Sipef sells tea and half of the rubber branch
The plantation group Sipef sells its Indonesian subsidiary PT Melania to the rubber group Shamrock. With this, Sipef gets rid of half of its rubber branch and all tea activities. The price of $ 36 million is higher than expected.
takes an important step in its quest to evolve into a pure palm oil player. The plantation group from Schoten concluded a letter of intent with Shamrock Group for the sale of PT Melania, in which Sipef owns 95 percent through its subsidiary Tolan Tiga. The other 5 percent is owned by an Indonesian pension fund. Shamrock is an Indonesian group that operates several rubber plantations and factories and specializes in the production of latex gloves.
The sale takes place in two phases. Within a month, Shamrock will pay $ 19 million once a thorough search of the books is completed. The rest will follow at the latest by the end of April 2024, when the plantations will receive a renewal of their land permits. There are still some costs deducted from the total price tag of 36 million dollars (30 million euros).
With the sale, Sipef gets rid of all tea activities and half of its rubber branch. The tea plantation in Java, one of the few in the world where picking is still done by hand, is also in the deal. Last year, Sipef grew 2,762 tons of tea and more than 6,000 tons of rubber. Sipef will use the proceeds to reduce debt and convert his remaining rubber plantations into palm oil fields. While the price for palm oil has risen sharply to more than $ 1,100 per ton, the rubber price has been struggling for years. Only in 2020 was there a small turnaround due to the high demand for latex gloves due to the corona pandemic.
Sipef has struck a very good deal.
KBC Securities welcomes the sale. “Sipef has struck a very good deal,” says analyst Alan Vandenberghe. ‘We valued the rubber activities at $ 0, for tea we counted on a valuation of $ 15 million. If we include personnel costs and land title renewal expenses, we arrive at a sales price of $ 28 to $ 30 million. “
Vandenberghe repeats his buy advice and price target of 55 euros for Sipef. He believes that the market has overreacted to the significant increase in the export tax for palm oil by Indonesia, which hit Sipef’s share price. That tax creams off almost all profits at prices above $ 670. Because the tax yields much more than expected, he thinks Indonesia will lower the tax again. In addition, Sipef produces about a fifth of its palm oil in Papua New Guinea, where it can benefit from the high prices.
Bananas and flowers
In addition to palm oil, Sipef also has three banana plantations in Ivory Coast, where it also grows flowers. KBC Securities estimates the value of the Ivorian assets at at least $ 35 million. CEO François Van Hoydonck has never hid that they can also leave the house if someone offers a good price. Due to the good profitability of banana cultivation, there is less time pressure to dispose of them.
Palm oil has come under fire from environmentalists because some companies and farmers are clearing rainforest for new plantations. Europe’s Green Deal aims to phase out palm oil-based biofuels. Sipef only grows palm oil with sustainability certificates and is affiliated with the Rainforest Alliance that protects the forests. If no forest is cleared for it, palm oil is more ecological than other vegetable oils such as soy or rapeseed because palm oil yields much more per hectare with fewer resources, says Sipef.