SOUTH DAKOTA SOYBEAN PROCESSORS LLC (SDSYA) stock intrinsic value fair value estimate & owner earnings analysis

South Dakota Soybean Processors is a farmer-owned soybean crushing and refining business, built around a decades-old plant in Volga, South Dakota that turns soybeans into soybean meal (sold mainly to poultry and swine feed markets) and soybean oil (sold into food, industrial and biofuel markets). Roughly 85-90% of its volume is sold domestically, concentrated in the Midwest and shipped nationally by rail, with the remainder exported. The single biggest fact shaping this business today is the Mitchell, South Dakota facility: a large new oilseed processing and refining plant that the company spent roughly $480 million building between 2023 and 2025, financed with a mix of new debt and outside equity investment in a subsidiary. Construction finished and the plant started up in the fourth quarter of 2025, and management says it nearly doubles the company's total processing capacity. That capital program is also why owner earnings look weak in 2023-2025 on the surface: this was not a shortfall in the underlying Volga business, it was a multi-year construction bill for a plant that was not yet earning anything. We treated essentially all of that construction spending as growth investment rather than a cost of maintaining today's business, and estimated normal, ongoing maintenance spending using the roughly $28 million per year the company itself has now budgeted for 2026, the first year both plants are simply operating rather than being built. Crush margins - the spread between what a processor pays for soybeans and what it earns selling meal and oil - are also cyclical, and 2025 caught the business in a trough: soybean meal prices fell as Argentine competitors returned to export markets and the U.S. crop grew, soybean oil demand softened on a weaker outlook for biofuel blending, and the Mitchell plant's first quarter of operation added start-up costs on top. The result was the first year of negative reported operating cash flow since 2019. None of this looks unusual against the company's own history - normalized owner earnings per unit swung from roughly $(0.08) in 2017 up to about $2.27 at the top of the last crush-margin cycle in 2022 - but it means the anchor for value has to look past both the 2022 peak and the 2025 trough. We used the median of the last ten fiscal years, about $0.51 per unit, as the level that represents the pre-expansion, single-plant business through a full cycle. From there, the three cases differ mainly in how much of Mitchell's added capacity translates into added owner earnings, and how quickly crush margins normalize: Bear case: the industry-wide wave of new U.S. crush capacity built over the past several years (Mitchell is one of many) keeps margins compressed near 2024-2025 levels for an extended period, so Mitchell's extra volume adds little net value while the roughly $250 million of new debt taken on to build it makes the business more sensitive to a soft cycle. Owner earnings stay near breakeven through the late 2020s and only gradually recover toward the weakest points of the historical cycle. Base case: Mitchell ramps toward full utilization over about three years, a normal timeline for a plant of this size, while crush margins mean-revert toward the historical median rather than staying at either the 2022 peak or the 2025 trough. Combined owner earnings rise from around today's depressed level to roughly $0.90 per unit by 2030 and hold there, since no further expansion is currently planned or disclosed. Bull case: Mitchell ramps faster than typical and crush margins recover toward the strong levels the business has already demonstrated in 2021-2022, supported by the fact that roughly half of U.S. soybean oil output already goes into biofuel and soybean meal export demand has stayed near record levels even as prices fell. Owner earnings approach $1.80 per unit by 2030. We discounted each case's cash flows at a flat 6% over 10 years, and beyond that assumed each case's ending level simply continues, since there is no disclosed plan for a third plant or other structural growth once Mitchell is fully ramped. That produces a wide range - roughly $2.80 to $27.40 per unit - which reflects real uncertainty rather than a wide guess: a commodity-cyclical processor that just quadrupled its debt load to fund a plant that has been running for less than a year can plausibly be worth very different amounts depending on how that bet plays out. Given that combination of cyclicality, new leverage and unproven ramp-up, the margin-of-safety price sits at a meaningful discount to the base-case estimate, and assumes the Mitchell plant is actually delivering rising volumes alongside healthy cash flow - not just completed. One item we could not fully reconcile from the filings: the company revised its reported working-capital and derivative-related cash flow figures for 2018, 2019 and 2023 in later annual reports without a formal restatement explanation for the change in presentation. We used the most recently reported figures in each case, as they tie out correctly to reported operating cash flow.