Anglo-Eastern Plantations boosted by surge in palm oil price


Every cloud has a silver lining for Anglo-Eastern Plantations (LSE:AEP) PLC, the palm oil and rubber producer with operations across Indonesia and Malaysia.

In the first half of the year, speculation about unfavourable weather conditions hitting production of soybean oil helped push up the average price of palm oil – the closest substitute – by 73%.

This price jump, along with increased production, saw the company’s revenues climb 63% to US$201.1mln, with gross profit surging from US$21.8mln to US$59.8mln.

On the outlook, the company said: “India, the world’s largest edible oil importer, in its effort to tame its domestic inflation has at the end of June 2021 cut its taxes on crude palm oil and other palm oil products for three months while maintaining the existing tax rates on other vegetable oils. This is likely to lead to a bigger import and improved demand at the expense of other vegetable oils.

“The industry also welcomed the Indonesian government decision to reduce the crude palm oil export levy at the start of the second half of 2021…

“On the whole crude palm oil prices are expected to moderate in the second half of 2021 as the industry enters into the high production season and palm oil inventory inches higher over the next few months. Prices nevertheless are expected to remain volatile depending on how production levels unfold amidst a change in global weather pattern.

“Despite the increase in the vaccination rate, there are rising concerns over the emergence of a new virus variant which has already spread to Indonesia and could interrupt our operations or in a worst case scenario shutdown our estates and mill operations. A prolonged pandemic in our main export markets may also hurt demand in the short term. The group has policies in place and would be in a good position to mitigate these risks should they arise to limit the impact to the group.”

In the market the company’s shares have climbed 10.92% or 64p to 650p.

2.11pm: Volex expands in US with purchase of Irvine Electronics

Volex PLC (AIM:VLX) has seen its shares spark up after it unveiled a US acquistion.

The power products specialist is paying US$16.4mln in cash for Irvine Electronics, which manufactures among other things printed circuit board assemblies.

The deal, which is expected to be immediately earnings enhancing, is expected to complete in the third quarter of next year.

It will strengthen Volex’s existing profile in North America, adding further capabilities and capacity in California to complement its operations in Washington state and Mexico.

Chairman Nat Rothschild said: “The acquisition of Irvine increases our geographic coverage and technical capabilities in the key North American market. Our strategic intent is to develop Volex’s presence in the defence and military aerospace markets, adding further blue-chip customers involved in long-term programmes and partnerships…

“This acquisition is indicative of our ongoing M&A strategy which, along with our pursuit of operational excellence and organic growth, will assist Volex as we target US$650mln in revenues and US$65mln of underlying operating profit by 2024.”

Volex is up 11p or 2.91% at 389p.

11.45am: Verditek positive about outlook despite increased losses

Verditek PLC (AIM:VDTK), the solar panel specialist, has had a tough few months but it thinks the worst may be over.

The company reported increased first half losses of GBP1.154mln compared to GBP918,177 for the same time last year.

The accounts include a GBP300,000 to cover the cost of stock stolen from its Italian plant, although it is still hopeful the items can be recovered.

Chief executive Rob Richards said: “The six-month period to 30 June was both a challenging time for Verditek as well as a period when several fresh seeds were sown.

“Having hit high levels of production at the group’s factory in Lainate, Milan towards the end of 2020, production was scaled back at the start of 2021 as further projects in the pipeline were either postponed or withdrawn due to the uncertainty brought about by the global pandemic.

“With the economic uncertainty of the last 18-months starting to recede, we believe that the outlook for the second half of the year is improving…

“Despite recent headwinds, we continue to see positive opportunities for Verditek and believe the significant investment into the development of our flexible, lightweight solar panels will soon bring about meaningful financial reward.”

It said that during the first half it had received a number of smaller orders from ” the UK roofing industry, distributors of boat power solutions, as well as from clients in the Netherlands, Kenya, Italy, Belgium. It is envisaged that these initial orders will lead to far larger volumes in the second half of 2021.”

It also continues to discuss licensing its manufacturing technology to a partner in building new plants, and it has two opportunities under consideration at the moment, both in the Eastern Hemisphere.

The positive outlook has helped lift its shares by 9.84% or 0.3p to 3.35p.

10.47am: Renalytix rises after positive report on its kidney disease product

Renalytix PLC, which specialises in diagnositics for kidney disease, is in demand after a report outlined the healthcare savings which could be made using its testing platform.

The company said the budget impact analysis report -developed in collaboration with Boston Healthcare Associates and published in the Journal of Medical Economics – projected five year savings of $1.1bn for a population of 100,000 patients with type 2 diabetes and chronic kidney disease tested with its KidneyIntelX solution.

It said: “Savings were driven by more effective pharmacy management and appropriate specialist referral compared to current standard of care for patients at high risk for disease progression and kidney failure…

“Health systems and insurance plans would realize these significant cost savings based on slowed disease progression (52% of savings), delayed, or prevented dialysis and transplants (32% of savings), and reduced dialysis crashes (11% of savings).”

The company said budget impact analysis was a key element in securing payer coverage in the US market.

Its shares have climbed 4.55p or 40p to 920p.

9.36am: Macfarlane set to beat expectations as its packaging business benefits from e-commerce growth

Macfarlane Group PLC (LSE:MACF) has seen its shares soar after saying full year results would beat previous expectations, despite some worries about staff shortgages and raw material costs.

The company, which specialises in packaging and labels, said it was benefiting from the continuing growth in online retail which meant increased demand for its products. First half sales grew by 26.5% to GBP133.5mln while pretax profits more than doubled to GBP7.8mln.

Both divisions performed well and recent acquisitions GWP Holdings and Carters Packaging (Cornwall) contributed to profits.

The company has raised its interim by 24.3% to 0.87p a share.

Chairman Stuart Paterson said: “Macfarlane Group achieved good sales growth in the first half of 2021, benefiting from the ongoing structural shift to e-commerce retail and recovery in certain industrial sectors which were affected by COVID-19 in the first six months of 2020. Despite ongoing difficult operating conditions due to COVID-19, significant inflationary pressure on input costs and supply shortages of some materials, the business has produced a strong profit performance…

“It is pleasing to report that the effective management of operating cash has enabled the business to finance two further good quality acquisitions through our existing bank facility. In addition, the pension scheme is now in surplus…

“We expect the second half of 2021 to be challenging as we anticipate further inflationary pressure on input prices, continuing supply constraints on most raw materials and operating costs increasing due to staffing pressures.

“However, the group has previously demonstrated effective management of these challenges and, as a result of this and the performance in the first half of 2021, the board expects the group will exceed its previous expectations for the full year. “

Its shares are up 13.81% or 16.5p at 136p.

8.42am: Echo Energy jumps after bringing Argentinian wells back online

Echo Energy PLC (AIM:ECHO, FRA:A321) has seen its shares gush higher after bringing some shut wells at Santa Cruz Sur assets in Argentina back online.

The oil and gas company said it had upgraded the infrastructure and successfully installed the necessary pipeline to bring back production at the Campo Molino oil field from wells shut in April 2020.

It said: “To date, the Campo Molino oil field has been brought back online with four of the shut-in wells now back in operation and producing from the Springhill reservoir. This first tranche of restored production will increase the number of active producing oil wells at Santa Cruz Sur to 18.

“As of 23 August 2021, the recently reactivated wells have contributed to an almost 50% increase in total liquids production at Santa Cruz Sur compared to the period immediately prior to this.”

Chief executive Martin Hull added: “Successfully increasing our liquids production is an important milestone. There remain further production upsides as we continue through the programme of reopening previously shut-in wells. Increased production combined with the continuing marked upswing in global commodity prices materially increases our cashflows enabling reinvestment to further drive growth. The ongoing production increases have been achieved while maintaining our careful cost management in order to maximise value for shareholders.”

Echo has climbed 8.93% to 0.61p.

Also heading higher is eEnergy Group PLC.

The energy services business has jump 8.57% to 19p after announcing its first contract win to provide solar power together with LED lighting in a single contract.

The contract is with manufacturing group British Gaskets Limited and is worth around GBP0.4mln.

Over the 20 year lifetime of the system, the company expects the customer to save, at today’s prices, almost GBP1.4mln with a reduction of CO2 emissions of approximately 576,000 tonnes.

Chief executive Harvey Sinclair said: “This contract represents a major milestone for thegGroup as we begin to offer joined-up energy-as-a-service solutions to customers. Our offer is being well received by the market and this blueprint for material energy and cost savings, coupled with significant decarbonisation is compelling for customers and the environment. This contract gives us the confidence that we’re on track to deliver results for 2022 in-line with current market expectations.”


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