OLAM INTERNATIONAL LIMITED
O32.SI
Olam: Investing US$150m in Nigeria
- Olam International announced last Friday that it is investing US$150m in Nigeria to set up two state-of-the-art animal feed mills, poultry breeding farms and a hatchery to produce day- old chicks.
- Olam calls the new venture - largest integrated animal feed mill, breeding farms and hatchery in Nigeria - a “win-win” for the company and Nigeria.
- Olam also intends to utilize the wheat bran from its wheat milling operations, as well as maximize its sourcing networks to buy corn and soy from local farmers.
- Recall earlier that Olam spent US$275m to acquire Amber Foods which owns the wheat milling and pasta manufacturing assets of the BUA Group in Nigeria – a move to strengthen its position as the number two wheat miller by sales volume there.
- As before, moving downstream makes sense as it will create “demand” for its upstream origination business. However, any sizable benefits are likely to accrue from FY17 onwards at the earliest; hence we keep our forecasts unchanged for now.
- We currently have a HOLD with a S$1.67 fair value on the stock.
Carey Wong CFA
OCBC Securities
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http://www.ocbcresearch.com/
2016-04-11
OCBC Securities
SGX Stock
Analyst Report
1.67
Same
1.67
