₦airaland Forum

Streetinvestor2:
You post here is completely different from what I posted.i am not repeating an argument to win.
I posted to confirmed two facts which time have proved to be right concerning kpakus
1.They both whr not targeting same asset
2.Kpakus don't have any money on ground
Na you sabi do argument to win..lol

ositadima1:
Once you start with insults, you signal that you lack the numbers to let the data speak for itself. The only relevant question is whether the discounted future cash flows of ARPN exceed the acquisition price at Ellah’s cost of capital. Without numbers, claims of “overpayment” are nothing more than baseless opinions.

You implicitly admitted with presco that price alone does not determine value; execution and capital structure do. The same standard must therefore be applied to Ellah.

Until then, this debate is not about valuation, it is about emotional bias.

ositadima1:


So all your predictions have come to pass, lol. Yet tomorrow you’ll return to say the same thing, just framed differently.

After they acquire ARPN, you’ll come back again with the same argument, merely worded differently. Anyway, you have every right to talk.

HesInMe:
It was not intended as an insult like that, but if that's how you took it, I apologize. I thought this was a settled matter, and you were just being argumentative.

You're right that we can't run a DCF on this because we're not privy to the cash flow numbers. That's why we use alternative analyses like implied valuation using publicly traded comparables.

You calculated (assuming you'd used the correct plantation size) that ARPN was valued at a similar price

Yes, you could take issue with the comps. But the conclusion is clearly unsurprising. Business intuition tells us that oil palm assets are now hot-ticket ones, so it'd actually be surprising if a large plantation did not command a price premium today. And that the illiquid ARPN should actually trade at a discount to Presco.

HesInMe:
It was not intended as an insult like that, but if that's how you took it, I apologize. I thought this was a settled matter, and you were just being argumentative.

You're right that we can't run a DCF on this because we're not privy to the cash flow numbers. That's why we use alternative analyses like implied valuation using publicly traded comparables.

You calculated (assuming you'd used the correct plantation size) that ARPN was valued at a similar price per hectare as Presco -- but we know qualitatively that ARPN has a much lower plantation yield (lower average plantation age) and no value-adding post-harvest processing. That implies a premium valuation to Presco -- just like we'd conclude if we ran a DCF. If you really care, we can quantify that premium, but it'd be a premium nonetheless.

That conclusion is hardly surprising. Business intuition tells us that oil palm assets are now hot-ticket ones, so it'd actually be surprising if a large plantation did not command a price premium today.

So the question now is, how does Ellah make up that premium over fair value? Another way to look at this is to ask: Why would a rational investor buy ARPN at the same price as Presco's shares today given the implied valuation? Illiquid ARPN should actually trade at a discount to Presco. Why not just buy Presco?

Does that make sense?

ositadima1:
I agree that using comparables makes sense when we don’t have detailed cash flow data, but only if the differences are actually quantified. Right now, your claim of a “premium” is based on qualitative points like plantation age, yield, and processing capacity, without showing how those differences affect cash flow timing, required capex, or returns.

A younger plantation with lower current yields is not automatically worth less on a DCF basis. Its value depends on how quickly yields ramp up and on the buyer’s cost of capital. Also, this is a control acquisition, not a minority investment, so it shouldn’t be priced the same way as a liquid public share like Presco.

The real issue isn’t whether ARPN looks expensive compared to Presco at a glance, but whether reasonable assumptions about yield growth and capital costs make the deal value-creating for Ellah. Without even a rough framework for those assumptions, calling it “overpayment” is still an assumption, not a conclusion.

HesInMe:
Lol. ChatGPT will be the end of humanity.

Take some time to learn about the business. There's a YT video online where Presco's CFO discusses the economics of oil palm plantations. The differences in yield based on plantation age, and in margin based on revenue mix, are not qualitative. They're real money, and massive numbers at that.

ositadima1:
Can you stop going in circles and making the same points without any quantitative evidence, even rough assumptions? You haven’t provided any solid justification for your claim of a premium. You keep repeating the same arguments while avoiding the questions raised.

At the very least, Pa Emma would show his workings and numbers. You’ve successfully avoided doing that. Either present a quantitative case, even if it’s rough or half-baked, or let it rest.

HesInMe:
Or you can prompt ChatGPT:

Assume the common commercially planted varieties and cultivation practices of oil palm. Quantity the difference in per-hectare yield between a plantation age 4 years and one age 8 years.

ositadima1:
So you’re putting the burden of proof on me? You must be joking. Defend your own position and stand up to scrutiny, or let it rest.

Mankind2024:
You reminded me of my campaign on Nairaland in 2023/24 when I brought the gospel of the Magnificent 7 stocks (check my past topics). Today, the Magnificent 7 stocks—of which NVIDIA is a leader—have delivered inflation-beating returns of three digits on my invested capital.
This was not luck, but trust in compounding, discipline, patience, and time.

emmaodet:
Just be careful with this strategy of holding forever without regularly rebalancing your portfolio.

See below -

The Top 10 Stocks Change Over Time — A Lot

This chart compares the S&P 500’s top 10 companies from 1985 to 2025.

The names keep changing: IBM, GE, Exxon, AT&T, Walmart…

Many former giants aren’t in the top 10 today.

The lesson? Market leaders don’t stay on top forever.

Streetinvestor2:
We are not that close.We still get close to 40% gap and likely 50% as our population goes higheri n 5 yrs Unless the government go begin allow importation back into the country .A liter still goes for #2k and above. Even at #1500 for a litter the guys will still be making good money from my research.The kill for these oil guys is the industrial need for palm oil in nigeria. It will definitely continue to increase if the manufacturer ingredients and production part of the economy continue to expand

ositadima1:
Once you start with insults, you signal that you lack the numbers to let the data speak for itself. The only relevant question is whether the discounted future cash flows of ARPN exceed the acquisition price at Ellah’s cost of capital. Without numbers, claims of “overpayment” are nothing more than baseless opinions.

You implicitly admitted with presco that price alone does not determine value; execution and capital structure do. The same standard must therefore be applied to Ellah.

Until then, this debate is not about valuation, it is about emotional bias.

Mankind2024:
@Emma,
Frequent activity is a killer of a compounding portfolio. My foreign portfolio has survived over 8 market downturns and reversals to means; it has always bounced back to the apex due to the shield I built around it. The day you understand the power of compounding is the day you overcome the power of what you cannot control.
avoid buying stock, buy business and hold 4eva.

emmanuelewumi:
You can hold forever if the business is still growing and delivering.


I have been a shareholder of Zenith, UBA, for over 20 years

Shareholder of United Capital, Presco, Okomu for over 10 years.

I sold my First Bank, Access, FCMB, Fidelity, Sterling and others this year in order to reduce the number of stocks in my portfolio to around 25

emmanuelewumi:
You can hold forever if the business is still growing and delivering.


I have been a shareholder of Zenith, UBA, for over 20 years

Shareholder of United Capital, Presco, Okomu for over 10 years.

I sold my First Bank, Access, FCMB, Fidelity, Sterling and others this year in order to reduce the number of stocks in my portfolio to around 25

emmaodet:
Just be careful with this strategy of holding forever without regularly rebalancing your portfolio.

See below -

The Top 10 Stocks Change Over Time — A Lot

This chart compares the S&P 500’s top 10 companies from 1985 to 2025.

The names keep changing: IBM, GE, Exxon, AT&T, Walmart…

Many former giants aren’t in the top 10 today.

The lesson? Market leaders don’t stay on top forever.

nosa2:
Then again one can argue that if the deal was very favorable to Ellah shareholders then Management would have been splashing the details everywhere

nosa2:
You suppose open index fund. 25 stocks is very inefficient in my opinion

Streetinvestor2:
We are not that close.We still get close to 40% gap and likely 50% as our population goes higheri n 5 yrs Unless the government go begin allow importation back into the country .A liter still goes for #2k and above. Even at #1500 for a litter the guys will still be making good money from my research.The kill for these oil guys is the industrial need for palm oil in nigeria. It will definitely continue to increase if the manufacturer ingredients and production part of the economy continue to expand

emmanuelewumi:
I love the sound of dividend alerts from January to December. In fact my portfolio income is now 15 times of what I got in 2020. That is the only efficiency that is important to me


Used to have about 60 stocks in my portfolio and then used to receive over 100 dividend alerts. Although I have received 57 credit from alerts from my portfolio this year, with an outstanding one towards the end of the year.

But I started reducing the stocks in the port around late 2024.

Just checked my portfolio and I found out I have the following securities in my portfolio. 17 stocks and 7 bonds.
Equities
1. Afriland Properties
2. CSCS
3. Friesland WAMCO
4. Africa Prudential Registrars
5. Aradel
6. Dunlop ( dead stock, with no buyer)
7. GTB
8. Nahco
9. Presco
10. Unilever
11. United Capital
12. Zenith Bank
13. Stanbic IBTC Bank
14. Okomu Oil
15. Custodian
16. Fortis Global Insurance ( dead stock)
17. Transcorp

Bonds

1. 12.4% FGN March 2036
2. 12.98% FGN March 2050
3. 16.2884% FGN March 2027
4. 12.5% FGN March 2035
5. 13% FGN December 2031
6. 19% FGN February 2034
7. 19.89 FGN May 2033.

The securities should be able to give me at least 36 investment income credit alerts

I sold the following this year
1. NGX
2. Fidelity Bank
3. FCMB
4. NASCON
5. Access Bank
6. Total Energy
7. SFS REIT
8. UPDC REIT
9. Seplat
10. First Bank
11. CAP Plc
12. Airtel

nosa2:
Finally somebody willing to engage on this. Lets review the effect of the policy, aside from creating a boom for the palm oil guys what is the policy doing to the other sectors of the economy? Think about that and you will begin to see the probability of the protection being removed and why I have been saying what I have been saying.

emmanuelewumi:
The over 1000% growth in the portfolio income is due to reinvestment, portfolio rebalancing and leverage by borrowing against the portfolio

crownprince2017:
How come u were still in Dunlop n other n not sold before they become dead. I was just wondering.

emmanuelewumi:
No buyer for the past 15 years or thereabout.

Dunlop and Standard Allied Assurance ( but was recently rebranded and renamed)

Streetinvestor2:
Why do u think the policy is bad for the palm oil sector. And how is it affecting other sector
We have this policy on sugar with backward integration attached. We have it on rice though government approved the importation of puddles for a short period to crash the price locally.
I think it is good policy that should be sustained and backward integration should be added. Then government should allow even export on it.I think thr is restriction on export because some Asian Countries did same..We cannot allow our country to be dumping ground for substandard palm oil like I saw in the past in railways then in kaduna. That was what indomie company in kaduna was buying because it was cheaper but the oil was completely rubbish from my own physical check. Then why the bigger guys will continue to make good margins. The majority locals don't have efficiency in the milling process. The way they start is equally how many close shop in short period. Then this big guys have alot of revenue coming from revenue mix in the industry because of capacity and funding for the machines needed to create different products out. Like in my lga,many Mills I use to know have shut down for different reasons. Mostly related to power supply. Then the few local production just serve the few people who really want quality hand prepared oil to cook.
And this quality comes with extra cost if u go for it.Do you know thr is huge money being made from karnel oil presently mostly cold compress