GMG Global

GMG Global has formed a 80/20 JV with Societe de Production de Palmeraies to develop natural rubber plantations in Cameroon. The JV plans to secure 2 land concessions covering about 45k ha & will invest US$200m in a large scale industrial plantation & processing facility over 12 years. These will more than double its existing 41k ha of rubber plantations in Cameroon. As this is a greenfield project, gestation is expected to take 7 years before the plantation yields any returns. Separately, rubber prices in Shanghai traded to a high not seen since May 06. GMG’s majority shareholder, Sinochem - is the largest rubber player in China, controlling 10% of the country’s supply. Stock appears to have run ahead of the news, currently trading at over 30x FY120 P/E.