Anglo-eastern Plantations Share Discussion Threads

[skanjete2] 19/10/2021 13:12

It seems like the palmoil stocks are wakening up these days...

[nobull] 11/10/2021 15:43

"Has their balance sheet ever been better?"

Stronger, no; less inefficient, yes; you have to hope things will change?

[gaiusgracchus] 09/10/2021 20:32

Has their balance sheet ever been better? I think maybe not, at least for a long, long time. Will shareholders see the benefit? That's the question as far as I'm concerned. A lot of downside protection for sure, but is this a double? I just don't know. How much upside do the rest of you see?

[ntv] 05/10/2021 09:29

You could look at the balance sheet another way. If they spent on an acquisition now, they could be buying near the top of the cycle. I have a feeling this is peak harvest time so very beneficial. So it is piling up. Will it be taken private? Who knows. Give it another 12 months and cash won't be far off mkt cap so downside will be very limited I hope. Happy to hold here for while yet😀👍;

[nobull] 04/10/2021 17:25

You have to deduct another $100 off that $955 to get an ex-mill-gate price. I agree they appear to be doing fantastically well, but a company that won't return the excess capital it is carrying on the balance sheet and that can't be bothered to invest it profitably for its shareholders is a turn-off to all but the most enthusiastic.

What is the company doing with all that cash? You would think it was all invested in barely performing loans where there was a danger of the principal not being recovered the way the shares are priced. Weird.

P.S. the discount CPO now trades at with SBO is now quite small in historical terms. Another weird thing.

P.P.S. The dividend policy

[skanjete2] 01/10/2021 08:41

Today CPO reached an all time high of 1330US$.

And importantly, above 1.275US$/ton, the export levy and taxes are capped at 375US$/ton.
So every extra dollar above 1.275US$/ton flows directly into the coffers of Anglo Eastern.
At the moment they receive a net price of about 955US$/ton, about the highest they ever got and extremely profitable.

[ntv] 01/10/2021 08:31

Another month gone and another $10m in cash added to the balance sheet
That is $30m since the last balance sheet date
Prices are still close to an all time high

[nobull] 12/9/2021 09:15

m_kerr, thanks for that. Yes, the fact AEP is a public company hence its shares can rise in price is a good defence against a claim for unfair prejudice particularly as AEP's dollar market cap. has risen over the last few weeks, probably mostly due to the rise in the cash balance reported in its H1 results (rather than due to changes in $ ex-mill gate price of CPO - if anything the ex-mill gate price has fallen recently due to the rise in September export tax).

And I still feel you are right that the share price would be massively higher if the dividend payout ratio were raised to 50% of eps, and in that sense, shareholders are being done down here. Another defence against an unfair prejudice claim might be that they are looking for reasonably priced acquisitions but haven't found any yet.

Anyway it is interesting that Simon Thompson of Investors Chronicle thinks AEP are a bargain on a forward PE of 3 or whatever, but I can't see what is going to out the locked-up value here. If I could, yes, okay, they wouldn't be this share price!

MPE probably trade at the substantial premium to book value because the DCF valuation, using, I assume, a long term $610 ex-mill gate price and a 16% discount rate, makes their plantations, and their small property development business, worth £10.99 a share (see page 94 of their 2020 AR and also the separate Khong Jaafar estate valuation document they publish on their web site).

REA trades at a massive discount to net asset value probably because it is assumed that a massive rescue capital raising will be needed at some point to reduce its horrific level of net debt. Also some of REA's 'assets' aren't exactly the type you can put up for sale, e.g. capitalised interest, but REA has the biggest operating leverage, an advantage, except when there is a backwardation on the palm oil price curve like there is now, so lots of scary times ahead for me!

MPE H1 results due out tomorrow, which I am also invested in. AEP is the only one I don't have! Maybe Simon Thompson is right after all, and I am wrong to be in REA ords. We'll see.

[m_kerr] 11/9/2021 16:27

nobull - i'm pretty sure that letting excessive amounts of cash (relative to operational needs ) pile up, whilst paying no or minimal dividends, has been successfully litigated against, but only in private companies, not publicly listed ones. this is because in theory higher cash balances should result in a higher share price.

[nobull] 10/9/2021 20:56

"...will be best achieved by turning off as many shareholders as possible from owning the shares"

An unfair prejudice claim may be the answer to unlocking the value then?


"There are two elements to the requirement of unfair prejudice, and both must be present to succeed in a claim:

the conduct must be prejudicial in the sense of causing prejudice or harm to the relevant interest of the members or some part of the members of the company (i.e. shareholders), and

it must be unfair."

Source:

[m_kerr] 10/9/2021 17:04

i can only conclude the chairman, who is the controlling shareholder, will at some point be looking to buy the other 49% at a discount to value, which will be best achieved by turning off as many shareholders as possible from owning the shares. shareholders must be assuming that the cash will just keep piling up and up, and none of it will make it back to them.

[nobull] 10/9/2021 10:38

MP Evans' future eps are expected to grow faster (average tree age is younger) and eps can grow from doing more of its own milling. One new mill has just come on line and another one is due to be completed next year. AEP's shares are may be a bet on a shareholder rebellion, not that you can rebel much against a 50%+ shareholder.

Corporate governance issues? More like a deliberate minority oppression scheme. Yes, Mdm Chairman raised the dividend 100%, but on the full year 2020 results it was still 88 times covered even after the massive dividend rise.

All 3 UK listed palm oil companies have similar total assets, but boy are they different at the enterprise value level and at the cpo production level. REA has over $50m of dud assets (coal mine and stone interests don't generate any cash) but that is about to change, but REA's ords have a higher risk rating than AEP's, so will definitely not be to everyone's taste here. JMV.

P.S. I bought some Lidl's frozen battered cod the other day, and guess what: it contains palm fat. Doing my little bit to help.

[m_kerr] 09/9/2021 21:57

if you take off the £100m or so of net cash (excl retirement liabilities), you get to an enterprise value to ebit ratio of, 2.08 which is probably the lowest i've ever seen for a business. MP evans trades at a 54% premium to book, and EV/EBIT of around 20. in fact, if you strip out the net cash, the business trades at a 60 odd % discount to net assets. i think it's fair to say as a private business it would be transacted at a value far, far in excess of the current share price. there are clearly corporate governance concerns here - if there was a commitment to paying out say half earnings in dividends, it would be trading at possibly double this price.

[ntv] 02/9/2021 18:23

also added $10m in July and another $10m in August so cash is climbing rapidly

[bubloo] 26/8/2021 22:44

st on investor chronicle
book value 0f 1029 p with 150 million can at hand

[nobull] 26/8/2021 16:44

"The stock looks very cheap"

So cheap, the company won't buy in its own shares for cancellation even below intrinsic value or ahead of a re-rating, the former action being something which could provoke the latter. Strange.

[ntv] 26/8/2021 14:50

Having mentioned the cashflow it is worth worth noting that trade payables have increased quite a lot

[easybrent] 26/8/2021 12:24

The stock looks very cheap and H2 will most likely be even better.

hxxps://twitter.com/EasyBrent/status/1430851232483225602

[nobull] 26/8/2021 11:32

$159m of idle cash. What are they going to do with it?

[speny] 26/8/2021 11:19

Today's results are way beyond what I was expecting, absolutely stonking set of figures! This should really fly on those figures, however due average daily volumes being circa 10k for the past few months, I doubt this is on many investors radars. I'm surprised with their lack of debt and the amount of cash they have, that there is not a better dividend policy in place.

VectorVest valued this at over £10 and that was before todays results.

[ntv] 26/8/2021 10:57

Like I said a while back they are currently generating $10m per month

[skanjete2] 26/8/2021 10:41

The results are simply stunning.

A marketcap of m322US$
Half of this is cash in the bank : m160,6US$
In six month they produced a record m62US$ cash flow. The highest ever, even better than in the bonanza years of 2008-2014.

If they go on like this for 18 months, the cash will equal the marketcap.

This is incredibly cheap at the moment!

[nobull] 14/8/2021 07:52

"We, nevertheless, expect a pullback in the CPO price as the crop production improves further from the second half of the year."

NTV, I agree with you, despite the above from the CEO. AEP had an average ex-mill gate price of $673 in Q1, and MPE, $726 in H1. If the operational gearing really is 9x compared with MPE's 2x then that probably means the results are going to be very good indeed, I wonder? Not invested here, but I watch with interest.

The cash mountain maybe doesn't help (unless they announce plans to do something profitable with it), but what does that matter, in the grand scheme of things, with such gearing? With an admin expense that is half REA's, that is another good thing.

REA needs to get someone who can run the whole operation, at a fraction of the cost, from an Iban or Dayak long house with wifi, or alternatively WFH. JMV.

[ntv] 10/8/2021 14:32

Results due soon.
They should be good