Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
The SP has been at or below this level since mid November without prompting any sort of sustained buying. So what is different today? Maybe there is a share tip around that I haven’t seen, or maybe someone knows something that I don’t. Whatever the reason, it is surprising to see so many buys, especially as it has had little impact on the price. Let’s see what the production update brings, probably tomorrow.
My broker is on full ask and 2.015 on the bid so I expect 2.10 on the ask but sadly the bid stuck on 2p though sellers might get 2.02/.03 . Can't see it staying at 2.05p for long.
I have never seen so many buys without a huge dump in the background. Brokers must have been holding a lot of stock to be able place some 4 m shares without trying push up the price....
Is no longer the question for now at least as 2p on the bid is restored and we have a wave of small but persistent buying. A decent update would surely spur further uplift but can DKL oblige? Hopefully the cashew issues are not structural because it really could be a lifeline here. The company should be throwing money at it to make it work as it is just in its infancy 🚼. But is it beyond their capabilities?
Thanks FK, whilst that may well be true it is at least reasonable to observe that the prices Dekel have received over the past few years, if not perfectly mirroring international prices, are closely aligned and hence it's a useful enough guide.
And it seems from the reported trades that there are only buyers around even now. Back in the bad old days we used to have large unreported sells so you would wonder whether the return of Dumper Dude has triggered a retrace. Of course we also know that there is always 'inspired' selling ahead of bad news at Dkl so that would be a bad omen ahead if a production update.
FKI. It's weird. Only buys still showing yet the price has slipped. On opening for a 100000 dummy trade I needed 2.098 to buy and could get 2.033 from the broker for a sale. As at 1330 the prices have slipped to 1.99 and 1.96
I wonder why ??
Good afternoon Harchris. DKl have flip flopped a few times about their pricing mechanism but my understanding is that it is tied to local CPO prices and there is a disconnect with international prices. Unless they move in tandem the international price won't have a definitive influence on the price DKL achieve.
PO prices are now bring predicted to range between M3700-4100 through 2024, modest gains on the current price. That would be more than enough to provide solid cash generation and profit but of course output needs to remain as consistent as it has this year and the cashew project needs to flip from cash sucking to cash producing.
The foundations are in place and the potential is there, it now rests on execution. Time will tell but fingers crossed for a good couple of updates (cashew and palm) later this month.
I think 🤔 wider market sentiment is weighing on shares as there were only reported buyers so far. The MMs are maintaining the wide spread which hardly helps. The directors are as usual sat on their hands despite the lowly share price but that is to be expected of them given their reluctance to support the SP and their preference for dilution. Let's hope the production provides some ✨️ sparkle instead.
And we arrive. A bit belated but happy enough to see 2p on the bid restored. Especially in advance of the next update. Hopefully the BOD don't manage to sour the next production update with some mealy excuse but if we could get decent figures I think there could be a further rebound in the offing. Obviously nowhere near enough for the dreadful SP performance to be rectified but any clawing back of losses is a small mercy.
Welcome to 2024 Dekelites. Significantly more purchases than sales today yet the share price falls. Isn't it reassuring to know that, in these strange times, there is one stable and predictable occurrence which is the ability of DKL to comply with the laws of gravity and sink ever lower into the abyss. Happy new year all!
Some 150,000 sold by mid afternoon at 1.93
If there is an issue*
To move back to 2p shortly. As Rugs pointed out the large trades seem to be finding a buyer. We are in high season now, at least DKL high season as they somehow extended it some time ago from January to June to include December. Whether 2p will underpin the SP is rather down to our hapless board who like the England football team struggle to achieve two good results in a row. We can be assured though if the issue with Cashew production then it is most certainly region wide but any progress us of course DKL specific
That's what I'm saying, we're past the point of trusting forward guidance but don't be dismissive of actual results on the record, and on the CPO side this year they really are very positive.
CPO production year to December - 36560T, same period last year - 23354T
A 56% improvement is great and we know that prices continue to hold firm around €800/t
The SP is yet to respond but assuming that these results are strong enough to meet all upcoming debt deadlines we should be close to a sharp share price reaction. And if cashews were to suddenly, for once, surprise to the upside then the reaction will be even starker.
* just about to
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.