Olam: New agriculture investments in Nigeria. Announced that it would invest US$49.2m to set up a 6k ha greenfield, fully integrated, mechanised and irrigated paddy farming and rice milling facility in Nasarawa State, Nigeria. Operations will be gradually phased in btwn FY2013-2016. The farm at its peak is expected to yield 10MT per ha approx 60k MT per annum. This will be converted to 36k MT of milled rice and distributed through Olam's network in Nigeria. The farming ops is expected to deliver an IRR of 28%.
Olam is currently a mkt leader in import and distribution of rice in Nigeria and one of the largest rice traders globally.
To also expand of its wheat milling capacity at Crown Flour Mills in Nigeria for US$50m. Its current capacity is 1630 MT per day and the capacity increase will boost production to approx 2380 MT per day and increase storage silo space to accommodate an additional 18k MT. The construction will take approx 17mths. Project is expected to deliver an IRR of 20%.
Olam currently trades at 11.7x P/E and Noble after its steep decline approx at 11.3x current P/E.
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