Cavendish has raised its target price for MP Evans Group PLC (AIM:MPE), the AIM-listed Indonesian palm oil producer, to 1,615p from 1,500p, implying 11% upside from the current share price of 1,460p, after the company delivered back-to-back record annual results.
The upgrade is driven by two factors: a revised crude palm oil (CPO) mill-gate price assumption of US$800 per tonne for FY26, up from US$750 per tonne, and a growing net cash pile that Cavendish forecasts will reach US$214 million by the end of FY28.
Adjusted earnings per share rose 30% to US$210.8 cents for FY25, with pre-tax profit up 24% to US$138.6 million on revenue of US$371 million.
The near-term price environment has been further energised by Middle East tensions, which have pushed CPO to US$1,530 per tonne on the Rotterdam spot market in recent weeks, reinforcing the commodity's role as a loose proxy for oil given that roughly a quarter of global CPO output feeds into biodiesel.
Cavendish is candid about the fragility of that tailwind, noting that an early resolution to the conflict could see both oil and CPO prices fall sharply.
The structural picture is more durable. MP Evans has reduced its reliance on purchased third-party fruit to just 15% of total crop processed, down from a quarter in FY20, improving margins and supply quality simultaneously.
At 10.6 times forward earnings and a 4.2% forward yield, the stock offers reasonable value if CPO prices hold, but investors are, in effect, carrying meaningful geopolitical exposure alongside the operational progress.