Questor: this firm’s break-up plans make it an interesting slow-burn turnaround story

Update: Anglo-Eastern Plantations

In response to a reader’s letter, this column has quickly cast its eye over Anglo Eastern Plantations, a producer of palm oil and rubber in Indonesia and Malaysia.

In the stock’s favour, the balance sheet has net cash and the £289m market value represents a discount to net assets, which include that net cash pile. The downside seems well protected, especially as the assets also trade at a discount to the price per hectare implied by acquisitions in the sector. In addition, fresh fruit bunch output is growing and palm oil prices are rising.

Risks include unpredictable weather and its impact on production and the gathering ESG pushback against palm oil because of deforestation (although the firm has a strict zero-deforestation policy). The yield is tiny and the shareholder structure, with one owner controlling 51.1pc of the stock, seems to preclude corporate activity and thus a potential catalyst for the stock. A hold at best.

Questor says: hold

Ticker: AEP

Share price at close: 730p

Russ Mould is investment director at AJ Bell, the stockbroker

Read the latest Questor column on every Sunday, Tuesday, Wednesday, Thursday and Friday from 5am.

Read Questor’s rules of investment before you follow our tips.

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