Member Info for Nobull

JL, but AEP's H1 profits were up 10 fold, mostly on the back of a 23% rise in CPO price (some of it was from higher volumes too). Ditto Sime Darby. With the same effect on REA, albeit without any significant volume increase, you would at least think they could break even at the operating level and generate enough cash to deleverage a bit this year, don't you think? The power of commodity price gearing is supposed to be awesome. compared with volume gearing, is it not? I am advising my relatives to hold. At circa $700 cpo CIF Rotterdam, you would expect the FOB Samarinda price to be a lot better than it was at the time the auditors qualified the annual report, would you not?

Theoryman, I agree with you : "Even if they don’t end up gaining from it, it doesn’t mean it was the wrong action to take."

They have probably spent a lot of our money on a put option, a right to force someone to buy our oil at $35, not an obligation on us to sell it at $35 no matter how high the oil price goes. When I last looked, a week or so ago, the oil price curve went from $42 to about $60 in March 2029, so buying a put option is a bit of luxury really, but maybe when our revenue is so unreliable from the risk of default, it maybe is prudent to protect against commodity price risk too. Goldman Sachs think Brent crude will be $65 next year. I tend to think the put option was a waste of money, but I can be wrong.

No, I don't understand either why even someone working for a broker would be ****ing about with lunch money on REA. And with the September CPO futures contract at 2,965 ringgit (just 15 minutes ago), the bid price of 53p is ridiculous. $19m of bank debt can be paid back this year out of cash generated, and with luck, some rupiah bank debt can be 'paid back' by depreciation of the rupiah against the $. Er, yes the sterling loan note debt will be increasing with the £/$ rate at 1.33, but you can't always win on everything, and at least that debt is less pressing than the rupiah bank debt. Fingers crossed river levels aren't forcing delivery of CPO by road.

I am not sure. On one side of the balance sheet showing how everything is financed, you probably just deduct the shares cancelled from issued share capital, while on the other side (the assets side) you show a deduction of cash (the cash spent on the shares), but then the par value of the shares cancelled is less than the amount of cash removed from the asset side - and there I get stuck, so what to do about making the balance sheet balance? Something surely has to come out of "retained profits" on the financing side of the balance sheet, and for that to happen surely a loss has to go through the income statement to account for the change in retained profits from one balance sheet date to the next one. Maybe someone else can help? Yes, I would have thought a loss needs to be shown in the income statement, but I could be wrong.

£6.80? What a bunch of opportunistic, rent-stripping skinflints.

JL, thank you for all your interesting posts. The Artemis stake reduction is ancient history. It occurred between 01/01/20 and the date of publication of the annual report (see page 48). See the paragraph "During the period from 31 12 19... Artemis Fund Managers Ltd has reduced to below 5% to 4.6%". The RNS yesterday said 4.61%. The question is did they reduce their stake when palm oil prices were lower or higher than now? That, I don't know. My guess is they reduced when the share price went through the floor, sometime back in April, I wonder, a time when palm oil prices were lower than they are now. I don't know enough about whether their stake reduction caused the share price to fall or whether they reduced their stake in anticipation of news that was a good reason for the share price to go through the floor. I am hoping the company is de-risking more than it is deleveraging because preference arrears substituted for bank debt are free capital and aren't secured in the same way as bank debt is, I wonder? I can be wrong about these things, but fingers crossed things come good here. The rupiah has slightly devalued against the US$ since the start of the year, which is helpful to us. The CPO FOB Samarinda price will be key though, and so far it is better than last year. With a good CPO price, we will be deleveraging too, and the lower finance costs going forward would tend to accelerate the process, all other things being equal, which they never are. Also with a good CPO price there shouldn't be any asset impairment costs, save maybe for some small write-downs on the deferred tax assets (the new lower company tax rate in Indonesia?) . Will they be profitable at the operating level in H1? I doubt it, but I think they will be overall for 2020, but what do I know? Fingers crossed for the bank negotiations to go okay.

Not 2.9%. Should be 2.5% (source: Trustnet.com)

Yes, it is maybe not Aberdeen's fault: the Aberdeen Standard SICAV I Asian Smaller Companies X Acc GBP appears to hold 2.9% of the fund's assets in MP Evans shares, and this is an OEIC (assuming a SICAV is just the French for the same thing), which means when investors in it want to redeem their holdings, the fund probably has to sell shares. The only issue then is why they chose to sell shares in MPE rather than anything else.

Maybe they just think a lot of the good news is already in the high PE ratio and maybe they dislike the backwardation on the palm oil price curve - I don't know.

https://www.bursamalaysia.com/market_information/derivatives_prices?code=FCPO shows the backwardation.

Yesterday's article in The Star by Royce Tan on the prospects for palm oil prices appears to give reasons for the backwardation. It is all the fault of Europeans cashing their SICAVs!

It is also being pulled up, I wonder, by the price of soyabean oil, which was $860 CIF Rotterdam on Thursday 6th August, when the difference between the two was $200, which is not the most extreme discount but it is quite a large one, I wonder?

I think KLK bought its 424k shares, or thereabouts, recently for £5.40 each (see the two big trades at 11:19am on 28th July 2020, the day of their stake change across a 1% boundary. Standard Life Aberdeen must be insane to be selling at that price.

I vaguely recall Cendereung is held leasehold, probably because Mdm Lim is not a Bumi. Rent stripping is only for Bumis, I wonder? AEP seems to be in a stand-off with the Indonesian authorities: vacant land and huge cash pile but no permission to do anything good with the money like create jobs and tax revenue and to improve Indonesia's balance of payments. The fiasco over connection of a biogas plant to the grid made me laugh. How could they take 6 months to get permission?

Yes hops, you are right.

For the record, I have no objection to our BoD changing our business model to that of a vertically integrated operation more like KLK's - it makes sense to take advantage of the artificially low feed stock price compared with the international price, all made possible by the $50 per tonne export levy, giving Indonesian operations an additional competitive advantage. However, our BoD has it hands full for the next two years with its, say, $50m capex program (two mills and associated biogas plants @ $25m each?), not that expansion outside one's core area of competence isn't without risk, to say nothing about dilution and finance risk if such a move downstream is too capital intensive.

My daughter, like you, if she invests here would prefer a cash exit free of commission and market-maker rake-off; she has rejected my advice to invest in REA ords, although I have argued it is de-risking even if it is only de-leveraging very slowly (substituting pref arrears for bank debt to a degree), and maybe rightly so given my woeful investment record. See you at the next AGM as long as it is not in Ipoh. All the best.

CJ66, thank you for all that interesting info.

My relative has no interest in being part of a larger organisation with higher value-add palm derived product processing facilities. Neither does she want cash (CGT followed by IHT , no thank you ). If you have to suffer IHT, you want the biggest death CGT price uplift possible. Have you ever tried to get UK probate accepted in a foreign country to transfer a stock? There are no benefits for my relative, losing BPR and taking KLK paper. I can't speak for anybody else, but KLK are my worst nightmare come true. I want MPE to remain independent.

Time to read what you dislike but too dim to put an alternative narrative? Go and sit your rear end on a Petronas Tower spike and hurl your zingers from there.

The price my relative would need to compensate for loss of BPR would be extremely eps dilutive for KLK shareholders. I think the directors of KLK just want to pay themselves more for controlling more plantations and don't give a stuff about growing eps for their shareholders: there is no happy middle way between the two, us getting a fair price and their shareholders not being diluted out to kingdom come: one side will get cheated. It is not in the interests of the Indonesians to have foreigners skimming off an economic rent from starting up new plantations (well it is and it isn't but that's another story): they want these profits from privilege rather than from risk taking for themselves) and then invite the foreigners in to make the more lacklustre returns that accrue after a native has skimmed off the rent, so I wonder if KLK suffers from these sort of rebuffs by the Indonesians, hence their interest in trying to skim off a rent buying us at a time of lowish palm oil prices when we have such an attractive production growth profile (the next best thing to buying vacant land and starting a plantation from scratch). Bog off KLK.

Yes, anything that helps KLK is bad news for long term shareholders. In my relative's case (the person who owns these shares, bought on my advice when the palm oil price was a lot higher - er, slight boo boo there) would lose BPR, as KLK with a foreign listing would not qualify, so her legatees would need a 66% premium on her average entry price to be left with the same starting capital after suffering 40% IHT on the estate.

There are lots of good things to look forward to: the volume gearing effect from the growing production profile, the near absence of finance risk on the mills for Bumi Mas and Musi Rawas, one mill and biogas plant of which is almost fully funded by the recent land transaction, leaving the other to be funded from bank borrowings, and internally generated funds, the latter if CPO price gets back to its more normal 10 year average (no equity dilution). And then there is the palm oil price gearing effect. The divs make my relative very happy.

There seem to be no worthwhile economies of scale from controlling more oil palm plantations: savings from diluting head office costs against greater CPO production are hardly worth the bother compared with the cost of advisors on hostile bids.

Yes, I agree the BoD are excellent, and thanks CJ for pointing out the achievement of growing third party ffb processing, an achievement I had not really taken in.

One of the institutional shareholders is probably reducing. About 0.46m shares traded today. KLK might bid again, not to add value for their shareholders, but just to be in charge of a bigger revenue stream. Every share they get sub £7.40, they must think they are on to a winner - no wonder they don't like MPE buying in its own shares for cancellation at these prices - I don't know which is worse, your advice or KLK. By reducing their stake, the selling institution is not supporting the directors - they just make it easier for KLK to get control at a derisory price. All of them are ghastly, you, the selling institution and KLK.

Unacceptable? You have to be kidding. It's the best thing any director has done. Why would you believe this if none of the directors used their own money to buy shares at the market price?

"However, the final terms of the 2nd amendment of Shaikan PSC are expected to be beneficial or at least neutral to the Company"

According to the 2018 Annual report, Mr Soden did not own any shares in the company. Neither did any of the of the other directors. He is the first of the old directors to buy with his own money, and judging by the price he bought recently. May he proden the other directors into cancelling the excess shares held in Treasury, although even I can see that if the MNR will only agree to an FDP that requires a zillion squillion dollars of capex, it may be better to sell them back at a profit to develop the field faster without dilution from new capital raisings.

There was a piece in the Business section of yesterday's Telegraph about Bermuda wishing to stop beneficial owners keeping their ownership secret - they are reviewing the issue to comply with EU anti money laundering regulations. GKP publishes its top ten shareholders, so surely a secret holding would be revealed in that - secret 35% shareholders all conspiracy nonsense.

Everhopeful, many thanks for both those links. I was wrong about Bermudian law on stake disclosure requirements. It is the BSX listing rules that require substantial stake disclosures, and since our shares don't trade on the Bermuda Stock Exchange, those rules are irrelevant; it is maybe the FCA's Disclosure and Transparency rules that are relevant to us, although there may be a third source of rules on the same topic, those from the accounting profession e.g. on what has to go into the annual report. I still think it is unlikely there could be a secret substantial shareholder - conspiracy nonsense - as it undermines the integrity of the market, notwithstanding the fact that Mr Kozel allegedly disposed of his stake without notifying shareholders (all done while he was a director perhaps?).

Everhopeful, That made me laugh. Many thanks. No wonder some GKP directors want to be paid for things they are not entitled to take credit for, e.g. oil price rises. Our most dishonest, corrupt and conflicted politicians have a great deal to learn from Mrs Cashti, then.