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Could be a good top up opportunity for long term holders. Now that share buybacks are cancelled the support has gone.
4 shares purchased, 5 shares sold.... taking fees into consideration it must be marginal if it’s worth trading such low volumes.
KLK are still on the acquisition hunt,
news from April https://www.theedgemarkets.com/article/klk-buy-60-stake-indonesia-oil-palm-firm-rm342-mil
I have read the views expressed, but sadly nothing worthy of further consideration has been furnished.
I think the Board's valuation is based on the Khong Jaafar valuation which uses an ex-mill gate CPO price of $610 (see page 5 of the 2018 report). The REA annual report (I only skim read it) seems to think a Rotterdam CIF price of $600 - $800 range is more normal than the recent CPO trading range, if I recall correctly (although that is maybe quite different from an ex-mill gate price), but then as REA were not profitable at the operating level, they would say that, wouldn't they? Anyway the biodiesel mandate should lift CPO prices near year end as Brent crude returns to more normal prices. Dorab Mistry said so in a Bloomberg video clip on the palm oil price outlook.
KLK know that the MPE share buying has undoubtedly supported the SP over the last year, even pre COVID. I guess they hope the SP drops and allows them the chance to pounce, they only need the BIG holders onside to secure a deal. Let’s see - Palm oil pride should rise in the coming months due to supply shortages caused by small holders going bust and the larger growers suffering from a lack of labor to pick the crop ( COVID immigrant restrictions). The last offer of £740 was + 30% from the current price - the company still has other assets ( the land development) in addition to the palm oil business. The BoD valuation is a little high however £9 - £10 a share is fair given the expected growth in production.
The company ought to have more cash now that is not allowed to buy in stock for cancellation, although I think CJ means cash of a much greater amount when the takeover bid was announced, cash enough to pay back the cost of much of the bid, I wonder?
The voting down of the special resolution was undoubtedly KLK: 11m is about 20% of shares in issue and 11m when added to the 16m or so accounts for the other resolutions passing on a vote in favour of about 27m.
The chairman said at the AGM that there were no significant economies of scale from having a greater number of 15,000 hectare estates scattered far and wide throughout Indonesia (15,000 ha is the optimum size) other than to help dilute the central Jakarta office costs against greater cpo output. To me that means the economies of scale KLK would get from controlling MPE are not KLK eps enhancing unless they rip MPE shareholders off by paying less than NPV (Finncap thinks a valuation of about $18,000 per mature hectare is right for world class estates like MPE's). So the only reason KLK would bid is to aggregate the turnover so the KLK directors could give themselves pay rises, IMHO, an action that would just cheese pare KLK shareholders (MPE being under their control after paying a proper price for MPE would dilute KLK shareholders, I wonder?). I can't see how a change of BoD would increase eps: you plant the optimum no. of oil palms per hectare and you should get 5.5 tonnes per hectare of CPO like REA do. How does changing the BoD of MPE improve that? I do think the directors of KLK will have another shot at it, but I shall instruct the person I am agent for who owns these shares that it is inappropriate to accept cash , unless it is going to damage KLK's shareholders massively, and that it is inappropriate to accept KLK paper, to avoid CGT, for that will come with cyclical eps with no additional eps growth outside the palm oil cycle, eps with an additional currency risk to worry about, to say nothing of the problem of dealing on a foreign stock exchange. My views count for absolutely nothing in the great scheme of things, and KLK director self-interest, rather than KLK shareholder interest, may win the day; I hope not (Winning control is like a promotion for KLK directors?). As far as I am concerned, the last bid was all about screwing MPE shareholders (extracting a huge risk free profit). They messed it up, showing themselves to be the absolute skin flints they are. JMV. Other people will have different circumstances, so it may be in their interest to act differently. DYOR.
To "CL66" You state that the company has little cash left, how did you come to such a conclusion?
I am much more interested in "OLI12's" estimate of MPE's share price in 2021 and 2022 when the Estates are all mature.
....added to which MPE's increased dividends and previous share buy backs have left little actual cash, that was part of the 'cheap' shot attraction for KLK - to take over a company cheaply with a basket of cash to half pay for it as well.
Now they should have to pay the going price - we need to see the CPO price increase, as this in turn ups the whole asset value of the trees.
Recent low on may 14th was $510, but now around $585......$600+ please....
I agree. When you look at the average age of the crop MPE own coupled with the increased production that comes with crop maturity then..... Brokers to the company, finnCap, see last year’s $119m revenue being boosted this year to $154m, then $183m in 2021 and $207m in 2022.
That should see pre-tax profits leap from $10.7m in 2019 to $22.5m this year, $46m next year and a massive $63.6m in 2022. Earnings in cents could increase from 7.8 to 28.1, then 54.6 and 74.6 cents per share. DYOR. This is a good investment with the added possibility of a take over in the mix.
Presumably KLK voted against the continuing of "buy backs". May result in occasional bargains for the "quick footed" but
2 or 3 thousand shares are of little consequence!
However MPE is a very well managed company. KLK tried their luck firstly at 6.40p and finally at 7.40p! MPE is in much better shape now with plenty of Cash, as per the Dividends.
I can see no good reason to sell although my first purchases were at about £1.60.
KLK will have to make an offer of over £12.00 to have chance of success, the Institutional holders are under no pressure
to sell, as in every case their share holding in MPE only form a very small percentage of their portfolio's
An Investor, in the true since of the world would be well advised to site tight, and enjoy the dividends.
...note for the below 750,000 shares sold in 3 trades at £5.75 - will see if these have been picked up by KLK,
as normally a volume amount of this sort on such a modest company would result in a movement of at least £1 for a market maker to be able to shift....
KLK poked with a sharp stick - I think that showed the buybacks were an effective move to keep the price up, when few shares are sold each day - shame, but hopefully it has served it's purpose - as todays news was very good.
It could now have a gradual drift down for them to benefit, but they must largely rely on a large institutional shareholder to get bored of a lack of share progress.
Should still hold for £10 if everybody in is wise enough!
Share buybacks cease with immediate effect following AGM vote. Failed to gain 75% support - one assumes KLK have put a stop to it.
Remember that with a 15% increase on the price on 35% more CPO produced,
this will have an exponential impact on profits with the relatively fixed cost base.
Looking at the trade volumes KLK doesn't appear to have made any recent major purchases and may now have missed the cheap opportunity boat.
Full marks also to the board for carrying on with small share buy backs to stop the price falling to a silly level for KLK to pick up more on the cheap as well.
I wonder if KLK are buying more, though who would be selling after such a good update?
Interesting volume today.
Indeed. Despite the recent fall in Palm Oil prices due to COVID the price is still ahead of 2019 levels. Pleasing crop increase that should only grow in the coming years due to the young age of our plants. I topped up around the 500 level a few weeks ago. Still a chance of a take over here however if not happy with the growth and dividends.
Very good trading update this morning.
KLK are the reason I have been hanging on to these for several years. The minute I sell they will pounce lol
Note the largest shareholder is Kuala Lumpur Kepong Berhad (KLK) KLK tried unsuccessfully to take MPE over a few years ago. KLK is amongst the largest plantation companies in Malaysia. Given the stock price and the weakness of the pound they could pounce again.
https://masterinvestor.co.uk/equities/mp-evans-ready-for-a-big-leap-forward/
Easy to tip this as a £7.00 target when it was that price before all the market upheavel.
Some interesting trading here in the last few weeks on the back of significantly higher palm oil prices. Today’s trade of over 1m shares is a large amount for MPE.
3 year high and still rising on shortage fears. MPE should have a good 2020.