Arden: DKL "represents true value"29 Nov 2021 08:57
Arden this morning highlight "some stocks we believe have either seen an unwarranted sell-off, have seen strength go under the radar or where there is now a more attractive opportunity".
One of those highlighted is DKL:
"Dekel (DKL.LN, BUY, PT 7p) As the UK starts to unpick a 10 year high of 4.2% inflation where previously rates were considered notionally ‘forever’, you only need to look at commodity markets to gain a sense of perspective. Fragile supply chains around the world simply have not bounced back to support the post vaccine wealth of demand and latent appetite for consumption that we are witnessing globally.
No market is that truer than palm oil. The price of palm oil (Rotterdam CIF) has skyrocketed, over 100% from its 2019 average. Widely maligned as a ‘sin’ commodity, palm itself is benign. Production methods in South America and Malaysia endanger biodiversity. Whereas Dekel’s first class operation in Côte d'Ivoire supplies ‘responsible’ palm oil for all the products we know about in the West, cosmetics and confectionary yes but crucially used as a staple cooking oil across the developing world and is far more productive per hectare than soy.
Dekel-Agrivison will soon be recognising revenues from a second commodity, cashew nuts. Our new target price of 7p represents an upside of 43% to the current price of 4.9p. Given the broader pricing environment around commodities, Dekel represents true value. BUY."
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