R.e.a Share Discussion Threads

[ntv] 22/9/2022 07:53

I suppose the insiders got their copies already
I wanted to trade them up or down today no chance of that

[ntv] 22/9/2022 07:51

I can't use the link as McAfee blocks the page on the website as "Suspicious link"
Why can't they just print the half year results like any other company?

[dandigirl] 25/8/2022 08:48

Interims next month.

[ntv] 24/8/2022 07:46

My workings make this currently making a loss again on CPO
Coal sales should be paying down the debt
we sold out of both preference and ordinary(a while ago) basically because of no clear financial news
CPO is picking up a bit but going wait to see the balance sheet and details on whether it is worth buying in again after the next results

[dandigirl] 10/8/2022 09:13

nobull: any thoughts on this a.m.'s announcement please? Looks to be negative to me with the tax take increased on lower prices.

[nobull] 18/7/2022 11:08

The above is maybe the reason for this morning's strong recovery in prices all along the CPO price curve:

[dandigirl] 07/7/2022 23:45

Thank you, nobull.
When will politicians learn? This constant tinkering. How can business plan. If monthly changes were inconvenient enough, now there is a suggestion of changing pricing every two weeks.

[nobull] 05/7/2022 08:55

Two things explain the fall:
Crispin Odey dumping about 1.654m shares (half his fund's holding);
The sharp daily falls in the CPO futures prices across the entire palm oil price curve, and this combined with REA's high operational and financial gearing.

I imagine if you are a Unilever palm oil purchaser, you would put off buying palm oil as long as possible while we are in a palm oil bear market, and this exacerbates the falls, I wonder?

I shall not be selling any time soon, and if REA ords go a lot lower, I may purchase a lot more; however, any future purchases have to be looked at in the light of alternative investment opportunities available at the time. The attraction here for me is that they must be reducing net debt by $4m a month if IPA is paying back the coal loans as each shipment of 30,000 tonnes goes out. Sure, REA might not be paying down the interest bearing debt, and might be doing something else with the money, but they aren't stupid, so I guess things aren't as bad as the share price indicates. JMV. ATB.

Yes, I can't see any reason to rush in just yet with another 26 days of this month to go before the reference price is adjusted to give us a more reasonable export tax deduction, and therefore a fairer ex-mill-gate price.

A thing I noted about the PG broker note giving us a £4 price target was the analyst used a 10% discount rate when the cost of our preference capital (9% grossed up at the Indonesia rate of profits tax) is more. If he had used a higher discount rate, as I think he should have, his target price would be lower, I wonder? I shall be overjoyed if they get net debt down to $100m by end of Q1 2024.

[dandigirl] 04/7/2022 13:47

Belated thanks, no bull.
Your thoughts appreciated.
However see that share price has continued to fall.
Might be tempted below 100!

[nobull] 26/6/2022 16:48

Dandigirl, hi
Further thoughts?
Economically mineable coal = 400,000 tonnes
Mining rate = 30,000 tonnes per month
Production cost per tonne = $110
Coal shipped as at annual report date = 94.5k tonnes.
No. of shipments made at same date = 3 (3 x 30k tonnes)
No. of shipments remaining to be made to mine all the coal = 10
Estimated time to mine the rest of the coal = 10 months
Expected completion date: 31st March 2023
Profit generated by the remaining 10 shipments = 30,000 tonnes x $200 x 10 shipments = $60m
IPA shares this $60m thus: 70% for itself and 30% for the contractor doing the mining. IPA's share is therefore $42m

Debts owed by IPA to REA on the coal interests are probably $32m, although the loan is in the books at $29.5m due to a $2.5m write-down having been made in the last set of accounts.

My guess is the $32m will be repaid, not by the end of this financial year, but by the time the FY2022 accounts are published in April 2023 (the last few repayments being a post balance sheet event, I wonder?).

Since we don't have an equity interest in the coal mine (the Indonesian government prohibited that after REA bought its equity interest in the coal mine?), a sale of the coal interests therefore occurs when effectively our loan is repaid in full.

Yes, I hoped for an outright sale of the coal interests and an immediate repayment of the entire loan all in one go, but it obviously isn't going to happen: instead it looks like a sale by 10 more monthly instalments instead!

The thing I like about REA is the combined gearing (both operational and financial). When it works the right way, it has the power to rocket the share price. When palm oil prices are going the wrong way, the combined gearing of course will do the opposite. The market in REA ords maybe isn't that liquid, so that contributes to the share price volatility as well, I wonder?

I attribute the mega share price falls this week to the mega palm oil price falls, to our mega gearing, to the failure to have a CPO reference price that is close to the lower, actual palm oil price, and to the Indonesian Government insisting on a $200 export tariff (in addition to export levy and export tax) to disregard compliance with domestic market obligations, three of these factors resulting in us having a lower ex mill gate price this week (just temporarily) than last year's average, I wonder?

There does seem to be a clamour by small holders for the Indonesian government to make an unplanned change to the excessive deductions charged for CPO export e.g.



The consensus analysts' forecast shows eps of 24p for both FY2022 and FY2023 e.g.



PG has higher forecasts (29.5p and 30.2p). Anyway, if net debt falls $70m by say end of Q1 2024, a $7m saving in finance costs might give us an extra 10p in eps. I don't see why our share price shouldn't be £2.50 by then.

I think Russman is wrong to be calling for a restructuring of the balance sheet at this stage (doubtless he wants the prefs to get a large slug of the company, leaving the ords diluted out to hell, but it isn't going to happen - Ukraine and Putin have changed everything). Fingers crossed for £2.50, although I expect the journey there will be bumpy.

P.S. The same sort of calculations can be done for the stone interests, $16 a tonne being the sale price, and they have an awful lot of that e.g. 80m tonnes (not sure if I heard that right).

[dandigirl] 23/6/2022 17:11

Thank you, nobull. I always enjoy reading your helpful and knowledgeable posts. You were so right in calling the last uplift whereby the share price has doubled and tripled, depending on entry point.

All your points are well made, as ever. I had to smile, though, at the comment regarding repayment of the coal and stone loans as that has been spoken of for many months [years?] now. Any further thoughts on this please? Thanks.

[nobull] 23/6/2022 13:02

"The period of strength appears to be receding. Wouldn't be surprised to see further share price falls in the coming days."

Yes, except net debt should fall to about $100m (from $170+m now) by early 2024, and if CPO prices stay broadly flat (note the backwardation on the palm oil price curve has recently almost completely disappeared, perhaps indicating palm oil prices are going to be around the $1,000 CIF Rotterdam level for quite some time, albeit our ex mill gate price will be a lot lower than that due to onerous export deductions regime - sure palm oil prices have come down a lot in the last few weeks - the reason for the share price fall?), and if the net debt falls mostly due to coal and stone loans being repaid, then it seems reasonable to just add $70m (for the debt repayment) to the market cap of £54m at £1.23p share price, giving a new market cap of £111m and a new share price of about £2.50p. Panmure Gordon has a target price of £4, but one should never get excited about analysts' target prices, I wonder, and of course we have a speculative risk rating. The share price is volatile, but it's maybe a matter of getting used to it and not worrying unduly about it. No, this is not a stock to bet the farm on. MPE is a safer one, but there will be less gain there, perhaps? JMV. DYOR. AIMO.

[briggs1209] 23/6/2022 07:03

The contiual tinkering of tax levels does not aid visibility to earnings, which may scare some.

But all of these government measures have come about because the price has been high. I'm looking for investment in their plantations from the current cash coming in so that they are in good shape when prices fall back.

(pref holder)

[dandigirl] 22/6/2022 19:31

I fear the Board have missed an opportunity to do something about the share structure. [Don't ask me what, though!]

The period of strength appears to be receding. Wouldn't be surprised to see further share price falls in the coming days.

[nobull] 20/6/2022 11:31

Today's announcement is interesting: the press got it all wrong then about the top band of export levy being reduced to $200 until the end of July! The press got it right about the top band of export tax being increased by $88. The $200 export levy the press talked about was actually an increase if you wanted opt out of the time consuming DMO requirements to get an export permit.

I see Joko has sacked the minister in charge of setting the levy and export tax. What a mess it has all been. The remedy for high cooking oil prices is to allow exporters to keep the benefits of high CPO prices.

[davidjbr] 27/5/2022 13:59

My best guess is that it's depressing domestic prices vs international. Previously they've said that domestic prices are approximately at international levels once the export levy is accounted for. This announcement suggests that relationship has been weakened given there is no longer the ability for producers to export all oil. Suspect that will lower domestic prices by maybe 20%, assuming export permissions start to come through (although the last month may well have been much lower).

[ntv] 26/5/2022 09:00

Not really sure what to make of the RNS re Lifting of ban
Anybody able to put it into plain English tia

[cwa1] 26/5/2022 08:19

Couple of announcements this morning:-

Extension of dollar notes



and

Lifting of CPO selling ban(with some restrictions)

[foxfox79] 18/5/2022 20:02

Some interesting food for thought here, i think 250 is a reasonable target for end of 22 not 23, based on my assumption - which may be wrong - that cpo prices will remain above 1000 USD cif rotterdam. I continue to hold as i believe agricultural stocks are one of the few areas to take shelter during the recession, as Marc Faber also recommends. Also own aep.

[nobull] 11/5/2022 16:36

This week's share price performance is nothing short of perverse (£1.46 right now). New analyst's forecast out showing eps of 24p for FY2022 and FY2023. I don't really believe these forecasts as I am not sure if they have taken into account the arrears payments on the prefs, which surely would reduce the eps.

Yes, I get that the $10m loan interest written off can now be written back (Coal is $385 a tonne right now) and we just need 9 more shipments perhaps to get our coal loans paid off. Net debt needs to come down a lot to get a lower risk rating, so that our shares can trade on a slightly higher PE e.g. 10x - and maybe for that we need a massive extension planting programme to bring down our average tree age to that closer to MPE's, I wonder, so we can have a decent production growth profile, like MPE has.

The weak £ must make the pref arrears a cinch to pay now.

The analyst gives us a "strong buy". Net debt of say $130m by y/e 2023, better interest cover, pref arrears paid off by then, and maybe a small re-rating - what's not to like? My price target (no, I haven't done any calculations) is £2.50 by end of 2023. JMV.