A full six-month contribution from last year's acquisition of Kula Plantations combined with record production and a strong palm oil price saw
Although Kula accounted for a large chunk of the 36.4 per cent increase in fruit yields in the period, good growing conditions meant that organic fruit production was up 8 per cent. Lower than usual rainfall also helped it process the bumper harvest, with extraction rates up to 23 per cent and total oil shipments up 50 per cent. Its crude palm oil (CPO) was sold at an average price of $1,122 a tonne, 42 per cent higher than a year earlier, and chief executive Nick Thompson said that approaching 80 per cent of 2011 annual production had been sold.
That trading strength and a robust outlook for palm oil prices prompted a return to the dividend list, and Mr Thompson outlined plans to pay out 40 per cent to 50 per cent of free cash flow in future.
Broker Peel Hunt expects underlying pre-tax profits of $280m and EPS of 135¢ for the full year ($143m and 68.3¢ in 2010).
| NEW BRITAIN PALM OIL (NBPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 843p | MARKET VALUE: | £1.22bn | |
| TOUCH: | 830-855p | 12-MONTH HIGH: | 1,015p | LOW: 560p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 602¢* | NET DEBT: | 20% | |
IC VIEW:
Low stocks of edible oils globally mean risks to the palm oil price are on the upside and, with a mature estate and strong refining capability - including its sustainable palm oil refinery in Liverpool which is close to breakeven - a forecast PE ratio of 10 is too low. Buy.
Last IC view: Good value, 830p, 17 August 2011
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