Dekel Agri-vision Share Discussion Threads

[cheshire man] 18/1/2018 12:47

Looking at 12p on the chart here just need some volume to get there and then only half way to Cantor Fitzgerald 24p tp,,,,,:-)

[twistednik] 18/1/2018 09:25

Looking good for a slow climb back to 12p imho. If next quarters figures are very positive than we could go higher !

[rivaldo] 18/1/2018 08:54

Nice one basem1. Moved up above 10p now, with buying coming in at almost 10.5p.

Should move back to 12p for starters.

[basem1] 17/1/2018 19:54

Could double from here over the next 6-9 months of all goes well. We're now at 9.8p and have the FY numbers in the bank that the market was expecting when the shareprice was 12.25p. I've added yesterday and again today.

[basem1] 17/1/2018 19:51

"Driving significant shareprice growth "

[rivaldo] 17/1/2018 09:30

New interview with the CEO re the record Q4 - and highlights, again thx to jk400:



April/May for full year results, as usual.
Divi expected to continue, progressive growth.
Second boiler "imminent".
Nursery equipment on site at Guitry, installation this year.
Norpalm talks still ongoing.
Aiming for "solid periods of production growth" in Q1/Q2

[chadders] 16/1/2018 23:23

Thanks for that rivaldo.

[rivaldo] 16/1/2018 23:00

Cantor Fitzgerald say Buy and have a 24p price target (thx to jk400 for this):

"DekelOil (BUY) £ A return to form
DKL LN (8.9p, TP 24p), Market Cap: £27m
(Corporate Stock)

Our view: A stronger Q4 shows DekelOil back on track in our view following earlier one-off mechanical issues. The ability to secure premium prices is also apparent. The company is now set to complete the planned capacity increase at the Ayenouan mill ahead of the peak harvesting season starting in February. The production numbers and underlying return to form give us confidence that this will drive growth at least in line with our forecasts and we reiterate our BUY recommendation and target price of 24p.

Q4 rebound in production
DekelOil has released its full year production update showing a healthy rebound in Q4 CPO production and sales delivering the company£s highest Q4 CPO , reversing the weaker data seen in Q3 and delivering overall production broadly in line with 2016 at 38,736 tonnes. Sales of CPO were 38,378 t, slightly ahead of our forecast 38,085t. Pricing was also stronger with the company averaging £680/t in the full year ahead of our £665/t forecast and we estimate that this represents a premium to the Rotterdam CPO price of 7%. Palm kernel and palm cake production and sales were slightly lower than last year but again prices were stronger than expected with palm kernel oil showing particular gains.

Return to form ahead of capacity increase
The results reflect a return to normal operations following one off mechanical issues earlier in the year. The CPO extraction rate has been a little lower than in previous years at 22.6% compared to 22.9% in 2016. While this is good for the Cote d£Ivoire, a lower oil content is thought to be due to the processing of slightly younger fruit following heavy planting over the last 5-7 years. The extraction rate should be expected to rise again with plant maturity. The company is now set to increase capacity at the Ayenouan mill to 75 tonnes per hour from 60 and the new capacity will be in place ahead of the peak harvesting season starting in February.

Valuation reflects cashflows
We value DekelOil on a DCF basis with a cost of equity of 15% and cost of debt of 10%. This gives us a target price of 24p. The principal risks to our valuation are volatility in the CPO price and production volumes."

[twistednik] 16/1/2018 10:28

Wow, that was a surprise this morning ! I think this will gradually pop up to the previous support level around 12p when people realise how good an update this is.

On that basis I'm picking up a few.

The problem with the business seems to be the volatility of earnings based on factors that are very difficult to predict!

[cheshire man] 16/1/2018 09:59

and a very encouraging one too chadders :-)

[chadders] 16/1/2018 09:58

It's a production update not a trading update fellas.

[varies] 16/1/2018 09:50

No news on Norpalm that I can see since the AGM reference in August to "continuing discussions".

[masurenguy] 16/1/2018 09:36

The small dividend paid last year (£500K) is unnecessary. At their current stage of development they should focus on further capital investment to expand both production and sales. This is not an income investment at this stage of its development.

[lyceeuk] 16/1/2018 09:26

but their is no mention about the dividend ???

[rivaldo] 16/1/2018 08:30

Agreed - excellent update today. Back to 12p for starters?

I particularly like the confidence shown going forward for 2018 - and that the 25% increase in capacity will be in place for the peak harvest season.

Onwards and upwards from here.

[masurenguy] 16/1/2018 07:52

I consider this to be a positive development and am heartened to see that the African based CEO is taking shares instead of cash as part of his basic salary remuneration. Lets hope that the shareprice starts to reflect these positive factors !

DekelOil Executive Director Lincoln Moore said:"Thanks to a record Q4 performance, our 2017 CPO production, at 38,736 tonnes, closely matches last year's total, a highly creditable outcome particularly when the unplanned stoppages at the Mill during May and June are taken into account. The combination of stable production and higher CPO pricing will translate into record full year revenues and profits. Prior to 2017, CPO production at Ayenouan had grown for three consecutive years. We expect 2018 will see a resumption in annual CPO production growth. Our confidence is based not only on DekelOil's growing standing among local smallholders as an established and reliable buyer of fruit, but also the imminent completion of the 25% increase in the Mill's capacity to 75 tonnes per hour from 60 tonnes per hour. Importantly, this will be in place in time for the commencement of the peak harvest season, which typically runs from February until June in Côte d'Ivoire."

In addition, application has been made to the London Stock Exchange for the admission of a total of 628,397 ordinary shares of EUR0.0003367 each issued to certain advisers in settlement of fees for services provided ("Admission"). This figure includes 400,000 Ordinary Shares which will be issued to Vince McAleer, CEO of the Company's subsidiary Dekeloil Côte d'Ivoire SA, as part of his base salary remuneration. It is expected that Admission will become effective on 22 January 2018. Following Admission, the Company's issued share capital will consist of 299,010,097 Ordinary Shares."

[chadders] 16/1/2018 07:41

Excellent update. Our resident deramper has a bit of egg on his face methinks.

[troublingtimes] 09/1/2018 14:20

There is a lot of talk about a good deal for Norpalm saving the share price

I thought it would be interesting to put some perspective on the numbers.

So what is norpalm worth?

Well according to PZ Cuzzons (a big shareholder and customer or norpalm) the equity is worth just under a £1m.

To pay a bit more than that could be ok but much more and we need to ask why.
And then we need to be sure the follow on capex can be funded.

What we know
-----------
Norpalm report in Norwegian krona and their regulated reported performance looks something like:

NOKm
Year op income op profit after tax
2016 116m 14.45 6.8
2015 104 6.0 3.9
2014 90.8 12.7 12.0
2013 62.9 0.6 -0.06

I don’t want to go to the trouble of working out the exchange rates at those times but divide by 8 and you get a rough idea in $.

There is some other stuff in the company but notice operating income has been going up nicely but margins and profit are all over the place.

We also know that capital demands are high – they put in a new boiler for about $3m a couple of years ago. What else could be needed we don’t know.

We also know that there were land problems.
hxxp://www.norpalm.no/index.php?articleid=166&expand=96

They even had to engage with the then president. And for those who don’t know him, he had a reputation for being particularly greedy so that would not have been a “free” conversation – the new government is right now chasing his (allegedly) corrupt brother and other ex-ministers. The Ghana papers used to openly report that his ministers’ charged $100k for their signatures so you can imagine his cost. To solve it they had to hire some “fixers”. Who knows what headache will come out of that. The new govt has already cancelled more than 30 PPAs because of corruption issues.

If a land case comes up these can take decades to solve in the local courts.

I don’t know what the balance sheet looks like so we can’t tell how much debt it has.
We also don’t know what cash flow looks like.

So who knows what it’s all worth?

Well our starting point could be PZ Cuzzons they are in the trade and they own about 31%.

According to their accounts they list their holding as worth £0.3m in 2015 (2014: £0.3m). So just under a £1m for the whole company (after debt). Also .. “The Directors consider the historical cost of the investment to be representative of its fair value at both 31 May 2015 and 31 May 2014.”

Now this is probably a little “porkie-pies” on the part of Cuzzons because their Ghana operation also discloses that they took the following dividends out
GHS
2016 0.35m
2015 0.95m

If you divide by 4 you get a rough idea in $.

They also stripped out another few bucks in rental income in 2015 and sold some sort of services to them. But norpalm did owe them something like £200k as some sort of receivable so presumably there have been payment problems.

Cuzzons is ultimately a UK company so it has to meet a certain standard of accounting so the £0,3 can’t be too far out – at least according to their UK auditor.

Either way we are not talking about big bucks to buy it.
Even if they pay up --- £2m is more than fair.

So assuming they are not totally "stupid" – the price they pay for norpalm will probably not be too frightening, the problem will be the follow on commitment. That is what killed norpalm before.

[cyfran101] 03/1/2018 18:00

Land ownership legal issues i believe they mentioned for the need of government guarantees regarding Norpalm.

[cyfran101] 08/12/2017 15:30

I didn't think it would be quick as they wanted certain government guarantees first. Maybe that's proving to be an obstacle to a deal?

[chadders] 06/12/2017 11:50

A bit of news on Norpalm wouldn't go amiss.

[basem1] 22/11/2017 15:16

He wasn't "passionate" though was he, just corporate credible. Maybe better to under promise and over deliver ?

[chadders] 22/11/2017 15:09

rivaldo, thanks for that, excellent video, he comes across as very credible. I'm overweight in this already but it's still a very compelling medium term investment case for me.

[basem1] 22/11/2017 14:50

Thanks Rivaldo, I take some encouragement that he thinks the stock has overshot on the downside and we are trading in low single figure ratios. My breakeven after selling some at a huge loss is 15p. A couple of reasonable quarters and an increase in the divi should see us get there in 6 months time, maybe sooner.