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MP Evans commits to dividend

The palm oil producer's top-line climbed up by more than two-thirds in the first half
MP Evans commits to dividend

MP Evans’ (MPE) operating profit came in six times higher at $6m (£4.6m) compared to last year, as the average price of crude palm oil ('CPO') climbed by more than a fifth in the period. 

IC TIP: Hold at 580p

Crop from the producer’s own areas rose by 16 per cent, while that bought from third-parties more than doubled after the company decided in mid-2019 to promote outside purchases. However, the cost per tonne of palm product was flat at $385, as volume growth was offset by additional costs at new sites. Management flagged that it anticipates the unit cost will fall during the remainder of the year. 

Elsewhere, MP Evans said that it expects to complete the investment programme on its existing projects by the end of 2022, which should alleviate demands on operating cash flow. Gross debt in the period nudged up 3 per cent to $97.7m compared to the end of 2019, which management hopes will be brought down by a recovery in CPO prices. 

Crop growth in the first half has slowed during the third quarter, with sites in Bangka and Kota Bangun feeling the impact of dry periods from last year and in the early months of 2020. 

Peel Hunt forecasts adjusted pre-tax profits of $19.4m and EPS of 23.6 cents in the 2020 full year, compared to $12.6m and 7.7 cents in 2019. 

MP EVANS (MPE)   
ORD PRICE:580pMARKET VALUE:£ 316m
TOUCH:555-590p12-MONTH HIGH:750pLOW: 400p
DIVIDEND YIELD:2.0%PE RATIO:36
NET ASSET VALUE:646pNET DEBT:24%
Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201946.2-0.6-1.65.0
202075.94.47.25.0
% change+64---
Ex-div:15 Oct   
Payment:06 Nov   
£1=$1.28