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DJ +293 (32,779) R
SP +4 (3943)
NS -116 (12,937)
R2 +12 (1398) R
WTI $65•56
10ytb 1•629%
Nos:- Oil $69•23. Vix 21.
Gold $1726. Copper $4•157.
Palm $1128. Silver $25•995.
$1•392. €1•164. IDR 14,385.
MSCI(W) 2807.
Morning all.
Although cpo suffered some profit taking today, over the week cpo gained $53 closing at $1127/cif(R) $1160 and is up 15% ytd. Not startling when considering crude has put on 34% and 98% over 52 but not too shabby.
However against last year wer'e averaging at (wk 10) $1014 v $718 in 2020 and that comparison is key, a cool 41% ahead on the headline nos which likely means REA is achieving in the local mrkt c.$825 net of taxes etc, considerably more than 2020s Q1 c.$520 av net 'achieved' prices. Thats a good cushion as Q1 nears close.
Trading volume this week 42,137 (2:1 sells) has been amongst the lowest I can remember and interest in palm companies shares is non existent, getting blamed for all global deforestation and biodiversity issues does not help sentiment. It's not a sexy sector with Gung Ho TV Tuned CEOs who inevitably attract many pis to their companies. Persuading pis to invest in the palm sector is akin to asking them to undergo a rectal examination.
Be that as it may, REA traded flat at 58 and the KLPI slipped again despite better prices and profits from the likes of Sime, Wilmar, HGV and KLK. Makes you wonder what might have happened to stock prices if the massive price turnaround in May (doubled since) had not happened.
London
(Wk 10 close).
Anglo 600
Dkl 4•65
Mpe 600
Prefs 81
Evening all. Cm'on England do us Welsh a favour and beat France!!
An expert on jet fuels? Oh no, nobull, just an interested onlooker in all things palm.
Palm for jets will happen and probably sooner than we think so while figs being banded about could underpin palm output down the road I wouldn't get over excited.
Absolutely debt repayments must come from cpo and not other 'jiggerypokeries' you outlined. Have to say for transparency sakes I trimmed my holding here yesterday.
JL, hi.
Sorry I hadn't seen your other post yesterday when I replied previously. You obviously are an expert on jet fuels and biodiesel, and I am right out of my depth there. I see at lunch time today in KL, the March CPO contract is sky high at over 4,300 ringgit so maybe our best bet is cpo bursts out of the Indonesian Government's reference price regime to give back some of the cpo price upside.
"You have to wonder how much longer this can continue and what to do? A huge RI or Placing to rid us of the Prefs, notes and bank debt?"
Yes, it is important that the company acknowledges the problem and comes up with a credible strategy. I am not interested in debt 'repayments' that occur as a result of currency movements. The bank debt repayments I like are ones generated from cpo sales and not from asset sales or from any other funny business like debt equitisations , debt capitalisations (if those two phrases are the right jargon) or from asset sales or from forward sales or from increases in supplier credit. We know the business model can work (it works for MPE and for AEP), so it is just a question of the BoD doing something right, whatever that is. If the next annual report doesn't give answers, then I expect a lot of questions will be asked at the AGM. My relatives continue to hold and I am recommending them to continue to do so for the time being. Regards. P.S. my time is not always my own so I can't guarantee to be able to read everything or reply to everything but I will do my best.
DJ +188 (32,486) R
SP +40 (3939) R
NS +300 (13,052)
R2 +19 (1386) R
WTI $65•85
10ytb 1•548%
Nos:- Oil $69•36. Vix 22.
Gold $1715. Copper $4•122.
Palm $1131. Silver $25•980.
$1•397. €1•168. IDR 14,370.
MSCI(W) 2806. FF-17. DF +76.
Morning all.
Rea 105 (58)
Cpo $607 ($1138)
Cif(R) $1160e
Oil $33
Gold $1604
Ftse 5237 (-639)
All 2942 (-345)
DJ 21,200 (-1622)
SP 2481 (-261)
NS 7202 (-750)
$1•260
€1•127
IDR 14521
Anglo 450
Dkl 2•20
Mpe 562
Global equities were in full panic mode the ftse closing down 11%. Stocks in Asia tumbled to near 30 year lows and US mrkts saw 10% losses.
There was worse to come as infections spread rapidly through China and Europe. Trump was in denial mode blaming China for trying to cover up the source, calling the virus Kung flu and said wearing Masks did not help, those infected would recover rapidly.
US cases were below 100,000 and deaths less than 1000. Businesses would remain open. Lockdowns & travel restrictions were months away.
Covid-19
05:00
UK 4,241,677 (125,168)*
Indonesia 1,403,722 (38,049)•
* 6753 cases
* 181 deaths
• 5144 cases
• 117 deaths
Hi nobull, I believe some planes in the US have already tested 100% biofuel and flown with 15% bio. Palm is the preferred biofuel due to its low cost, availability and cheaper refining costs.
Its hoped by 2050 if not before to have a 50% palm blend in aviation usage.
Boeing and Neste the worlds bigest HVO producer have asked the ISA to permit up to a 15% blend for aviation usage. Currently a 15% blend would equate to 43mt or 3 x the entire volume of the EU market. That may not happen given the EUs anti palm oil stance. Problems arise as highlighted by Biofuelwatch which details serious technical obstacles to producing commercial quantities of aviation biofuels from any other feedstock other than veg oil & animal fats. Biofuel for planes would rely on HVO.
However HVO (Hydrotreated veg oil) is expanding 10x faster than bio jet fuels overall and is considerably cheaper to produce than HVO jet fuel. Most HVO contains palm oil and its expected that cheaper HVO fuels will be available for planes in the future but Palm oil for planes would be bad news for tropical forests and Peatlands. How one squares that circle is an on going debate.
Aviation desperately needs cheaper fuel which can only come from more palm oil production which clashes with one that needs to protect the biodiversity and all on God's green planet. If HVO is to be a serious competitor to jet fuel one can only see a steady increase in palm usage going into the 2030s and beyond.
Excellent summary, your 07:14 post, JL. Thanks. I see Pertamina are experimenting with 100% palm oil derived jet fuel. There have been a few articles in the Jakarta Post about B40 that may indicate there will be more demand for palm oil in the future from that source, but the big question surely is will this extra demand just destroy demand from more price sensitive customers like India? Fingers crossed our Board is on the ball about the slow value destruction on the ords: our main shareholder is a maths genius according to SC, so he must realise what is happening. I make the net of taxes average cpo CIF Rotterdam price since the start of 2021 $743 (assuming the reference price for a given month is always the same throughout, i.e. not changed daily). Don't know how much you have to take off that to get an FOB Samarinda price but say $50 per tonne for the freight and insurance, and that surely is above our cost of production - it is just those damned high finance costs that screw up everything - and the wild currency swings of course.
I think nobull answered your post Mr Brie but I'll just add a couple of points. Tbh I think dividends on the Ords is pie in the sky and I'm not quite sure why you invested here? Was it the promise of dividends in the future? Why not load up on any of the top dividend paying UK stocks?
You say you added recently so you must see some shards of light in the gloom, but as is always with this Co whats gained in one hand is taken away by the other (the Govt) and of course not being able to price your commodity doesn't help much. The days of plantation companies returning 30% are long gone and for REA zero % is the new normal.
However much I and others rail against the current mrkt value of REA
we are carrying a potential Company disaster on our shoulders and thats all the mrkt is interested in. If your not an Apple or RDS debt is a killer to most Companies and one whose debt to equity is 80-90% you can see the mrkts concern. Some say we can pay off the Prefs and notes and the down at heel sp is overdone. Maybe?
REA has crossed quite a few Rubicons in the past and one more decisive step is almost upon us. Until the mrkt can see a clear path to our debt problem being addressed and reduced on a sustainable basis the shares are going nowhere. Will the board act before its too late? Oops its already too late.
You paint a depressing picture nobull, unfortunately your right and had not cpo prices recovered to these $1000 imo unsustainable levels the Banks would have called in the loans and left us pleading our case down Carey St way. With B40 stalled and the backstop leg of B50-100 looking fanciful any down turn in 2022 would make servicing the debt which is basically why we are still operating ever more problematical.
A wholesale restructuring won't do us the 'ords' any favours and a 'salvation merger' would leave REA holders with the short end. Of course thats nothing new to long-termers of REA but might be preferable to any of the other painful remedies mapped out by nobull.
Somehow the Co staggers on
propped up by the Banks. Since 2014 never turning a coin. You have to wonder how much longer this can continue and what to do? A huge RI or Placing to rid us of the Prefs, notes and bank debt? Who would support that when the industry is under constant demands for more money from the Govt? Catch 22, its more like Catch 100!
Rea 113 (56)
Cpo $631 ($1106)
Cif(R) $1120e
Oil $36
Gold $1647
Ftse 5877
All 3287
DJ 23,533 (-1465)
SP 2741 (-141)
NS 7952 (-392)
$1•286
€1•141
IDR 14,352
Anglo 474
Dkl 2•20
Mpe 640
DJ +464 (32,297) R
SP +23 (3899)
NS -42 (12,752)
R2 +27 (1367) R
WTI $64•97
10ytb 1•527%
Nos:- Oil $68•47. Vix 23.
Gold $1731. Copper $4•089.
Palm $1106. Silver $26•365.
$1•394. €1•168. IDR 14,405.
MSCI(W) 2775. FF +22. DF +138.
Morning all.
Covid-19
05:00
UK 4,234,924 (124,987)*
Indonesia 1,398,578 (37,932)•
* 5926 cases
* 190 deaths
• 5633 cases
• 175 deaths
MrBrie, yes but they have no money to do any extension planting. The discount of cpo to sbo was absolutely huge on 08/03/21, showing that extra demand for cpo from biodiesel manufacturers has not materialised yet, I wonder? Indon export levy and tax is just a windfall tax on us, the innocent beneficiaries of crappy weather in soybean growing regions, I wonder? They should be ashamed. Not even Julia Gillard managed to get away with a rent tax on the iron ore companies as bad as what the Indonesians are doing to us. This company absolutely needs to get the debt down and it can't. I don't know what our WACC is but it surely is more than the 11% bank interest rate we pay on Rupiah debt, and we are not making even that. The result is the ords are slowly having value drained from them and handed to the pref holders unless something is done swiftly: cost cutting?, switch on the coal mine?, change in the tax regime to less savage one, cpo price burst out of the tax bands and restore the cpo price upside, get rid of the pref holders and arrears through a restructuring, the rupiah dollar rate go sky high and cut our bank debt - any of these could rescue us from being a zombie stock. A restructuring would dilute us out massively I expect and would restore the price to book and price to sales ratios to more normal unattractive levels, but I am not sure it would increase the wealth of the current ord holders, rather reduce the risk of bankruptcy if cpo turned down again - we have already had one red light flashing - that auditor's comment about material uncertainty as to going concern. We really need to get that debt down: it is killing us. JMV. P.S. we might be getting $670 FOB Samarinda now, which is maybe 10% more than we got on average for 2020. I can't see more than $10m debt getting paid off in FY2020 and again in FY2021. The strength of the £ is another bummer. Every time we renegotiate the loan note maturity dates, more wealth has to be given up (legal fees and warrants).
Two points -- and I'm a glass half full person, so still sticking around and recently added to holdings:
- the postponed dividends on the prefs are getting in the way of RE. shares getting paid a dividend. My gut feel is that with current Palm oil prices prefs can be paid off, which is a prerequisite for dividends on the normal shares to resume. Resumed dividends should increase the share price of the normal shares, but not just yet.
- CPO prices seem to closely track oil prices. The export levy might not matter at all, if a lot of the production is soaked up for biodiesel production. The B40 mandate will increase demand on the local market.
Something that would be cause of concern to me is new planted area being delayed.
I've tracked my opportunity cost (gain/loss) to date, had I sold up here at end of last year (58).
I bght a dummy stock Oil stock and ytd am up 29% which reinforces how stupid I am to have held on here purely on thinking the usual stupid pis belief of if I sell its bound to rocket up....funny how one never thinks its bound to tank!
Oh well, things cannot get much worse can they? Assuming my o...lie flattens i need REA to reach 75. Looks a stretch but you never know when of course you do know, its a No No.
Now cpo has crossed the $1101 line we move up into a higher tax and duty band (Levy $255/Duty $144/Total take $399) up $28. Dkl Feb production update was positive but has no bearing here priced in euros and Ivory Coast demographics different to Indonesia in so far as they do not have to satiate a rapacious Govt gorging itself on the hard work of plantation companies.
The Swiss narrowly backed the Palm Oil Free Trade Agreement with Indonesia by 51•7%.
Rea 107 (58)
Cpo $644 ($1104)
Cif(R) $1115e
Oil $37
Gold $1659
Ftse 5960
All 3333
DJ 25,018
SP 2882
NS 8344
$1•292
€1•142
IDR 14,346
Anglo 498
Dkl 2•40
Mpe 634
Covid-19
04:30
UK 4,228,998 (124,797)*
Indonesia 1,392,945 (37,757)•
* 5766 cases
* 231 deaths
• 6389 cases
• 210 deaths
DJ +30 (31,833)
SP +54 (3875)
NS +495.(12,794)
R2 +12 (1340) R
WTI $63•87
10ytb 1•538%
No:- OIL $66•95. Vix 24.
Gold $1710. Copper $4•021.
Palm $1104. Silver $25•865.
$1•387. €1•167. IDR 14,410.
MSCI(W) 2762. FF -44. DF -36.
Morning all.
DJ +306 (31,802)
SP -21 (3821)
NS -369 (12,299)
R2 +26 (1328)
WTI $65•49
10ytb 1•571%
Nos:- Oil $68•76. Vix 25.
Gold $1686. Copper $4•110.
Palm $1097. Silver $25•395.
$1•384. €1•167. IDR 14,425.
MSCI(W) 2723. FF -14. DF +190.
Morning all.
Rea 113 (57)
Cpo $649 ($1096)
Cif(R) $1115e
Oil $36
Gold $1669
Ftse -497 (5966)
All -266 (3335)
DJ -1199 (23,851)
SP -226 (2747)
NS -625 (7951)
$1•313
€1•146
IDR 14392
Anglo 455
Dkl 2•40
Mpe 628
The start of the slump in equities during March '20 when the ftse and Dow bottomed out at 4994 & 18592 on the 23rd.
Or should that be because of.....!!! I've been lumbered in frustrating shares from time to time but REA really takes the biscuit! As we know the share price is representative of nothing its purely a number conjoured up by the barrow boys to keep their books level.
I have said enough on this subject to fill a book. The management are obviously not much bothered so why should we?