Yesterday, DekelOil informed that it has been accepted as a supplier to Projet d’Appui au Secteur de l’Agriculture de Côte d’Ivoire project (PSAC), which is 70% owned by the World Bank and International Finance Corporation (IFC). The balance 30% shares of PSAC are held by local Inter-professional Association of Oil-Palm Industry. As per the agreement, PSAC would subsidize 50% of DekelOil’s costs related to preparation of nursery plants for sale to smallholders. The company also agreed to grow 140,000 plants in its nursery at Ayenouan in 2015 and 420,000 plants in 2016. PSAC plans to plant around 10,000 hectares (ha) of palm plantations in the region and also begin a pilot zone in the company’s operating region to improve the quality of roads and provide 5,000 ha of land for basic operations.
Beaufort Securities view: The aforementioned update provides DekelOil an opportunity to work in the PSAC project. The company would benefit from its partners, World Bank and IFC, to expand and improve its share in the fast growing palm oil industry. The project would not only help DekelOil, which has a world-class nursery with a 1 million seedlings a year capacity, but also support thousands of local smallholders, communities and families in the region. Further, DekelOil is on track to commence production at Ayenouan palm oil project in Côte d’Ivoire. The region has been a promising destination for palm oil developers and still has a lot of potential for future expansion. The company is well placed to commence production by the year end owing to the advancement in operations supported by a strong local response. DekelOil produced 21,836 tonnes of crude palm oil (CPO) in the first half of 2015, up 53% over previous year’s overall production of 14,242 tonnes as per the recent trading update. In spate of the above developments, we maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as corporate broker to DekelOil Public
