AEP Plantations (LSE: AEP) has been a FTSE 250 star. It’s soared 169% over five years — with most of that coming from a 132% climb in just the past 12 months.
But after a painful 21% slump Wednesday (20 May), is it about to go horribly wrong? Or might this be a buying opportunity for investors who thought they’d missed out?
Let’s dig in and see what happened.
What does it do?
Anglo-Eastern produces palm oil in Indonesia and Malaysia. And it’s been a profitable business, throwing off large amounts of cash. It has a track record of paying dividends stretching back 34 years.
For the 2025 financial year, AEP paid 81 cents per share (60.2p at current exchange rates), up a whopping 85% over 2024. That’s a yield of 4.4% on the share price at the end of December. And earnings per share of 231 cents (174p) covered it a very comfortable 2.85 times.
The company also repurchased shares to the tune of £8.7m. And it still ended 2025 with cash equivalents of $232.3m on the books.
What could possibly go wrong?
What happened?
Indonesian President Prabowo Subianto just announced new commodity export controls, that’s what. The country now intends to route export sales of natural resources, including crude palm oil (CPO), through state-owned enterprises.
When a government steps into a free market and imposes its own direct control, more often than not that’s seen as bad move for companies in that market. And investors certainly didn’t gauge this new development as a favourable one.
AEP issued a statement pointing out that it “sells all of its CPO production domestically to refineries in Indonesia and does not export directly,” with much of its production consumed within the country.
As such, “the proposed changes are not expected to have a direct impact on AEP, although there may be indirect effects through pricing adjustments.“
What should investors do?
I think there’s one key thing anyone considering buying AEP shares needs to do before anything else. That’s sit back, and think about an important aspect of an investment like this.
In a country — especially a developing one — where governments are often more interventionist than most developed Western economies, there’s a whole load of extra risk. And when someone in power decides to override the free market, things can go catastrophically wrong.
Now, I’ve no idea what the effect on AEP will turn out to be. And the company itself says it “remains confident in the long-term fundamentals of the Indonesian palm oil sector and in the resilience and efficiency of AEP’s operations.”
Think long term
I won’t buy a stock like this myself, for precisely the reasons I just outlined. But at the same time, I recognise I might be overlooking an attractive long-term cash cow here.
Investors who like FTSE 250 stocks, with cash and growth potential, could do well to take a close look at AEP now, I think. But they should keep the macro risks in mind.
Should you invest £5,000 in Aep Plantations Plc right now?
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Alan Oscroft does not hold any positions in the companies mentioned.
