R.e.a Share Discussion Threads

[wigwammer] 02/11/2023 08:22

Cuts net debt to £110m, pays off pref arrears and and has pretty marginal effect of underlying asset ownership.

[wigwammer] 02/11/2023 08:20

Wakey wakey... absolutely transformational news for REA

[cwa1] 02/11/2023 08:18

Proposed further investment by PT Dharma Satya Nusantara Tbk ("DSN") in PT REA Kaltim Plantations ("REA Kaltim"), sale of PT Cipta Davia Mandiri ("CDM") and rationalisation of REA's group structure (the "Transactions")



and Prefs announcement...

[pbaker] 28/9/2023 15:16

The ordinaries are doing better than I thought but it is on very low volume as usual. To me this is just market makers have no stock. It is great for the few ordinaries i own, the prefs at 64 could yield 14% and there are 7p of outstanding payments. Though if and when these get paid is the big question for pref holders.

[briggs1209] 28/9/2023 13:57

I think the ords are holding up well here given that the prefs are reflecting worry about REA being a long term going concern.

If I'm MPEvans I think I wait 12 to 24 months and see how much more distressed REA becomes.

Without a suitor I imagine a debt for equity swap could be a way for REA to service their debts, would not be pretty for the ords though.

[cwa1] 28/9/2023 10:36

Modest follow through today on low published volume

[pbaker] 27/9/2023 20:53

It was only 50000 shares £25k. Market makers short of shares? I still have my fingers crossed for the MPEvans bid. It is only me predicting this but you never know. They are generating cash, could pick REA up for a song. Then pay down debt over 3 to 5 years. Share holders would take £1 if offered as would preference holders.
Rea management team have not covered themselves in glory.

[cwa1] 27/9/2023 14:23

A little fillip for the share price today. Just bombed out buying, or something else?

[ntv] 24/7/2023 16:16

and Ukraine

[cousinit] 24/7/2023 16:07

I suspect that there's an element of El Nido anticipation for lower volumes/higher prices in recent CPO moves

[ntv] 24/7/2023 15:50

Huge jump in CPO prices in recent weeks should help the balance sheet considerably

[pbaker] 30/6/2023 19:38

Increasing borrowings by a further $8.5million but only raising $8.075million.
For a company that should be cash generative at this level it does not bode well.
This makes very little sense.
What do they need the money for?
augmenting the group’s working capital.
This is non descriptive sounds like BS?
were they short for the pref dividend?
Are they making sure they have enough for the December pref payment to clear the arrears?
Borrowing money to clear interest free pref historic missed dividends?
Once dividends on prefs are clear, I will be tempted to exit on any good price.
What are they doing?

[nobull] 30/6/2023 12:46

A redemption yield of 9.67% for the purchaser of those notes, assuming the principal is $100 and there are no bonus interest payments due at the end.

[cwa1] 28/6/2023 09:42

28-Jun-2023 / 09:20 GMT/BST

═══;══λ2;══_52;══ 552;═══════════;══λ2;══_52;══ 552;═══════════;══λ2;══_52;══ 552;═══════════;══λ2;══_52;══ 552;══

R.E.A. Holdings plc ("REA" or the "company")



7.5 per cent dollar notes 2026 (the “dollar notes”) issued by REA

REA announces that the company’s wholly owned subsidiary, R.E.A. Services
Limited ("REA Services"), has sold for delivery on 1 July 2023 its entire
holding of the previously unsold balance of $8,570,000 nominal of dollar
notes at 95 per cent of the par value of such notes. The resultant sale
proceeds will be applied in augmenting the group’s working capital.

The notes sold were purchased by REA Services on 30 June 2022 pursuant to
proposals, approved by dollar noteholders on 3 March 2022, to extend the
repayment date of the dollar notes from 30 June 2022 to 30 June 2026.

The total amount of dollar notes outstanding remains $27,035,218.

[wigwammer] 16/6/2023 13:19

Thanks for the thoughtful replies, pbaker and cousin.... I think net net it's an interesting play - there is growth, assets and decent margins ... and eventually that will be reflected in the share price..... but I think the Indonesian jurisdiction does mean it will be a slower process than would otherwise be the case... interesting to see they have paid dividends historically and I recall management buying shares in the not so distant past...... but next year it will be a decade since the last ords dividend! ... best of luck

[cousinit] 16/6/2023 13:01

The company has generally been over indebted for such a cyclical industry and the diversion into coal and stone quarrying hasn't helped in that (up to now).

There does seem to be more focus on limited investments:
Some new planting and replanting
Improving infrastructure and resilience against flooding
Additional mill capacity
Certifications to obtain greater premium pricing

Whilst all of that is modest, it might actually drive some operational gearing so that results could improve even without CPO prices increasing.

So there is some focus on value, but may take several years to see whether it pays off or not.

[pbaker] 16/6/2023 09:34

Wigwammer. Market cap on the ordinaries just £28million at 67.5p. Though with all the debt, that values the company at an enterprise value of over £200million.
With palm oil bouncing off of $855 for the second time(let us hope that is the floor)now $895 you can only hope that the company can pay the pref dividends and continue to reduce debt.
The big issue here is the Indonesian government taxation on palm oil. It stops REA making big profits at high prices and it takes a great management team to make a reasonable return.
As a family we hold over 200,000 prefs. It is our largest single position. We only hold 8,000 ordinaries. With a yield of 10% on prefs I am hopeful but I can not justify taking our position higher.
The ordinaries appear a bargain and next year if palm oil sits near $1000 for the year, you could see ordinaries touch 200p again. A small dividend is possible just to keep shareholders happy. perhaps 0.25p at the half way and another 0.75p as a final.
There is the smallest chance MPEvans could bid. The management team there seem to be all about the shareholder, they would not over pay. So 150p and £1 for prefs I think they could take REA out and make MPEvans a bigger player in palm oil.
These are my thoughts as always DYOR.
That is the Bull case. The Bear case, sees palm oil fall. $500 could be a low. This might see the company hold back on making up the pref dividend. 7p per pref left to get them back level. As a worse case they might not make the final payment in December. This would see the prefs crater to 50p and the ordinaries head towards 40p. This is a small company that is lightly traded so any big sellers can keep the price low for a long time. For me this scenario would be a nightmare but it is not unthinkable as any long term holder would tell you.
Would love to hear anyone's thoughts.

[wigwammer] 16/6/2023 08:33

Prefs - mean pref dividends

[wigwammer] 16/6/2023 08:30

I made some decent gains here 18-24 months ago, and looking again. But jeez - given the sky high prices witnessed over the last few years, what does this company need to do to generate decent cash flow? They paid off some of the prefs and debt fell a bit, but it does seem the authorities in Indonesia conspire never to let them make any material progress. Any thoughts? It's got a long trading history, a full LSE listing, material assets, an attractive growing end market - but is it run for shareholders?

[nobull] 05/5/2023 12:01

"This could leave a dividend on the ordinaries of 10p next year?"

I've got my doubts about that. They really need to pay down debt first - the debt is at diabolical levels, but debt reduction, if you are a director, is boring - much nicer to have a new plantation or new vehicles, etc. I think expanding the business, if there is any surplus cash, will take priority over debt reduction. Reinstating the dividend is a leakage of money the directors would love to have to spend on new stuff, I wonder?

I agree with you that £2+ is likely but the directors can achieve that quite quickly by paying down debt, but because we want that, they won't do it - you can be sure of that. The other thing to bear in mind is the operating leverage here is massive, so palm oil price movements have a more dramatic effect on profits. We've had falling palm oil prices for some time now. The share price trajectory is reflecting that and maybe anticipating a return to barely profitable conditions.

Anyway dividends on the ords ought to be the last thing on their mind for a while yet. JMV.

I haven't sold any, up from the low fifties to £2 and down again but if they get any lower than the current level of about £1, I expect I'll be loading up with a lot more. The business model is sound but the financial model needs fixing. A new revenue source to the stone contractors should enable some of the loans we made to these organisations to be repaid enabling a debt reduction to translate into a rise in market cap, I wonder?

[pbaker] 25/4/2023 20:25

Rea update 20.04.23. A complex set of results. Do we need 4 different types of profit. Revenue $208.8million Debt $166.7million down from $175.7. EPS 31.85p. So just PE 3.1. The preference dividend should be caught up by 31.12.23.
This could leave a dividend on the ordinaries of 10p next year? So a while to wait for any income.
I do wonder if MP Evans might be tempted to make a bid?
I own many more of the preference than i do of the ordinaries. So i am talking my own book.
This looks so cheap but it is cheap for a reason.
I do think £2 could be easily reached in a good market and £4 is not impossible.

[nobull] 01/2/2023 08:18

I expected these to rise 10p on the today's trading update; sadly, not the case. My target remains £2+ in 18 months' time, driven by net debt reductions and enterprise value remaining more or less constant, or maybe slightly higher, what with the new revenue streams. That said, predicting future enterprise value is beyond my competence: I just think the m.c. of the ords can rise by the corresponding fall in net debt.

[hpcg] 22/9/2022 07:58

NTV - there is an attachment on the RNS also, right at the bottom.