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MP Evans sees yields increase, though demand softens

The palm oil producer has made a generous income target for 2021
MP Evans sees yields increase, though demand softens

 

  • A prospective dividend of 30p in 2021
  • Faltering demand puts lid on palm oil recovery

Palm-oil producer MP Evans (MPE) managed to maintain uninterrupted production at its plantations throughout the year, though the impact of the pandemic was to lower global consumption and place a cap on the recovery of the palm oil price. This stood at an average of $716 for the year, though that was $150 higher than in 2019.

Growth of the crop increased by 21 per cent during the year, with the company achieving a total extraction rate at its own mills of 23 per cent. Management said that its capital expenditure programme, started in 2005, was now in its winding-down phase and that the focus was on increasing shareholder returns. A prospective dividend of 30p a share was forecast for 2021.   

Broker Peel Hunt upgraded its forecasts by 12 per cent and now expects adjusted EPS of 50.4ȼ for 2021.

MP Evans seems to have ridden out the pandemic and rising dividends should support the share price. Hold.    

Last IC view: Hold, 580p, Sep 14 2020

MP EVANS (MPE)   
ORD PRICE:632pMARKET VALUE:£ 344m
TOUCH:620-645p12-MONTH HIGH:724pLOW: 410p
DIVIDEND YIELD:3.5%PE RATIO:23
NET ASSET VALUE:669ȼNET DEBT:21%
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (p)
201683.919.222.315.00
201711735.141.817.75
201810918.39.9017.75
201911912.711.617.75
202017528.437.422.00
% change+47+124+222+24
Ex-div:22 Apr   
Payment:18 Jun   
£1=$1.38