VSA Morning Agri Comment, 03/09/19
DekelOil# Opens Second Nursery Site
DekelOil Public Limited (LON:DKL) has commenced operations at a second nursey site in Côte d'Ivoire, at Dabou, located west of Abidjan.
20ha nursery site has been leased for two years for nil rent.
Pilot nursey will consist of 10,000 oil palm seedlings, with 5,000 of these already planted. With minor investment, total capacity could reach 600,000 plants per year.
First right of refusal agreement in place to use existing greenhouse infrastructure on the site, which may allow rapid entry into other high-value agricultural sectors.
In addition, in collaboration with AgDevCo, the company is currently completing an Environmental, Social and Health Impact Assessment at its 24,000ha Guitry development project, which is located close to this nursery site and is envisioned to have its own nursery in due course.
This site adds to DKL’s existing one million plant per year nursery at its first palm oil project at Ayenouan. DKL will use the Dabou site to sell seedlings into the local area, which although providing a limited near-term economic benefit, could have a more meaningful longer-term benefit due to DKL’s wider aspirations in the region through its Guitry project. The Guitry project has the potential to become a significant project for the group, subject to project-level financing being obtained.
We are positive on DKL’s efforts to diversify its operations across commodities and regions. We also see the announcement that AgDevCo is now working with DKL on an operational level as positive, following its €8.7m investment into the group in late July.
We therefore maintain our BUY recommendation and target price of 12p.
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Edward Hugo, Head of Research & Equity Analyst, Agriculture & Alternative Energy | T: +44 (0)20 3617 5187 | E: [email protected]
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