Anglo-eastern Plantations Share Discussion Threads

[nobull] 12/1/2022 10:20

Agreed adsaddsa with what you say. But AEP, from memory, has a significant part of its finance supplied by a non-controlling shareholder, perhaps as part of a strategy to please the authorities. Other plantation companies do the same thing in a different way, I wonder? e.g. have more plasma schemes (they help reduce tensions between foreign investors perceived to be cleaning up and locals, I wonder?).

Another difference is MPE has a property development business, which should mean the associated company, Bertam Properties(?), makes much more significant profit contributions in the coming few years (change of use of the land from agricultural to residential use usually yields significant profits). Finally, there will be differences in the production growth profile. MPE has a lot of young trees, whereas AEP maybe has some significant replanting to do - how old is Tasik? It must be getting on now (will chopping it down reduce revenue?). Oh, I forgot: MPE will be able to improve its margins when the new mill at Musi Rawas is finished in 2023. I'd have to study it all in greater detail to be sure about all this. JMV.

[34adsaddsa] 08/1/2022 22:02

It's quite funny to compare it to M.P. Evans Group.

AEP has greater revenue, makes larger profits, has a huge net cash position versus net debt for M.P. Evans.

M.P. Evans has a market cap 60% larger than AEP's.

It's because of the management here and the fact she owns most of the shares. She's not seen as shareholder friendly. She could pay out all the cash via a special dividend and this thing would STILL have to double from here even ex-dividend to command the same valuation as M.P. Evans.

[ntv] 07/1/2022 08:45

Year end cash should be around $220m
I make that over £160m so nett cash is well over half the current Mkt cap
Happy to hold and see where this goes. one thing you would hope here is the downside is limited except maybe for a mkt crash

[skanjete2] 03/11/2021 16:53

That's more than 20p/share A MONTH of cash they're producing.

[ntv] 03/11/2021 08:08

Added another $12m to cash reserves during October
Cash balances are approx $204m no debt

[skanjete2] 27/10/2021 08:42

Almost half the market cap is covered by cash at the moment.

An E.V. of about 220 mUS$ while producing 120mUS$ cash a year!!

Is this cheap or what?

[ntv] 26/10/2021 12:31

Serious cash generation here

[ntv] 21/10/2021 16:24

Highest closing price for a while but is it ready to break out properly just yet?

[skanjete2] 19/10/2021 12:12

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

[nobull] 11/10/2021 14:43

"Has their balance sheet ever been better?"

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

[gaiusgracchus] 09/10/2021 19:32

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 08:29

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 16:25

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 07:41

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 07:31

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 08:15

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 15:27

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 19:56

"...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 16:04

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 09:38

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 20:57

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 17:23

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

[bubloo] 26/8/2021 21:44

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