Olam: Co has planned another invt in Gabon, a 80% owned JV with the Gabon govt (20% stake). The project will be to develop 28k ha of rubber plantations in Phase 1 with an additional 22k ha in Phase 2. The total invt amt is est at US$183m. The project will be financed on 1.5: 1 debt to equity ratio. Olam’s share of equity will be approx US$59.0m.
Planting is expected to commence in FY2013 and to be completed by FY2019. At full maturity, the project will generate annual volumes of approx 62k tons of dry rubber. Note that any upside is likely to be during FY2019 except for revaluation gains.
Olam’s other projects in Gabon include a US$1.3b urea fertilizer project and US$236m palm oil project. Olam trades at approx 14.0x fwd P/E and peer commodity trader Noble trades at 11.2x fwd P/E.
Separately Capital Group decreases its stake in Olam from 6.8% to 5.6% (approx 28.2m shares).
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