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Asian Plantations starting to ripen

Acquisitions take Asian Plantations' total acreage to over 20,000 hectares, and mark the start of accelerated fruit production
October 3, 2011

Losses mounted at Asian Plantations in the first half of the year, but this was only to be expected because it takes a number of years after planting before the full potential palm oil crop can be harvested.

IC TIP: Buy at 257p

The company is making steady progress, though, selling 1,233 tonnes fresh fruit bunches (FFB) at an average price of around $221 per tonne. But the total potential output is significantly higher, especially following the acquisition in August of the 5,000 hectare Dulit estate adjacent to the company's existing Incosetia estate. The Dulit estate is expected to generate in excess of 22,000 tonnes of FFB in 2012, and management reckons that output in 2012 from all plantations will reach around 50,000 tonnes, with an eventual target of 500,000 tonnes per year as all four existing fields mature.

Funding all of this meant that net debt rose to $36.8m (£22.9m) in the first half of last year, but this has been reduced to a more manageable $20.3m, thanks to a $25m share placing in February. And a further $2.1m has been raised after the half-year end by issuing a convertible bond.

Broker Panmure Gordon expects a loss per share of 14.8¢ (from a loss of 11.6¢ in 2010).

ASIAN PLANTATIONS (PALM)
ORD PRICE:257pMARKET VALUE:£104m
TOUCH:253-258p12-MONTH HIGH:311pLOW: 131p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:100¢*NET DEBT:50%

Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20100.10-2.01-6.80nil
20110.27-3.18-7.70nil
% change+171---

*Including intangible assets of $7.7m, or 19¢ a share

£1=$1.57