
Covered above.
Why is cashew business so far behind?
Problem with cashew appears to be mainly peeling and shelling off the back of that. Equipment issues and continued teething problems, see above.
Palm oil harvest levels?
Yes, they will always be unpredic