Anglo-Eastern Plantations (LSE:AEP) traded lower on Wednesday, as market focus shifted to an interim profit slide despite Cavendish reiterating a firm 'buy' rating.
The shares slipped 7% to 186.88p during early trading, reacting to a 16% drop in adjusted earnings rather than an upgraded target price of 250 pence.
At the root of that bottom-line squeeze is a delayed cropping cycle in North Sumatra and an intensive replanting programme across the Riau estate.
Looking past the immediate production shortfall, Cavendish nudged up its financial year 2026 crude palm oil price assumption to $830 per tonne to reflect tighter supply.
That upward pricing revision is heavily underpinned by firming domestic demand and the looming acceleration of Indonesia's B:50 biodiesel mandate.
Beyond supportive pricing, the plantation operator is banking on the recent $170.6 million acquisition of Pinago to rapidly scale output and repair sluggish harvest yields.
Those freshly integrated assets, coupled with the imminent commissioning of a ninth mill, should help funnel cash straight back into the core business.
On the same note, the broker highlighted a cash-rich balance sheet, projecting that the Indonesian grower will generate $84 million in free cash flow during financial year 2026.
Casting a shadow over the broader growth narrative is a newly proposed Indonesian commodity export agency, as well as a pending decision on the Kalimantan initial public offering in 2027.
