When the market has confidence that they won't just sit on hundreds of millions of dollars in cash. They've made a good dent with the buyout of minority interests and increasing the dividend but it's not enough. |
RNS out - biogas plant completion.
When will the market notice this company and value it properly? |
If it were a company with a diversified shareholder base then I would agree with a tender offer, but it isn't.
A delisting would be a catastrophe and I'm not interested in any route which makes that a possibility.
Do you think the market value would be under £200M after the special dividend of $100M? With a doubled ordinary dividend the yield would be getting on for 13%. The shares simply wouldn't be at that valuation. |
Dividends are terribly tax inefficient and don't solve the valuation problem... bad idea |
No. Almost everyone would try to participate in the tender so people wouldn't get that much of their shares accepted and ownership would be further concentrated in the hands of the heirs of Madam Kim.
People pushing for buybacks/tenders are making a mistake. A big special dividend and a doubled ordinary dividend hugely reduces the excess cash problem, leaves us less at the mercy of the share price valuation and doesn't cause delisting risk. |
Or better yet : they should organise a tender offer for $100m at say 14£/share.
This would be a win-win for every one.
In one swoop they would :
- have a reasonable valuation in line with the other plantations
- a liquidity event for shareholders willing to sell
- at an attractive valuation for shareholders willing to stay
- a more efficient balance sheet |
In the last six months, they've spent $85M on buying out minority interests. That's a lot of cash. They should pay a $100M special dividend and double the current dividend to 80 cents. That would instantly fix the share price problem. |
I’m not really surprised at Anglo’s lacklustre performance, most of the Indo planters have performed poorly compared to their Malaysian counterparts.The CPO price has started 2024 quite positively and I’m sure the Indo planters will play catch up over the next few months. I know the Indonesian Govt interference is detrimental but on the other hand labour costs are less than in Malaysia, which is positive.
It’s extraordinary how just a few thousand share traded can move the price by 1-2%, this share along with MPE should seek a listing in Singapore(London is not the place)
Think what would happen if daily turnover was 70-80,000+ a day. The huge cash pile should be put to work, why not diversify geographically and buy some land in Malaysia.
Many Malaysian plantations have holdings in Indonesia, it can work both ways and also spread the risk. |
 I'm confident that this situation will sort itself out in de the coming 24 months.
This company seems asleep, but a lot is going on behind the curtains :
- loss making plantations in South Sumatera sold
- intercompany loans between subsidiaries sorted out
- minorities bought out
- differentiation of cash pile to more dollar exposure
- shareholder orientation improved : attractive dividend, set to increase
- management succession plans initiated
- buy back for future management incentives
Only disappointment last year was a major expansion investment that failed to materialise.
Things to be realised this year :
- sale of Malaysia plantation
- management succession formalisation
- higher dividend
- rationalisation of cash pile
- replacement investments
- expansion investment?
But the main reason for an investment in this company is that cash will keep flowing in at a high rate.
In the last 10 years, expansion of plantation acreage in Indonesia is very tough and almost non existant. In Malaysia, production has topped and is falling back.
Demand for oil will keep rising at 3% a year, but production can't follow.
So we're in for an extended period of high palm oil prices, even taking into account the Indonesian export taxes.
At this low share price, this seems to me a low risk/high potential situation. In the meantime we're being nicely paid for waiting by the attractive dividend. |
51% overseas shareholder with chequered history and passing of the baton to the younger generation who may not respect minority shareholder rights as much as Madame Lin. Given the record of delistings of other companies with an overseas majority shareholder it is not surprising it gets a low rating. You're depending on the Nokia Bell Pension Fund to stand up for you. |
Tiger,agree,a backwater within a backwater.
I would never have believed after 40+ years investing ,how the London market has gone so quiet ,really v little reason to have a listing on the LSE for businesses like AEP.
Holding the faith but not my breath that value will out in the end. |
Can anybody offer a compelling explanation for the seemingly absurdly low valuation of this company?
Mcap - £271m. No debts. Cash of $226m at last trading update = £177m. EV: £94m.
6 month profits at interims of £32m. Annualised = £64m.
Price of palm oil more or less stable at MYR 3,700/t. This is well below the Ukraine war influenced peaks of 2022 but well above long run averages.
I get there can be some quibbles about some of the cash pile being held in subsidiaries where there are (or were) minority interests, so we should perhaps make an adjustment for that. And, also, some more cash recently went out to buy out these minorities (an excellent investment, IMO). But, big picture, the current price makes no sense to me. especially when sector peer and fellow London-listed palm oil producer MPE is valued completely differently.
Yes, in the days of Madame Lin, things were a bit eccentric here. But times have changed. The company now pays a reasonable dividend - 40p this year = a yield of 6% or so. And it has a small share buyback in operation.
I've never believed in the efficient markets hypothesis. IMO, markets are irrational and bipolar - prone to fits of black depression and rushes of euphoria. But, even given that, WHAT THE HECK IS GOING ON HERE?!? |
TBTT, that's indeed a more realistic scenario... |
I suspect something quite different - that the company is being "cleaned up" ahead of a sale. Hence the buy-outs of the minorities in the profitable plantations, the improvements in dividends, and the disposal of unprofitable plantations.
Given the majority shareholder will want a good price for their prize asset as much as we all want a good price that's OK with me. |
Delisting isnt neccessarily a risk in these circumstances - as long as everyone is honest you still hold a decent asset and should get paid...
I like the publicity a listing brings but it isnt essential. |
75% is a high bar. I don't think anyone else would vote to delist. |
I didn't say they intended to screw minority shareholders. If they did delist, I'd hope they'd provide a tender offer like Quarto at a similar price to the market price.
All I'm saying is that there have been quite a few delists in the last year from companies with a majority Asian shareholder. You'd be naive not to factor that risk into any investment thesis. |
Strange.
If they intend to screw the minority shareholders, why would the younger family members waste money on a decent dividend to minority shareholders? |
Only need 75% and the family has nearly 52%. I doubt Nokia Bell will care if it’s listed or private as their holding is way too big for the liquidity and they must hold lots of private investments. Only reason to be listed is to raise capital (
they don’t need it) or if it benefits the business reputation (also not needed).
Not saying it will happen but it’s definitely a risk as the younger family members may be less respectful of minority shareholders. |
How do you think they can delist this without the approval of f.e. Nokia Bell? |
Having just seen QRT delisting, there is a major risk here with the passing of the baton IMHO. Cleaning up the minorities is a great move but I do hope we get to see the value rather than the family delisting it and taking it for themselves. |
The $60m they paid was more or less the minorities' share of the accumulated cash in the subsidiaries. So they paid basically nothing for the future cash flows of these plantations.
The acquisition is on attractive terms and accretive on itself, but the main value of the transaction is strategic in nature.
It opens the door to unlocking of value. |
Difficult to have a view because we don't have enough information about the gross assets. It could be they've paid $60M and effectively immediately recouped $20M in cash from the acquired minority interests. We just have to trust they aren't being foolish. They'll certainly know the assets better than the minority interests and it's not as though AEP managemnt have been rushed into this. |
skanjete2
Non controlling interests as per 1/2year results
- Non-controlling
interests 3,938
I agree it is good too clear it all up and there must be some decent overhead savings to come hopefully
We shall have to wait and see
I am sticking with a 45c per annum dividend I currently forecast.
2024 could be interesting though but yet again it will boil down to the CPO and who knows where that will be |
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