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I feel it’s honest to say that MP Evans (LSE:MPE) is a UK inventory that draws little consideration. In the present day (15 September), the palm oil producer introduced its outcomes for the six months ended 30 June. However although the group revealed a 60% improve in earnings per share in comparison with the identical interval in 2024 — and a 20% rise in its interim dividend — it didn’t hit the headlines.
This might be on account of the truth that its main belongings are situated on the opposite aspect of the world. It is perhaps a case of out of sight, out of thoughts. The group has substantial pursuits in Indonesia the place it owns six palm oil mills, 49,800 hectares of majority-held palm oil plantations and an extra 16,200 hectares in smallholder co-operative schemes. It additionally has a 38% curiosity in a big property and a 40% share in a property improvement firm in Malaysia.
However like all agricultural enterprise, its earnings are depending on two components – market costs and crop yields — which might be largely outdoors its management. This implies its revenue could be unstable.
YrManufacturing (tonnes)Promoting value ($/tonne)Price ($/tonne)Earnings per share (pence)2025 (six months)737,70086844671.720241,608,900823410129.620231,622,90072942778.120221,511,700854402108.020211,366,200810350115.6Source: firm reviews / 2025 = six months ended 30 June
A rising however contentious market
Nevertheless, palm oil is probably the most traded vegetable oil on the earth. Demand has doubled over the previous 20 years. It’s now utilized in meals, cosmetics and cleansing merchandise.
However it may be controversial. The business has been accused of partaking in mass deforestation and human rights abuses.
That’s why MP Evans emphasises the sustainable nature of its crop and its partnerships with native communities.
Valuation metrics within the sector
Based mostly on the group’s earnings per share for the 12 months to 30 June, its inventory trades on a a number of of 8.5. This appears very enticing in comparison with the common for the UK inventory market of round 19.
Having stated that, two of its closest FTSE rivals seem cheaper. Anglo-Jap Plantations, which produces palm oil and rubber in Indonesia and Malaysia, trades on 5.7 instances earnings. R.E.A. Holdings, which additionally produces palm oil in Indonesia, has a a number of of 1.8.
However neither of those firms can match the dividend yield of MP Evans.
In the present day, the group introduced that it was growing its interim dividend by 20% to 18p. Add this to final 12 months’s remaining payout of 37.5p and the inventory presents a wholesome yield of 4.2%. After all, there aren’t any ensures relating to shareholder returns.
YrDividend per share (pence)2025 (six months)18.0202452.5202345.0202242.5202135.0Source: firm reviews / 2025 = six months ended 30 June
Professionals and cons
However anybody eager to take a stake must be comfy with the truth that its earnings are more likely to be unpredictable. Unhealthy climate circumstances (too dry or too moist) can adversely have an effect on yields and the long-term influence of local weather change on the group isn’t but recognized. Pests and illness may additionally current an issue.
Nevertheless, palm oil costs have been moderately secure for the reason that center of 2022 and the group continues to develop. It’s just lately added one other 3,000 planted hectares to its portfolio.
It additionally retains a powerful stability sheet having moved to a web money place of $70.3m at 30 June — 12 months earlier, it reported web debt of $7.5m.
After which there’s the dividend. It’s grown by a median annual fee of 24.3% over the previous 4 years.
On stability, I feel MP Evans is a inventory value contemplating.
