Financial Performance review
Benso Oil Palm Plantation Limited , reported an 80% increase in revenues from GHc 19.4 Million to GHc 34.8 Million. Profits after tax rose by 266% from GHc 2.7 Million to KES 9.8 Million.
The net profit margin rose to an impressive 28% compared to 14% in the prior year.
Operating environment and outlook
Benso’s growth in revenues was driven primarily by an increase in Crude Palm Oil Production and an upward trend in prices.
Wilmar International Limited, a Singapore headquartered agribusiness, acquired a majority of Benso’s shares from Unilever in early 2011. Wilmar’s core business is palm oil cultivation and processing; cost efficiencies enacted by Wilmar are already paying off as evidenced by the sharp rise in the net profit margin.
The good weather experienced in 2011 and the high world market price for palm crude oil are expected to continue into 2012. The operational efficiencies enacted by the new majority shareholder are likely to be sustained. The company is therefore likely to post a strong performance in 2012.
Investment analysis/Recommedation
The company’s share price closed (on February 14, 2012) at GHc 1.77; an all time high. The last period the company traded over GHc 1.00 was in the fourth quarter of 2008 when it a high of GHc 1.30 in October 2008.
With earnings per share of GHc 0.2808, the company is trading at a PE ratio of 6.3. On this basis alone the share is cheap.
The company has zero bank debt and has a huge and growing cash balance; the cash balance rose to GHc 7.47 Million up from GHc 2.5 Million in the prior year.
At the current market capitalization, the price book to value is 2, a fairly reasonable figure for a company that highly cash generative.
The dividend yield is 3%. The total dividend payout is up by 60%. While this is a significant increase it is much less than the growth in profits indicating that management wants to plough back funds to grow the company.
Recommendation:
The share is a buy even after the strong rally in share price in the year to date. The company is cheap as measured by the valuation metrics above
The main challenge with the share is the very low volume of shares traded on a daily basis making it difficult to build a significant stake.
Benso Oil Palm Plantation Limited , reported an 80% increase in revenues from GHc 19.4 Million to GHc 34.8 Million. Profits after tax rose by 266% from GHc 2.7 Million to KES 9.8 Million.
The net profit margin rose to an impressive 28% compared to 14% in the prior year.
Operating environment and outlook
Benso’s growth in revenues was driven primarily by an increase in Crude Palm Oil Production and an upward trend in prices.
Wilmar International Limited, a Singapore headquartered agribusiness, acquired a majority of Benso’s shares from Unilever in early 2011. Wilmar’s core business is palm oil cultivation and processing; cost efficiencies enacted by Wilmar are already paying off as evidenced by the sharp rise in the net profit margin.
The good weather experienced in 2011 and the high world market price for palm crude oil are expected to continue into 2012. The operational efficiencies enacted by the new majority shareholder are likely to be sustained. The company is therefore likely to post a strong performance in 2012.
Investment analysis/Recommedation
The company’s share price closed (on February 14, 2012) at GHc 1.77; an all time high. The last period the company traded over GHc 1.00 was in the fourth quarter of 2008 when it a high of GHc 1.30 in October 2008.
With earnings per share of GHc 0.2808, the company is trading at a PE ratio of 6.3. On this basis alone the share is cheap.
The company has zero bank debt and has a huge and growing cash balance; the cash balance rose to GHc 7.47 Million up from GHc 2.5 Million in the prior year.
At the current market capitalization, the price book to value is 2, a fairly reasonable figure for a company that highly cash generative.
The dividend yield is 3%. The total dividend payout is up by 60%. While this is a significant increase it is much less than the growth in profits indicating that management wants to plough back funds to grow the company.
Recommendation:
The share is a buy even after the strong rally in share price in the year to date. The company is cheap as measured by the valuation metrics above
The main challenge with the share is the very low volume of shares traded on a daily basis making it difficult to build a significant stake.
