R.e.a. Holdings Plc

0.00 (0.0%)
Share Name Share Symbol Market Type Share ISIN Share Description
R.e.a. Holdings Plc LSE:RE. London Ordinary Share GB0002349065 ORD 25P
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.0% 87.75 196 08:00:05
Bid Price Offer Price High Price Low Price Open Price
84.00 91.50
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Chemicals & Chem Preps, Nec 208.78 27.78 63.20 1.39 38.46
Last Trade Time Trade Type Trade Size Trade Price Currency
11:29:24 O 1 91.50 GBX

R.e.a (RE.) Latest News

R.e.a (RE.) Discussions and Chat

R.e.a Forums and Chat

Date Time Title Posts
05/5/202312:01A quite Palm Oil producer214
22/9/202108:22REA Holdings - chart161
03/3/200517:19REA - one to watch-

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R.e.a (RE.) Most Recent Trades

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R.e.a (RE.) Top Chat Posts

Top Posts
Posted at 05/5/2023 12:01 by nobull
"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?

Posted at 05/7/2022 08:55 by nobull
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.

Posted at 26/6/2022 16:48 by nobull
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).

Posted at 23/6/2022 13:02 by nobull
"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.

Posted at 22/6/2022 19:31 by dandigirl
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.

Posted at 11/5/2022 16:36 by nobull
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.

Posted at 01/2/2022 16:40 by foxfox79
Disappointing price action considering the sky high CPO prices, makes me wonder what the share price will do when the inevitable fall sets in. Spot prices now above reference surely must translate in nice margins..
The reserves of the south pit seem paltry at 400000 tons. Don't see much of a catalyst here. Any thought on the reserves? I wonder on what the 30M they lent out is spent..

Posted at 24/1/2022 15:37 by nobull
NTV, hi
"Surely just getting the coal out of the ground is a good thing as this means the coal loans might start to be repaid"

Yes. And I believe we will get the coal loans repaid. It is maybe an academic point that coal export bans reduce the value of the coal mine, because we aren't technically owners in the sense that our returns from it are not allowed to be variable as they are for someone with an equity interest: we may have bought an equity interest originally in the coal mine, but the Indonesian Government seems to have subsequently outlawed foreigners having equity interests in coal mines.

"If there is an export ban surely that means domestic supply problems therefore the CPO price might creep up."

I think the Indonesian Govt. wants to keep the price of cooking oil low; an export ban would increase the domestic supply of CPO and therefore drop the price inside Indonesia even further than it already is below the international price, currently below the international price due to the export deductions regime that applies. A reason for the export deductions regime is to keep the price of cooking oil low (as well as make biodiesel-use of palm oil more economic - the export levy is probably used to subsidise the production of biodiesel?).

The problem of subsidy leakage is probably about stopping entrepreneurial Indonesians buying up all the bottled cooking oil and smuggling it to Singapore to sell it at the world price, thus pocketing the government subsidy for themselves.

I think with the high leverage (both operating and financial) we just have to expect the share price to go all over the place, annoying, but par for the course with a stock like this, I wonder? The flat lining for over a year was maybe an anomaly as we worked solely for the benefit of the prior ranking finance, I wonder?

Posted at 03/1/2022 12:05 by nobull
Wigwammer, seasons greeting to you too. No, I haven't been selling - couldn't if I wanted to.

...the palm oil price is currently 50% higher than in the prior 2016/17 peak. So when you say the government is taking a lot more this time, it is a lot more of a much bigger pie. Can you be more specific about how much is “a lot more” as a percentage of sales?"

The short answer is no. The unhelpful answer maybe is I am thinking about the whole cpo price cycle, going back at least 10 years. I just get the impression that the amount of levy and tax being taken compared with 10 or 12 years ago, when CPO price was around this level, is a much bigger percentage tax take.

The higher percentage tax take seems more like an opportunistic windfall tax than a justifiable reward to the Indonesian government for its creation of extra cpo demand by legislating compulsory use of biodiesel; it feels like an extra tax to take away the benefits we've got from other parts of the world suffering from a poor soy bean harvest, which is not a nice thing to do: we need the high profits of the good times to help us keep going during periods of low CPO prices.

An indication of how the CPO export deductions regime changed in December 2020 is here:

"As such, the export levy will be raised by US$12.50 to US$15 per tonne for every US$25 per tonne increase in the CPO reference price beyond US$670 a tonne and up to US$995 a tonne. Previously, the export levy was fixed at US$25 to US$55 a tonne for CPO and processed palm products regardless of CPO prices."

Source: hTTps://

So I expect our share price to climb back to its former levels (over £2), but maybe not as quickly as it declined at the start of the pandemic; a slower rate of recovery seems more likely because of the higher tax take and because of the anticipated dilution from exercise of the warrants in 2025 or whenever.

While I have forecast 8p eps attrib to the ords for FY2021, arguably using a method of questionable validity, I can't see how FY2022 will be profitable if we have to pay out 10p arrears to the pref holders. I hope for a share price of £2 by YE 2022, despite the grotty FY2022 eps outlook, grotty because of the pref arrears planned to be paid, not grotty because of there being anything unsound about our business model.

CPO futures prices at 6:15 pm today in KL, the front month price of which ought to keep the Rotterdam CIF spot price above the key $1,300 level, I hope.

Below is an excerpt of a spreadsheet comparing the three London listed palm oil producers, using their 2020 accounts. What is interesting is how their total assets are quite similar. However, the market caps, even if you don't use the out of date share prices used in the comparison are wildly different. The companies differ in the amount of equity supplied by the non-controlling shareholder (minority interests) and in the amount of debt used to finance the operations. Imagine if REA could just pay off all that debt and redeem the prefs, using funds generated from operations, then its market cap would need to go up 5 or 6 times what it is now, if it kept the same no. of shares in issue. AIMO. DYOR.

Posted at 14/10/2021 18:30 by nobull
Absolutely brilliant, CWA1, that last announcement. There's a real brain there on our Board, for sure. Over the moon to see evidence the BoD is going to work for us. Very happy indeed!

kadvfn1, the warrants excercise at £1.26p around the time the sterling loan notes are due for redemption, bringing in £5m to help redeem some of the loan notes. Yes, it causes dilution but you can't have everything. If the share price didn't reach £1.26 before then, the warrants would expire worthless. The 6.5p price reflects the long time value of the warrants as they are said to be "out of the money" right now. Hope that helps. Yes, Mr Robinow wouldn't be buying them if he thought he was going to lose his money. ATB.

"It is proposed that each warrant would be exercisable quarterly on 15 January, 15 April, 15 July and 15 October in each year up to 15 July 2025 on not less than 14 days' notice of the exercise. The first exercise date would be 15 January 2021."

(Source: hTTps:// )

Warrant strike price

"Pursuant to the enhanced proposals, REA Holdings will issue Noteholders with a total of 4,010,760 warrants each entitling the holder to subscribe one new ordinary share in the capital of REA Holdings at a price equal to 20 per cent above the average of the middle market quotations for the ordinary shares on each of the dealing days between 26 February 2020 and 26 March 2020 (inclusive) (as derived from the Daily Official List), payable in full on subscription.

Such subscription price has now been calculated to be £1.26 per new ordinary share.”

(Source: hTTps:// )

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