R.e.a Hlds 9%pf Discussion Threads

[russman] 10/5/2023 05:46

the prefs are classed as equity.

[pbaker] 09/5/2023 16:08

Tradertrev. Are you sure that the outstanding balance on the prefs is included in REAs debt pile? Not only that it is interest free debt. There is no interest added for late payment.
Obviously do not tell the management as i would like the 7p extra, which might be paid 30.06.23 though most likely 02.01.24 (31.12.23 but it is a Sunday followed by a bank holiday).
Will making this payment reduce the debt pile?
Not having a go just asking questions.

[tradertrev] 09/5/2023 14:21

Paying off pref arrears is a form of debt reduction

[russman] 06/5/2023 06:26

Holding co balance sheet needs to be slimmed.
Debt is too high for the volatility of their net crop yield.

[pbaker] 26/4/2023 10:17

hpcg you are spot on. If and as always it is the big risk of any investment. If palm oil stays near the $1000 mark REA remains profitable. The 7p of arrears on the preference shares is worth $6.2m or £5m. So next year 2024 it could have $6.2m extra to reduce debt, REA managed to reduce debt by $9m this year so maybe by another $9m+ this year $15.2m next year?
From the results
The total borrowings repayable in the period to 31 December 2026 (based on exchange rates ruling at 31 December 2022) amount to the equivalent of $142.0 million of which the major part will fall due in 2025 ($68.0 million) and 2026 ($38.4 million).
In these figures there is $35.6 million unaccounted for. They may fall due this year and next or much later.
Again all things being equal they expect to borrow any shortfall from local banks.
Until debt is under control the company will always be in the position of looking at the preference dividend any time the palm oil price falls.
As a shareholder of both preference and ordinary i would love to see the debt head towards zero. They could then buy back preference shares in the market place. Though that is a long way out and would need to see the senior team , concentrate on debt reduction. With debt near zero when the next down turn in palm oil comes around REA would be in a much better place.
Near zero debt could take as little as 8 years but would mean no dividends on the ordinaries until then.
That is why my larger holding is preference.

[hpcg] 26/4/2023 08:02

pbaker - the way I look at it is that at this time the arrears are something akin to excess funds generated over the year. Now we know that the 7p payment will be made in December but during that time the money can be retained as a financial asset against other short term debt. Come 2024 it isn't just an offset during the year, but a permanent retention improving the balance sheet beyond the year end.

[pbaker] 25/4/2023 20:10

Reading the annual results it looks like the 7p outstanding will be paid by the end of the year. All things being equal.
The preference do look good value over 8 months. At 91p 17.5% yield over 8 months if the dividend is caught up 9p+7p = 16p. Then 9.9% going forward.
High risk dividend play. Possible upside to 110p?
My opinion UK interest rates could reach 5% and inflation at 10%. This is at least keeping up with inflation.
I hold far too many of these for my own good. If the dividends stops again the future I am looking for a part time job.
I own a few ordinaries as well.

[cwa1] 20/4/2023 07:10

Sounds OK on a quick glance. Plenty of comments on their commitments to paying Prefs arrears(and normal semi-annual interests due) subject to everything else being business as usual. Happy enough with that.

[outsizeclothes.com] 02/2/2023 22:02

As it's now looking as if we won't see BOE rates at any higher than 4.5% max in this cycle, at any shareprice under par [£1] we now look cheap. More especially if there's an extra 7p arrears thrown in.

[russman] 02/2/2023 06:49

The stated intention to clear the arrears (in 2023) is reassuring.

[hpcg] 01/2/2023 12:14

The most important item in the update was the resilient production in the face of the rain. This has tended to be an Achilles heal. As they continue to reduce the length of mud road this should improve further. Getting the premium for sustainable oil will add revenue for nothing. This is with replanting under way as well. It all looks good for the preference share price.

[cwa1] 01/2/2023 08:18

From this morning's update...



David Blackett, chairman of REA, commented:



The group’s improving operational and financial performance is encouraging. Generally, firm CPO prices have largely offset inflationary pressures on costs albeit that prices have been restricted by the Indonesian government’s efforts to constrain the local price of cooking oil from rising above an affordable level. With extension planting now re-started, the commencement of replanting of the oldest mature areas and cash flowing from further repayments of loans made to the Indonesian stone and coal concession companies, REA expects that the group’s fortunes will continue to improve.

The semi-annual dividends arising on the preference shares in June and December 2022 were paid on their respective due dates. In addition, a payment of 10p per share of arrears of dividend on the group’s preference shares was paid at the end of 2022. Provided that operational performance and cash flows continue at satisfactory levels, the directors continue to plan for the elimination of all arrears of dividend on the preference shares by the end of 2023.



Outlook



The group's operational and financial position is steadily improving and the directors hope to see further improvement during 2023, supported by CPO and CPKO prices that are projected to remain at current remunerative levels and by further loan repayments from the stone and coal concession holding companies.

[briggs1209] 25/1/2023 12:48

There seems little demand for the stock and a slow day-by-day sell off into the market. Potentially 16p of dividends over the next 11 months to come here.

[hindsight] 20/1/2023 19:24

Palm Oil price seems to have found a level, fall not quite as bad as seems due to tax scaling. 90p seems about right

[cwa1] 20/1/2023 18:16

Just the closing auction of a miserable 1607 shares!

[outsizeclothes.com] 20/1/2023 18:00

Anything sinister about the last minute plunge ?
Have I missed something ?
If not, this is starting to look very attractive again, considering there may be 9p + 7p arrears in total coming this year.

[hindsight] 05/1/2023 16:49

hpcg, I agree
When it comes to it no one broker does the business.

[hpcg] 05/1/2023 15:38

Barclays used to be very good, then got bad / pointless, but I have hopes for them again now they have overseas stocks back. IG by far the best of those I use but they don't carry this. When it comes to it no one broker does the business.

[cwa1] 05/1/2023 15:26

No surprise about Barclays, they were easily the worst broker I used before upping sticks and moving on...

[telegraph3] 05/1/2023 15:02

Good to know I'm not alone here. No dividend yet from HSBC Invest Direct either. Contacted them on 3rd January and they now tell me they're "investigating."

[tradertrev] 05/1/2023 13:05

Still no divi from Barclays - they must be the worst retail broker of all.

[cwa1] 03/1/2023 15:26

In at iDealing. What a lovely sight ;-)