Dekel Agri-Vision, DWF Group, MP Evans, RPS Group, Secure Trust Bank, and STV Group
13th August 2021
Dekel Agri-Vision (LON:DKL) – sustainable growth could double share price
Earlier in the week this West Africa-based palm oil and cashew nut production and processing group declared its Update for July.
It was really quite bullish, with the group showing that the crude palm oil prices were very strong indeed. The monthly High in July was €949 per tonne, which was up a staggering 89% on the average price in August last year.
What is more, I understand that it has gone even stronger this month, now at around €1050, which is a ten-year High.
That is good news for this early-stage production group. It ramped up its sales in July by some 67.5% while its processing remains steady. It sold a total of 3047 tonnes CPO in July.
Dekel 's Executive Director, Lincoln Moore, in the Update stated that "Global CPO prices continue to remain strong on the back of tight global supplies. We remain optimistic that prices should continue to be robust for the foreseeable future which bodes well for the remainder of our current low season and next year's high season.”
The group is a multi-project, multi-commodity agriculture company, with a portfolio of sustainable projects in Côte d'Ivoire, which are at various stages of development.
It has a fully operational palm oil project in Ayenouan, where fruit produced by local smallholders is processed at the company's 60,000 tonnes per annum crude palm oil mill.
The company’s interesting cashew processing project in Tiebissou, has suffered some delays in its commissioning, which is now expected to be next month.
Lincoln Moore stated that it “while it has taken longer than we had hoped, we remain well placed to be fully operational shortly and be well positioned to scale up production in 2022, which we expect will lead to a material step in group revenue."
Analyst Theo Bache at Arden Partners is currently estimating that the year to end December will see group revenues rise significantly from €22.5m last year to €35.9m, sufficient to turn the group around from the pre-tax loss of €2.1m to a profit of €0.2m this year.
For next year he goes for revenues of €45.2m and profits of €2.1m.
Although still very early in the group’s development he sees 2023 sales of €56m, then €70m in 2024. Profits in the same period could jump to over €5m, then up to €9m.
Arden Partners rate the shares, currently 4.8p, as a ‘buy’ looking for them to rise to 9.5p in due course.
They are a very strong hold as the group takes advantage of the higher prices for the world’s favourite vegetable oil.
In January its shares were trading at 6p and I consider that they will be there and above within months.
(Profile 23.09.20 @ 2p set a Target Price of 3.5p*)
DWF Group (LON:DWF) – strong demand for the shares presages a big rise
On Wednesday of last week, a number of the partners of this legal and business services group placed 13.34m shares at 102p each, representing some 4.1% of the company’s equity. It was a significantly oversubscribed transaction with both new and existing investors clamouring to get the stock.
And who can blame them?
The group, which floated in March 2019, has offices and associations across the globe.
In the year to end April it recorded £338.1m of revenues and declared an adjusted pre-tax profit of £34.2m, worth 7.4p per share in earnings and covering a 4.5p dividend.
For this current year analysts Mike Allen and Rachel Birkett at its brokers, Zeus Capital, estimate £364m revenues, £41.1m profits, 9.9p earnings and a 5.9p dividend – making that 102p price look very attractive.
That is obviously why the shares have improved subsequently, now 112p.
Do I see them going even higher?
Oh yes indeed – I see them heading up to 150p and beyond in due course.
In its sector DWF is undervalued and offering good strong upside potential.
(Profile 01.06.20 @ 67p set a Target Price of 100p*)
MP Evans (LON:MPE) – a growing share price
The Indonesian sustainable palm oil producer has now commissioned its fifth mill, a 60-tonne per hour facility at its Bumi Mas estate in East Kalimantan.
This new mill, the Benuang, will bring its oil-extraction in-house rather than sending it out to third parties.
Analysts Raymond Greaves and Michael Clifton at finnCap, the group’s joint brokers, have raised their estimates significantly due to the higher CPO prices.
They are now looking for $242m revenues for this year to end December ($174.5m) and adjusted pre-tax profits of $58.7m ($28.8m), generating earnings of 76.9c (38.1c) and covering a 42c dividend (29.7c) per share.
The brokers consider that MP Evans should be considered a ‘world class’ operation and they rate the shares, now 713p, as undervalued and maintaining their 1000p forecast.
In the last few months, the group’s shares have been up to 764p and will, in my opinion, be up there and above very soon.
(Profile 07.04.20 @ 540p set a Target Price of 700p*)
RPS Group (LON:RPS) – climate changing
This multi-sector global professional services group saw its revenues stand almost still in the first half of the current year. The six months to end June reported £233.5m of fees against £232.4m previously.
Their margins improved substantially, showing a 128% increase in adjusted pre-tax profits at £9.8m (£4.3m).
For the full year analyst Joe Brent, at its brokers Liberum Capital, sees £492m revenues and £21m (£13.4m) profits, worth 5.48p (4.29p) in earnings per share.
Accordingly, he has increased his price objective, after this Wednesday’s interim results statement, from 110p to 125p.
I do rate the prospects for RPS as the climate changes.
Its shares at 108p have a lot further to climb yet, they certainly have global appeal.
(Profile 05.05.21 @ 88p set a Target Price of 110p*)
Secure Trust Bank (LON:STB) – impaired to create value
On Thursday of last week this specialist banking outfit declared a record first half trading performance for the six months to end June.
The group’s statutory pre-tax profits rose an impressive 502% to £30.7m (£5.1m), while earnings leapt 564.3% from 21p to 139.5p per share.
And that was just by the half-way.
Pedro Fonseca and Andrew Mitchell, analysts at Edison Investment Research, estimate pre-tax profits for the year of £47.9m against £20.1m previously, with earnings more than doubling from 85.2p to 211.9p per share and covering a 53p dividend (44p).
They were impressed enough, at the group’s treatment of its impairment reversions in its motor finance and retail finance segments, to raise their ‘fair value’ estimate to 2234p per share.
With the group’s shares trading at around the 1375p level they look to be an attractive purchase ahead of its Q3 Trading Update due in October.
(Profile 12.04.21 @ 1210p set a Target Price of 1500p)
STV Group (LON:STVG) – bordering on the year’s peak view
In mid-August last year, the shares of Scotland’s leading digital media brand were just 207p. Yesterday they were trading at their peak for the last year, at 370p.
The group’s interim results, for the first six months to end June, will be announced on Thursday 9 September, that is just under a month’s time.
They will show both an impressive viewing performance and a clear operational momentum.
STV is Scotland’s home of news, drama and entertainment, serving audiences with quality content on air, online and on demand.
Research analyst Roddy Davidson at brokers Shore Capital is bullish on the group’s growth prospects and its underlying attractions.
Last year the group had a £23.3m revenue and made a £16.7m profit, earning 31.3p per share and paying a 9p dividend.
Davidson is estimating £20.8m profit this year on £27.4m of sales, earning 35.1p and paying a 10p dividend per share.
Next year £141.5m of revenues could lift profits to £23.3m, earnings to 39.4p and giving a 12.5p dividend.
For 2023 the current guesses are for £154.7m of sales, £27.1m profits, 43.6p of earnings and a 14.8p dividend per share.
The group’s brokers estimate a ‘fair value’ of 516p per share, which when compared to the current 365p makes the shares look good value over the next couple of years.
I now set a new Target Price of 450p.
(Profile 25.04.19 @ 370p did not set a Target Price)
(* Asterisks denote that Target Prices have been achieved subsequent to the Profiles being published)