The price of palm oil was strong over Chinese New Year this year. From lows of $500 in August last year it rallied above $850 – then the virus came, it went back to $500 but now is above $700. There are further developments …
MP Evans released a trading update for the first half of the year on 24th July. It showed significant increases in crops and production, roughly up 30% without wanting to get bogged down in detail. Furthermore they sold their palm oil at an average price of $541 compared to $462 in the first half of 2019. Palm kernels were also sold at better prices. The Board expect to maintain the dividend – the sunny side of 3% is not to be sneezed at this year. As if all that isn’t enough, on 20th July they announced a rinky-dink property deal in Malaysia which has a positive short-term impact on their borrowings and will probably lead to a long term gain too, in time.
On 28th July Malaysian owned KL-Kepong International Ltd snapped up more than 400,000 shares in MPE. They now own 21.23% of the company and I congratulate them on building their stake so cheaply, around £5.50 for the latest slug I guess. Remember, they unsuccessfully bid £7.50 for the company at the end of 2016 and were rejected. MPE is now an even more attractive takeover target.
While I am a long term investor, I first bought shares in the group in 1983, there is a price at which I would sell but that is irrelevant; it is the price at which institutional investors will sell. I have no way of knowing but I suspect that if KLK made a cash bid in excess of £10 I’ll have a Capital Gains Tax bill.