Cavendish, the corporate broker, maintained its 'buy' rating on MP Evans Group PLC (AIM:MPE), the AIM-listed sustainable palm oil producer, after the company acquired two parcels of land in Kota Bangun, Indonesia, for $2 million.
The broker said the acquisition was consistent with the company's stated strategy, describing it as "a classic vignette of what MP Evans does so well", involving parcels of neglected or undeveloped land needing replanting.
After anticipated total investment costs of between $20 million and $25 million are factored in, the acquisition represents a cost of around $7,000 to $8,000 per planted hectare, compared with a financial year 2025 year-end plantation valuation of $18,428 per owned hectare.
The first parcel comprises 776 hectares planted to oil palm that require rehabilitation or replanting, with up to 450 hectares of additional land suitable for replanting.
The second adjacent parcel covers 3,600 hectares, of which around 2,000 hectares should be suitable for development.
Cavendish said the short-term impact on profit and loss was minimal but that the improved crop would enrich the mix of the company's existing mills over the longer term.
The broker left its target price unchanged at 1,700p.
