Yes, excellent management over there.
By the way, it was also the Nokia Bell fund that blocked the takeover of MPE a few years ago... |
MPE interims out. Excellent results over there. |
Not that it matters, but there's bullish news for the sector:
1. Indonesia to reach B40 in January and aiming for B50 afterwards.
2. Indonesia is mulling reducing export taxes on palm oil.
3. Indonesian palm oil production in 2024 may be as much as 5% lower than in 2023 and global palm oil reserves may hit the lowest in three years. |
Hi Skanjete!
I realise that no "major minority" shareholder is going to sell out at 600p / share!
But the current share price will work to dampen expectations, so it's not meaningless.
And the fact is the company has enough cash / near cash inside it for Genton to be able to offer 800p+ per share to the other shareholders without having to dig in their own pockets. All they would need to do is to arrange some kind of bridging loan to effect the buy-out!
I think the giveaway as to future intentions was the slow-walking and then the cancellation of the share buyback.
To be honest, I can't work out if I should be outraged or if I should buy more at this artificially suppressed share price! |
Theoretically, that's correct.
But in practice, it will depend on the price minorities like Nokia Bell will accept. And that price won't be based on the current share price of AEP. More likely, it could be based on the valuation of companies like MP Evans or Sipef. |
Or, in other words, the major shareholder could likely engineer a buy-out of the minorities just by using the company's own cash-pile - no new money required!
I figure nothing will happen until the law-suits over Madame Lim's will are settled. And then we'll see.
Compared to sector peer MPE this is as cheap as chips. And MPE isn't overvalued. But perhaps there are good reasons for AEP being so cheap... |
Pure cash and investments is about 3,75£/sh at the moment. |
If they hadn't bought out the minority interests and put $40M into investments, they'd have $279M in cash now. |
Agreed, but can't just focus on the cash pile now.
They have so much more in working capital + investments (mostly government bonds).
Net current assets + investments + non-current receivables + non-current deferred tax assets - long-term liabilities = $258,590,000.
Market cap - $258,590,000. = p/e of about 1 for the business itself.
Not that it matters at the moment. |
Interims out.
Directors have fulfilled their statutory obligations to market but nothing more.
No interim dividend, no buybacks, no real commentary on outlook or attempt to promote the company.
By themselves the figures are good enough - certainly this isn't a "Friday RBS". EPS of 70 cents annualised = a P/E of less than 6. And, if you adjust for the absurdly large cash pile this debt-free company still holds, even after buying out the minority holders in several plantations, it comes in at a P/E of nearer 3.
But, perhaps, that is missing the point. IMO, the point is the board's refusal to act in the best interests of all shareholders. |
Does anybody have any news of developments on the dispute over Madame Lim's will?
I can't find anything online, but maybe somebody else knows more.
I'm convinced that this share - ridiculously undervalued though it is - will go nowhere until it's clear who the major new shareholder is and what they want to do with their shares. |
TigerByTheTail : my thoughts exactly. |
AGM update as dry as dust - nothing but bare facts.
It occurs to me that the board are keeping their heads down and marking time until the dispute over Mme Lim's will is resolved, and it becomes clear who AEP's new major shareholder will be.
If I'm right, that's disappointing, of course, and it shows the current directors basic unfitness for office. But that's how it is. And why this company's share price is so wildly out of kilter with its peers. |
Again, that has all been true for years.
I doubt there will be any meaningful capital return until they run out of places to invest in the business or accept a takeover offer.
I'd like to be wrong. |
Is there a chance that there could be an announcement at the AGM next week that could have a positive effect on the share price ?. MPE have just announced a new share buyback, just when AEP are stopping theirs due to “illiquidity” nonsense, they’ve known all along the share trading is illiquid … I call their actions at worst dishonest, at best misleading. When a company announces a share buyback program they are conveying faith in the company and a belief that the share price is undervalued…. do they now think the share is fairly valued ? They should be buying at least 5,000 shares every day. |
At current CPO prices, they should be able to generate about $80m.
Say 25$m for capital investment and a $12-15m of dividends.
That would leave them with $40m extra cash this year, on top of the investments + cash of 177$m at year end.
So net cash should be above $200m net cash, possibly about $215m, or about 4£/share.
So you pay about 2,65£/sh for earnings of say 1,25£/sh, good for a P/E of about... 2 ?
This situation can't possibly last forever.
In three years the complete marketcap would consist of cash on the bank. |
Yes. That has been true for years. |
If this company were run with the same discipline as MPE the shares would be double the price imo. |
But it's down $16.4M since the start of the year, that's the drop I'm interested in. It could just be due to timing of investments, working capital etc. |
"The significant reduction in cash was principally due to the consolidation of AEP's holding in Indonesian subsidiaries by purchasing minority interests in late 2023 and allocating funds into investments for better yield."
All good |
Cash down. Presumably they've transferred more to investments for "better yield".. |
Yes, certainly a mess. I've read that article before. It seems unlikely to me that Madam Kim's AEP shares would just be left as part of the residuary estate but I can't find any mention that they've been specifically willed.
The article says assets worth 1.6 billion Malaysian Ringgits are in dispute. That's $342M dollars. Her AEP stake alone was probably worth $200M on her death so if her (indirectly owned) shares in AEP are in dispute then that is most the capital in dispute.
I think it's probably best for us if her AEP shares are distributed to as many parties as possible. |
This is the latest I can find about the disputed will. It looks like a real mess:
theedgemalaysia.com/node/667949 |
Another thought about the well known issues between the heirs of Mme Lim :
These issues could indeed lead to indecisiveness of Genting and indirectely of AEP.
On the other hand, that creates 2 positives :
- more leeway for the BoD to act more independently from the majority shareholder
- a take-under becomes more unlikely : the warring parties at Genting will want a fair share, which increases the odds of a independent and correct valuation of AEP for a transaction. |
Thanks for your well made points. I am not sure that I would be racing around aged 73 or whatever to do deals to grow the business, so I think the business is being tidied up in preparation for new ownership, as others have surmised. I agree it is likely to give the new owners maximum flexibility that the shares bought back are not being cancelled.
A drop in net assets due to a lot of cash going out to buy in the minority is not something that should worry their ego, for a new source of funding, namely retained earnings will pile up at even more break-neck speed than before, to replace that lost cash, I am sure, and the ROCE will be flattered in the short term too, I wonder?
Yes, I can foresee the company being run optimally at some point in the future, but maybe not just yet. A few other things maybe have to happen first. Hence the comment "Thank you for your understanding". A plea to be patient? |
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