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Higher yields support MP Evans

RESULTS: Higher yields at MP Evans' Indonesian estates helped to offset sharp falls in the price of palm oil last year
April 17, 2014

Like all palm oil companies, MP Evans (MPE) was hut by last year's sharp fall in palm oil prices, but the South East Asian producer was able to keep profits at its Indonesian plantations flat - reflecting a 9 per cent increase in crop levels and improved extraction rates. Additionally, and despite an $8.3m currency headwind, net profit still rose 6 per cent to $22.9m. That reflects its share of profits from joint ventures and was also helped by a strong contribution from the Malaysian property development arm.

IC TIP: Hold at 443p

The higher yields came from young oil-palm areas on the new Kalimantan plantation, where crop levels increased 55 per cent. That helped to partly offset falls in production on other estates where crops were hit by wet weather and replanting programmes. The Woodlands cattle business in Australia, meanwhile, broke even, and cattle company NAPCo recorded a $2.4m loss - both were affected by dry weather and low cattle prices. However, the Malaysian property development business generated a $4.4m profit.

Current trading looks solid and, since the year-end, prices of both palm oil and beef cattle have improved. Chairman Peter Hadsley-Chaplin also confirmed that the group would sell its cattle operations for the right price, with any proceeds reinvested in expanding the Indonesian palm oil business.

Panmure Gordon expects underlying EPS of 41¢ in 2014, up from 26¢ in 2013.

MP EVANS (MPE)
ORD PRICE:443pMARKET VALUE:£244m
TOUCH:440-447p12-MONTH HIGH:545pLOW: 430p
DIVIDEND YIELD:1.9%PE RATIO:21
NET ASSET VALUE:631¢NET DEBT:3%

Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (p)
200928.415.331.97
201042.119.441.27.5
201157.824.466.48
201283.216.732.58
201382.212.236.08.25
% change-1-27+11+3

Ex-div:23 Apr

Payment:19 Jun

£1=$1.67