Dekel Agri-Vision (LON:DKL) is the topic of conversation when Nick Spoliar, Analyst at WHIreland caught up with DirectorsTalk.
Dekel Agri-Vision has now provided its half year production update for the period ending 30 June 2023, what were the highlights we should note?
The key highlights are (1) the excellent performance from palm oil, very strongly ahead YoY in Q2 as volumes came through strongly (+>260% in Q2) and pricing remained strong, while (2) the company successfully transitioned cashews to a continuous production model, the platform for ramping up production during the course of H2.
How does this compare with last year’s figures?
Overall volumes are dramatically ahead YoY in percentage terms (FBB: 50%-plus, CPO, near-50%). CPO (Crude Palm Oil) production is down on last year, but still very strong by historical standards. PKO (Palm Kernel Oil) is 35% ahead YoY, encouraging given the higher margins which are attached to this side of the business.
How do you see the outlook for the company?
We see significant upside on the way as palm oil continues strong and cashews fulfil their promise, on the back of anticipated positive quality ratings and with attractive markets to go for. Our forecasts encapsulate a major shift upwards as the new strand of the business comes into its own, with PBT moving decisively into profit in the current year and exceeding €5m in FY24E, again at the current share price equating to attractive single digit PE ratings.
What news flow would you hope to see over the coming months?
Dekel Agri-Vision provides an impressive level of clarity and visibility over its operations, since it reports operationally on its palm oil activities on a monthly basis while also reporting cashews quarterly as well as the usual trading updates. We hope (and expect) to see ongoing positive operational updates on palm oil accompanied by news of cashew nut operations ramping up and further affirmations of our forecasts. Last but not least, we anticipate increasing cash generation from the company as the latter takes place.
