Dekel Agri-vision Share Discussion Threads

[rivaldo] 10/10/2022 13:56

WH ireland today reiterate their 9p target price and forecasts of €0.4m PBT this year rising to €4.2m PBT next year.

The latter equates to 0.5p EPS.

They note re cashews that "DKL have been carrying out a process of commissioning and testing, which appears to be progressing at pace. With production now approaching rates equivalent to c. 7,500 tonnes p.a., the cashew operation should provide a positive financial contribution in Q4 2022 and, crucially, a significant uplift in revenue and profits in FY2023".

In summary:

"Our FY23 forecast for the cashew business is premised on DKL’s target to produce 10,000 tonnes p.a. (against a nameplate capacity of 15,000 tpa, running three shifts per day), which we now believe is well supported. Once in full operation, we forecast the cashew project to contribute over €12m of revenue in FY23, with strong positive cash flows and potential for over €24m p.a. in the longer term at 25%-plus gross margins.

 Local pricing robust
Against a weaker international market, an average CPO price of €1,030/MT (local) over the month is highly positive and demonstrates the continued disconnect between
local and international pricing. Strong pricing is expected to largely offset lower FFB yields in the year and prices remain materially above our FY23 assumption of €900. The company’s strategy of selling PKO into the international market continues to pay dividends, offering a step change in margin contribution over prior periods – pricing up over 40% on August 2021.

 Palm oil volumes normalising
While the FY22 palm oil harvest has been the lowest in the company’s history, we expect that volumes will normalise in the region by next high season in FY2023. Although not reflected in our forecasts, a poor harvest may be expected to be followed by a strong production year, while recent planting in-country will support a further rise in FFB volumes longer term.

 Forecasts / Valuation
Trading on a forward EV/EBITDA of 5.5x, falling to 3.9x in FY24, and following a material de-risking to our forecasts for the cashew project over the last few months, we see significant upsides in value. We retain forecasts set on June 13th (see our initiation note : DKL Note) as well as our DCF and comparator-based fair value assessment of 9p."

[chadders] 10/10/2022 13:25

Yep, definitely turning a corner albeit a long sweeping bend.

[2vdm] 10/10/2022 08:38

I agree with your summary Rivaldo. Worth waiting and continuing to hold here.

[rivaldo] 10/10/2022 07:24

The September update shows CPO production well down once again, but H1 showed that this is outweighed by higher prices, and once again CPO and in particular PKO prices are well ahead of last year - note that last year PKO sales were Nil against this year's 53 tonnes, though PKC sales were Nil this September (swings and roundabouts!).

Extraction rates are excellent, and CPO production is at least improving if still lower.

Cashews seem to be progressing well now, with 10,000tn pa on the cards for next year given DKL are about to reach 75% of that level.

Happy to hold here given the transformation about to happen via cashews and the likelihood of improved CPO production in the next high season at likely higher sale prices.

[chadders] 07/10/2022 10:03

It'll be interesting to see if they put any € numbers on cashews on Monday, especially if we get a Q3 update as well as Sept monthly. For the most of this year cashews have been running at a supposed 15% of capacity and recent videos have revealed a number of pallets of finished cashews in the warehouse. If they are still only local sales they ought to add up to an interesting number.

[jpuff] 06/10/2022 18:40

In the meantime while we wait salaries are gleefully drawn and banked. It's a great lifestyle company for some eh

[chadders] 06/10/2022 15:06

Hard to believe how badly this has done over the last 5 or 6 years. That said I genuinely believe we have turned a corner and I'm really hoping for a sustained period of under promising and over delivering. Investors may mistrust the often poor communication but when the numbers improve DKL will be difficult to ignore.

[2magpies] 06/10/2022 12:53

It's always 'tomorrow'.

Equipment is here, soon we shall...

Next week ..........

Next month.............

Is this DKL Agri-Vision or Manyana Agri-Vision?

[chadders] 04/10/2022 19:06

You and me both..tho still only fair value with all the caveats.

[rugs3] 04/10/2022 17:16

Chad. I think I would be persuaded north of 10p as well !

[chadders] 04/10/2022 15:22

Maybe, but from memory Miton sold a few earlier this year and if they were offered north of 10p they could be persuaded. Agree it's unlikely but I'd feel a bit more comfortable if we were 9p

[rugs3] 04/10/2022 11:31

I think an unwelcome bid is most unlikely. Some 40 pct is with the directors and AgDevco /Biopalm and Miton, a loyal supported up until now at least, has another 10pct.
What Rivaldo has said above holds true. Their local selling price will hold up well until the end of the year and we must hope for good news on cashews.

[rivaldo] 04/10/2022 08:00

The current $950 CPO price is still higher than it was for the entire period from mid-2012 to early 2021!



So it's still high by historic standards. Plus this is now the low season, so better to have fallen now than during the high season which will hopefully return in strength in early 2023. Plus there's a 6-8 week delay in prices reaching the IC, so DKL will still be benefiting from higher prices anyway through to say November/December

Obviously it would be great to still have all-time high prices. But they'd risen so much that it's all relative and were unsustainable long-term.

Plus of course cashews will hopefully be transformational.

[2vdm] 04/10/2022 07:43

CPO prices continue to fall. Any views appreciated as to how this will affect DKL going forward. Hopefully the cashew arm will support the business.

[tradertrev] 29/9/2022 15:26

Pretty reassuring on all the key issues, to my mind.

[ptolemy] 29/9/2022 14:58

Did anyone join the online presentation? Feedback?

[2vdm] 23/9/2022 09:34

I hope the news re cashews will be positive. Bloomberg reports a large drop in palm oil.

[dillydally2] 22/9/2022 09:55

Toop is going to bag

[royalalbert] 22/9/2022 09:55

Think this needs the cashews to be running at full tilt before a sustained rise occurs.

[ptolemy] 22/9/2022 09:50

Good interims. Link below but not much to add:

[chadders] 22/9/2022 08:44

Excellent interims. Now if we could just flip market sentiment..

[2vdm] 22/9/2022 08:35

Agree Rivaldo. A positive update and looking good for the future. The Far East were also having labour problems for Palm Oil production, but I haven't seen anything recently.

[rivaldo] 22/9/2022 07:37

Surprisingly impressive H1 numbers today - 2,3m euros PAT and a record 4.2m euros EBITDA in H1 against a £16m m/cap.

And the cashew operation - at last - appears to be progressing nicely now towards full operating capacity.

Plus September is seeing some improvement in CPO volumes.

Imagine the potential in the next H1 with a decent CPO production season, at current multi-year price highs, combined with a full period of cashew production.

Time to dream..... :o))