What a year 2016 was for palm oil producer MP Evans (MPE). The group rejected an eventual 740p a share takeover bid from Malaysian plantation owner Kuala Lumpur Kepong Berhad, known as KLK, and good job it did. The shares are still trading at that level while a new independent valuation ordered by the group's bosses has ascribed an £11 per share value to the stock, up from the 780p-850p fair value estimated at the time of the approach. The company has unlocked further value by disposing of minority stakes in cattle business NapCo and joint venture Agro Muko. The first sale netted the company $80m (£64m) while the latter delivered a further $100m. The company wants to move away from minority-owned ventures in order to have as much control over its assets as possible.
This is all good news for shareholders, whose patience is being rewarded. For 2016, on top of a 71 per cent increase in the ordinary dividend, holders have received a 5p per share special payout relating to the NAPCo sale. That's before receiving a 10p return in relation to Agro Muko in respect of 2017. What's more, as the company brings more of its plantations under its control - it's looking to replace the lost hectares from Agro Muko with a new 10,000 hectare project - finance director Matthew Coulson reckons internally generated cash should keep dividends on an upward trajectory.
But there could be further disposals, too. The Malaysian property division, which encompasses Bertam Estate and Bertam Properties, could be sold if necessary. While chairman Peter Hadsley-Chaplin says the company isn't entertaining potential bids right now, he adds it's "good to know" the division is "in reserve" when the time is right.
For now the company is happy to report profits for the year from continuing operations more than doubled to $16.4m last year following a rise in the palm oil price towards $700 per tonne on average in 2016.
Analysts at finnCap still expect pre-tax profit of $32.4m for the year ending December 2017, giving adjusted EPS of 37.4¢, compared with $19.2m in FY2016.
| MP EVANS (MPE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 740p | MARKET VALUE: | £410m | |
| TOUCH: | 735.5-740p | 12-MONTH HIGH: | 781p | LOW: 380p |
| DIVIDEND YIELD: | 2%* | PE RATIO: | 41 | |
| NET ASSET VALUE: | 579¢ | NET CASH: | $75.3m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 83.2 | 16.7 | 32.5 | 8.00 |
| 2013 | 82.2 | 12.2 | 36.0 | 8.25 |
| 2014 | 90.0 | 24.1 | 49.1 | 8.75 |
| 2015 | 72.5 | 6.8 | 11.7 | 8.75 |
| 2016 | 83.9 | 19.2 | 22.3 | 15.00 |
| % change | +16 | +184 | +91 | +71 |
Ex-div: 20 Apr Payment: 23 Jun *Excludes special dividend of 5p in 2016 £1=$1.25 | ||||
