- Fresh land, steady strategy and room to grow: Cavendish likes what it sees following a new plantation acquisition in Indonesia.
MP Evans Group PLC (AIM:MPE) has made another smart move in its growth playbook, according to Cavendish.
The UK-listed palm oil producer has agreed to buy two plantation companies in East Kalimantan for $34.2 million, funded entirely from existing cash. The brokers reckon the deal makes strategic sense and could lift earnings by up to 4% in its first full year.
The land comes with 3,000 hectares already planted—young, high-quality trees that should yield better returns over time.
The acquisition price, about $12,500 per hectare, is higher than past deals, but Cavendish sees that as fair given the condition and potential.
MPE plans to integrate the estates into its existing Bumi Mas operation, which will now top 12,000 hectares.
No change to forecasts or the 1,500p price target for now, but with shares trading at around 990p, Cavendish sees 52% upside - and a dividend yield heading towards 6% by 2026.
Not bad for a company still sitting on net cash.