DekelOil announce CPO production of 29,137 tonnes for nine months to 30 September 2015.
Kernal Crushing Plant is set for commercial operation:
DekelOIl have confirmed that the 60tn/day Kernel Crushing Plant (KCP) has been built and the testing phase is underway. The KCP will boost sales and profitability and we expect commercial operation by the end of October 2015. The KCP has low capital expenditure with a payback period of less than 12 months based on our revenue projections on the KCP of €4m in 2016.
DekelOil targets portfolio expansion:
DekelOil has also entered into a contract to develop 10,000 hectares of brownfield land in West Ghana. The contract relates to land near the city of Bibiani, western Ghana. Providing due diligence checks out for the Company which can take up to 12 months, DekelOil has the potential to boost its portfolio of assets. West Africa continues to show strong demand for palm oil and DekelOil are taking advantage of the demand and supply imbalances. Also, there is less suitable land available for planting and it is becoming more expensive for palm oil companies to operate which makes the Ghana project more valuable and significant.
DekelOil announce CPO production of 29,137 tonnes for nine months to 30 September 2015. We forecast CPO production of 31,116 tonnes in 2015 with revenues of €19.6m, an EBITDA of €4.8m and a profit of €1.76m which will be attributable to shareholders. In 2016, with the benefit of the KCP we estimate DekelOIl to deliver an EBITDA of €9.2m, and a profit of €4.02m which will be attributable to shareholders.
In our view, the current share price is unwarranted and does not reflect the significant progress DekelOil has made. DekelOIl is expanding its land portfolio, the Company has delivered the KCP on time which has a payback period of less than 12 months and the KCP could potentially deliver an EBITDA of €1m in its first full year of operation. Above all, DekelOIl has doubled its crude palm oil production in 2015 at 29,137 tonnes. We reiterate our price target of 1.9 pence per share with a strong buy.