MP Evans has seen forecasts for the next two years tweaked by Cavendish following the acquisition of two land packages in East Kalimantan.
Longer term the move should be beneficial, says the house broker, as free cash flow and profits accelerate over the next five years driven by scale benefits and better management of the maturing plantations.
Land plot value should also rise steadily in line with yield improvements.
Benefits from the acquisition, though, won’t start to accrue until the financial year 2026, so the impact in the short term is to reduce earnings by 4% next year and by 12% in 2025.
Cavendish’s target price remains 1,300p against 738p, up 3% today.