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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.
You are right FK1, Cat is very happy. If this continues, and covid permits, may see you again at the AGM. I would hope for some cashew nuts if we get there.
Given the delay between global prices and the price we sell at, I expect we’ll be making good use of the storage tanks, so I expect to see lower sales this month as stock is held whilst selling prices are still rising. It could have a substantial benefit to our profits. If 5,000 tonnes are held to get an extra $200 per tonne, that would add $1 million to our bottom line.
It all seems to be coming together at the moment. High palm prices (CPO and PKO) coming into high season and cashew production starting up. If we can get some decent volumes through and an improvement in extraction rate, this share could really rocket. At these prices, farmers will surely be keen to harvest as much as possible. Also the trees grown from seedlings supplied from our nursery over previous years should be coming into production, Just bought another 65,000 this morning. The business should be generating great cashflow, to fund expansion or pay down debt.
Good trading figures again and looking forward to a profitable high season coming soon if the CPO prices continue at these levels. Bought another 45,000 shares in 3 tranches this morning on the drop following the reported small delay in the start of cashew production. I have had the start of January next as my expectation for the start of cashew production so a small delay, whilst disappointing, is not a problem to me.
An updated presentation was due to be posted to the company website on the morning of the AGM. It may be just me, but I can’t see it. Does anyone know where it is on the website? Last years is showing.
Tells me all I need to know about the quality of management of this company and of how they view retail investors.
FK1, I have bought a lot in order to average down and had intended to sell part of those once it reached my average price (6p). I am revisiting that in light of current CPO prices and the imminent start of cashew production. I would certainly hope we can get into double figures next year if we see some increase in CPO production.
Personally I would be disappointed to see the dividend reappear any time soon. With high levels of debt and opportunities to diversify, I would far prefer that cash was used to reduce debt and/or diversify before dividends were resumed. Of course, if the existing mill goes to full production and cashews are successful, then that would be a different matter...
FK1, my thoughts are that FFBs produced on company owned land were in relatively small quantities, but probably due to plants being immature. However as they mature they should contribute a reasonable amount. Even if they only produce 10 tonnes of FFB per ha, that should generate about 20,000t of FFBs and hence about 5,000t of CPO. Yields should be above 10t of fruit per ha at maturity with fertiliser,
The fertiliser programme was yielding little as it was a small trial at the time of the last AGM we attended, 2 years ago. Smallholders may feel more inclined to spend on fertiliser when CPO prices are high, so we may see a benefit in terms of volumes from the current high COO prices, albeit a year later.
I feel quite optimistic about next year, but I have said that before.
I haven't had time to look at the numbers in detail, but a few things come to mind. Gross profit %s were much higher a few years ago. Things that are likely to have affected this are (1) PKO prices have fallen significantly - these sales are high margin as they are like a by-product of CPO production i.e. there is no additional cost of goods, only production costs (2) DKL seemed to achieve sales prices higher than market rates in the past, whereas FFB purchased would have been based on market rates (3) higher volumes processed increase margins as some costs are fixed.
Darien, I think you should check your numbers.
I have a Bed and ISA trade which should go through today for about 313k shares, to protect my hoped for future profits!
A pretty good set of figures and it is good to get regular updates at this time. Particularly pleasing is the improvement in extraction rates, as this extra goes straight to bottom line profit as margins improve. The only negative for me is the sales figures being lower than production. Holding in stock is great when CPO prices are on the rise, but not now they are falling. Overall though, pleased with the update.
My wife and I have Bed & ISA'd some shares today - 125,000 on one and £3k value on the other. Just thought I'd let folks know as the trades may look a bit odd otherwise. Good weekend all.
Agreed LeMajor. Given the rapid rIse in CPO prices, they could easily make an extra €100+ per tonne. With 8,000 tonnes (if I remember correctly) of storage capacity, this could add nearly €1million to the bottom line, buying low and selling high. I'm not too concerned about the low Q4 figures. A decent H1 is what really matters along with CPO prices holding up.
Phil, I do use the palmoilanalytics site, as this shows the CIF prices, which I think form the basis of DKL's pricing. But, as you say, it is a few days behind. So I also use the UK investing cpo futures site, which seems to be pretty much real time. Whilst it doesn't show the CIF prices (which are higher of course), it seems to show a daily direction of movement which is reflected in the CIF prices reported with a few days delay.
Had another top up of 50,000 this morning. CPO prices are back on the rise again, which should be great for high season sales if the CPO price holds up. The BOD seems to be doing the right things - diversification into cashew and energy, starting the 2nd palm oil operation, which will be more gradual. Higher CPO prices, and hopefully profits, should give them a greater chance to continue the building of the business. If we can see production growth in CPO volumes, that would be a huge boost, as it is the operation that is most important at this stage. Trees planted in the past few years, including those on the company's own land, should start to yield more & If fertilizer use can be encouraged, we should see improved yields. Decent Q4 figures would be nice, but I am much ore interested in the 2020 high season production and whether the current CPO prices hold. My own target for the SP this year is 10p, which assumes a modest growth in production and CPO prices remaining at roughly the same level as they are now. All imo. Good luck all for 2020.
CPO futures price on the rise again. Just dipped in and bought another 62,500 shares this morning, bringing my average down a bit more. Looking forward to next year and hoping for some big gains here.
ShearClass - the price of FFBs is also linked, I believe, to the price of CPO, so there will be a rise in costs. Neverthless, the improvement to bottom line should still be substantial if the current CPO price holds.