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Tuesday, 29 July 2014

Livestock Feeds - An Investment Opportunity in Agriculture

The agricultural transformation agenda of the federal government is taking shape with many investors looking for ways of keying into it and benefit.

Government commitment's towards making the agriculture sector the mainstay of the economy is not in doubt given pronouncements of President Goodluck Jonathan and the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina.

While some investors with the financial power are investing directly in the agricultural sector of the economy, others are investing through portfolio investment by buying the shares of companies in that sector.

The Nigerian Stock Exchange (NSE) is currently providing the platform for portfolio investors to participate in the various subsectors of the agriculture sector, from crop production and fishing to livestock.

Although only five companies are quoted in the in agriculture sector of the NSE, they provide a good investment opportunity for investors. A look at the performance of the stocks listed in the sector in recent past showed that investors have reaped significantly from their investments either in form of dividends or capital appreciation.

One of such companies that has rewarded its shareholders significantly is Livestock Feeds Plc. While the company has not declared dividend for some time due to a rough patch it went through, investors who staked their funds on the equity in the past one and have years ago have are counting a capital gain of about 170 per cent.

The stock closed at N3.06 per share. That price is 28 per cent below its opening price of N4.30. However, given its performance last year, the price is an opportunity for investors to buy into the company given its future prospects.

Corporate profile Livestock Feeds was established in 1963 by Pfizer as a subsidiary to the pharmaceutical business which had been introduced to Nigeria few years earlier. Following importation of exotic milking cows and hybrid chickens into the country by Germans, Dutch and later Americans, the need to provide health and nutritional products led to creating animal health division and then the feed division.

The first mill of five metric tonnes per hour (MT/hr) was installed at Ikeja, Lagos in 1963. Another was installed in Aba 1964 and in Kaduna in 1965. They have 4MT and 3.5MT per hour capacity respectively.

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