Dekel Agri-Vision - looking for 70%+ climb, this £9m company is a 'real winner in the making'
This profile is going to annoy my wife again.
She was absolutely against me profiling M P Evans (LON:MPE) in April this year at 540p, the shares have subsequently been down to 520p and up to 630p. My Target Price for that company is 700p.
So, in researching and writing about this tiny company, another in the crude palm oil production (CPO) sector (which she is so against), it will probably have similar rumblings within the household – but I am not telling her about it this time.
Dekel Agri-Vision (LON:DKL) went public way back in 2013 when Mayfair-based brokers Optiva Securities handled the Placing of 170m new shares at 1p each.
At the same time the company acquired Boletus Resources, an unlisted investment company for which Optiva had raised £580,000 the year before.
The funds raised from the issue, along with project finance, were used to complete the construction of a 60-ton per hour palm oil extraction mill, which was then underway on the Cote d’Ivoire in West Africa.
In May 2016 Optiva raised £11.1m for the company to buy out its joint venture partner in the mill project, taking in the Miton Investment Group as a cornerstone investor in the enlarged grouping.
Today the group describes itself as an agriculture processing, logistics and farming operation.
Its flagship palm oil project at Ayenouan, on the Ivory Coast, covers the production cycle from feedstock cultivation at its computerised nursery, capable of handling one million seedlings, through to the actual production of crude palm oil at the rate of the anticipated 60-ton per hour.
The fruit used comes not only from the company’s own 1,900-hectare estates but also regularly from some 3,000 nearby smallholders, thereby helping to support the local area.
The village of Ayenouan is only two hours away to the east ofthe major port of Abidjan.
It is now one of the largest producers of palm oil in West Africa, its mill has the capability of producing some 70,000 tons of crude palm oil which is .
There are also plans for a second palm oil development in Guitry, three hours away west from Abidjan, where the company has rights over 24,000 hectares of expansion land, which could be used to provide additional feedstock for its CPO production.
Elsewhere the group also has 43.8% of a large-scale 10,000 tons per annum cashew processing project now underway in Tiebissou. It has options to acquire another 17% in the new project.
Just to remind readers – palm oil is used in food, health and energy.
It is the world’s preferred edible oil by volume.
In the health sector it uses range from soaps, shampoos and detergents to cosmetics.
In energy it is used to produce biodiesel.
The price of palm oil is getting stronger after hitting recent lows.
The company has some 424m shares in issue, of which the larger shareholders include Youval Rasin (15.89%), Miton Group (11.83%), AgDevco (9.72%), Biopalm Energy (8.36%), Shai Kol (6.51%), Aristide Brou (4.75%), Yossi Inbar (3.73%), and Lincoln Moore (1.17%).
As an agri-commodity developer Dekel Agri-Vision offers tremendous upside potential.
Two weeks ago with the latest update on palm oil production, Dekel Agri-Vision executive director Lincoln Moore told shareholders that, " with the upcoming half year report expected to show a more profitable H1 financial performance compared to last year, and with the large scale cashew processing project on course to commence first production in Q2 2021, Dekel is entering an exciting period in its development and I look forward to providing further updates in due course."
Estimates are for this fast-developing, but still loss-making, group to break into sizeable profits over the next few years.
Revenues of €22m to end December this year could see an almost halving of loss from €3.3m to just €1.9m. Next year a €25m turnover could see a mere €0.7m loss.
Looking forward, broker estimates suggest actual post-tax profits jumping to €1.1m in 2022, €3.6m in 2023, up to €6.5m in 2024 and a significant €7.8m in 2025.
With its shares at a miniscule 2p in the market today, this tiny little £8.5m (€9.3m) capitalised company looks to me to be ‘a real winner in the making’ not to be missed.
Comfortably, for investors patient enough to anticipate fruition of the group’s project plans, I now set a 3.5p Target Price on the shares.