An unscheduled update saw from MP Evans Group PLC (AIM:MPE) prompted Cavendish raise its 2025 earnings-per-share forecast to 210.9 cents, the fourth upgrade this year, and that tailwind has the shares up 6% at 1,375p.
The driver is not crude palm oil (CPO) alone but the by-product. Palm kernel prices have surged as coconut oil output has tightened, averaging $756 a tonne at the end of October versus $425 last year. C
avendish has lifted its palm kernel assumption to $750 a tonne and nudged its mill-gate CPO view to $850 a tonne. For the uninitiated, “mill-gate” is the price achieved at the mill before transport or refining costs.
Operationally, harvest volumes from owned estates and smallholders are running about 8% ahead of last year, but management has chosen to buy fewer third-party fresh fruit bunches, the spiky clusters pressed into oil, to keep mills running efficiently.
Purchases are down roughly 40%, trimming forecasts a touch but supporting margins.
The balance sheet is tidier, too. The group used dollar strength to clear its remaining rupiah borrowings, leaving debt at nil and an undrawn $30 million revolving credit facility; Cavendish models end-2025 net cash of $88 million.
On valuation, the broker’s sum-of-the-parts pins plantation worth at $18,668 per hectare, above the $15,511 per owned hectare implied by the share price. The price target for the stock is 1,500p.
The dividend stream looks dependable: a forecast 4.6% yield for 2025, rising to 4.8% for 2026, backed by strong free cash flow.
If palm kernel and CPO prices hold around current marks, there may be more to come; if they slip, today’s cleaner balance sheet should cushion the blow. A January production update is the next signpost.