Transcript Kazakhstan Agriculture investment opportunities

National export and investment agency “KAZNEX INVEST” JSC
Ministry for investment and development of the Republic of
Kazakhstan
Acquisition and greenfield investment
opportunities in grain industry in
Kazakhstan





Vast farmland areas
Agriculture with a potential to increase efficiency
Market potential for processed food
Significant market consolidation potential
Acquisition
and
greenfield
investment
opportunities with the range of 0,5 – 400 mln. USD
January 2016
This Presentation does not constitute an offer or invitation to the public in any jurisdiction to purchase any shares or assets of any
Company, and does not constitute or form any part of any offer or invitation to purchase shares, nor shall it or any part of it form
the basis of, or be relied upon, in any way in connection with any contract or investment decision relating to any shares. Information
contained herein should be treated as confidential. Copying or distributing without prior written consent from Kaznex Invest is
prohibited.
CONFIDENTIAL
Confidential
1
Agenda
1. Executive summary and basic information
2. Grain production
3. Acquisition and greenfield investment opportunities
CONFIDENTIAL
2
Executive summary
Kazakhstan is a dynamically developing economy with favorable demographics and low public debt
Kazakhstan is the largest economy in Central Asia. The country has got vast oil reserves, deposits of metals
and robust agricultural potential with lands suitable for both livestock and grain production.
Kazakhstan dynamic economic growth
Executive summary
 Growing demand in regional and domestic markets for higher value and quality food products of packaged
food, branded products and retail private labels is an outcome of Kazakhstan’s growing economy and
increasing disposable incomes;
 Kazakhstan has a potential of a springboard for expanding into the entire Central Asian, Caucasus, China and
India regions with combined GDP of more that USD 16 trillion, acting as an agricultural hub for the macro
region;
 Attractiveness of the end-consumer market as Kazakhstan represents a relatively large mid-income market
with GDP per capita of USD 12,950 in 2014 corresponds to that of most of the benchmark countries.
Kazakh potential in agriculture
 Strong potential for the development of agribusiness in Kazakhstan due to country’s considerable land
resources, as Kazakhstan has the world’s 12th largest arable land area, and fifth in the world in terms of
pastureland of 182.2 million hectares, but it uses only about 30% of the pastures;
 Kazakhstan plays an important role in ensuring food security in Central Asia. Taking into account the
interaction within the Organization of the Islamic food security, the possibilities of Kazakhstan in this area will
increase significantly;
 Agricultural development program “Agribusinesses 2020” includes state support directed at small, medium
and large farms to improve their effectiveness and develop the sector as a broad level;
 The special program of Plan of the Nations “100 Steps” is being implemented to address the problem of
livestock forage and crop production as well as specifically highlights importance to improve the quality of
the meat and dairy goods.
Summary of projects
Capex
Grain production
required
Summary of projects
100 m USD
50 m USD
13
11
12
10 m USD
1 m USD
13
Page number
Greenfield
Brownfield
CONFIDENTIAL
3
Kazakhstan’s economy and
basic market data
Kazakhstan is a dynamically developing economy with favorable demographics and low public debt
Kazakhstan is the largest economy in Central Asia. The
country has got vast oil reserves, deposits of metals and
robust agricultural potential with lands suitable for
both livestock and grain production.
Kazakhstan’s economy
Economic growth
 Since 2000 Kazakhstan’s economy has been
growing dynamically (among the world’s fastest
developing countries)
 Average GDP growth rate of 7.7% in years 20002014.
 GDP increase has been driven by favorable market
prices for Kazakhstan’s leading exports – oil, metals
and grain.
GDP growth rate (%)
9.8
13.5
9.8
9.6
9.3
9.7 10.7 8.9
2000
2002
2004
2006
5.0
1.2
2008
2010
6.0
4.3
2012
2014
USD/KZT
190
170
150
130
110
KZT devaluation
KZT devaluation
2006
Demographics
2008
2010
2012
2014
Age structure (ths)
 Population of 17.3 million in 2013 expected to
increase to 18.7 million by 2020
90 - 94
75 - 79
60 - 64
45 - 49
30 - 34
15 - 19
0-4
Male
 Favorable age structure implies a steadily increasing
demand for meat and agricultural products
 Median population age is at 29 years (compared to
46 in Germany, 38 in Poland, 31 in Brazil)
900
Public debt
 Kazakhstan has been the first former Soviet republic
to repay all of its debt to the IMF, 7 years ahead of
schedule
 In 2014 Kazakhstan sold first overseas dollar bonds
in 14 years, issuing USD 2.5bn of 10- and 30-year
bonds
600
300
0
Female
0
300
600
900
Public debt (% of GDP)
15.5
11.4
8.1
 The public debt of Kazakhstan since 2011 remains
stable between 12-14%
Basic information
7.5
7.3
3.3
2004
10.2
6.7
2006
5.9
13.8
12.6 13.2
12.1
6.7
2008
2010
2012
2014
Basic information
Public debt
 Total area: 2,7 mln. km2 (9th largest in the world);
 Official language: Kazakh, Russian;
 Currency: Tenge (₸) KZT);
 Capital: Astana;
 Largest city: Almaty;
 Administrative division: 14 regions + 2 cities of republican
significance;
 Membership in the organizations: UN, IMF, WB, OSCE, OIC,
WTO.
CONFIDENTIAL
4
Kazakhstan’s food
processing industry
Market data and value
Market data and value
For the period 2010-2014 gross production of the
agriculture goods in Kazakhstan increased by 1,5 times
and reached 8 bln. USD in 2014.
Growth and investment attractiveness
 Agro sector is becoming more competitive and
export-oriented. Since 2010 export of agriculture
commodities and processed products has
increased by 1,5 time and reached 2,6 bln. USD.
 Food processing total turnover for the year 2014
reached import and export indicators in the year
2015 were 2,9 and 1,1 bln. USD respectively
 FDI inflow to the sector increased by 2 times and
reached 894,5 mln. USD in 2014, out of which FDI
into the food processing industry was about 219,4
mln. USD.
 Currently there are about 1 689 enterprises of small
medium and large sizes operating in the sector of
food processing in the country
 Local market provision with domestically
produced main categories of goods was around
80%.
 Average production capacity for companies in 7
subsectors of food processing was around 42%,
varying from lowest 16,2% in vegetables processing
to highest 66,2% in production of canned meat
 As of 2014 overall food processing industry of the
country increased by 2,9% and reached over 5,5
bln. USD.
Agro strategy of Kazakhstan
Agro strategy of Kazakhstan
Strategy “Kazakhstan - 2050”
10 priority subsectors of
 To increase the level of state support for agriculture by 4,5 time
by 2020;
agriculture and food
 To increase the agro contribution to GDP of the country by 5
times by 2050.
Strategy “Agrobusiness - 2020”
 Investment subsidies to subsectors of crop production and
animal feedlots;
 Investment subsidies;
of raw materials for
 Meat processing
 Production of fats
 Deep processing of grain
 Fruits and vegetables processing
 Confectionery
 Fish processing
 Lowering interest rate on credit lines and lease;
 Subsidies for purchase
companies;
 Milk processing
processing
 Exemption from income tax on income of smallholders;
 Processing of hides
 Sugar production
 Wool processing
 Subsidies for the paid VAT
CONFIDENTIAL
5
Acquisition and greenfield
investment opportunities
Allocation of investment opportunities with regard to country’s regions
Allocation of investment opportunities with regard to country’s regions
Karaganda region – deep processing of wheat
projects
Kostanai region – grain processing
Almaty region is famous for its agricultural complexes,
which produce wide variety of meat products, diary
and wheat processing facilities.
CONFIDENTIAL
6
Agenda
1. Executive summary and basic information
2. Grain production
3. Acquisition and greenfield investment opportunities
CONFIDENTIAL
7
Grain market data and
financials
More than 70% of land in Kazakhstan is occupied by crops and animal husbandry
Grain production
Agricultural map
 Over 30% of the agricultural land is farmland
(remaining 70% is permanent pastureland)
 75% of Kazakhstan’s farmland is sown with
wheat,
13% is used for forage crops cultivation and 9%
for oilseeds
 Agriculture in Kazakhstan is characterized by high
extensiveness with insignificant consumption
of fertilizer (in range of 1-3 kg per hectare)
Farmland area (%)
Fertilizer consumption (kg per h)
Other
Meat production and processing market data
Oilseeds
Grains
Legume crops
Corn
Rice
Rapeseed
Soya
4
2.6
9%
2
13%
Forage
crops
1.0
1.9
1.5
1.8
2.4
1.8
1.4
1.6
2008
2010
1.7
1.8
Grain
0
2002
75%
2004
2006
Sunflower
Cotton
Sugar beat
Tobacco
Potatoes
Forage crops
2012
Kazakh oilseed industry faces a strong underutilization of capacity
Vegetable oil production (tons)
Refined and non-refined vegetable oil market
 The vegetable oil market in Kazakhstan grew on the
average by 8.5% annually since 2009
 Main oilseed processing plants are located in the
regions where oilseeds and cotton are cultivated
292,609
203,547
222,943
280,820
234,983
 A large part of the domestic production capacity is
outdated
Vegetable oil prices (USD* per ton)
1,500
1,379
1,020
1,149
1,000
940
500
1,160
1,050
2009
2011
2012
2013
Market prices
1,047
928
686
2009
2010
2011
Non-refined vegetable oil
2010
1,227
2012
2013
Refined vegetable oil
 Prices of both refined and non-refined
vegetable oil since 2012 began to fall due to
the underutilization of domestic capacity
Government support includes mainly direct payment subsidies to farmers
The main goal of recent government support is to increase the efficiency of agriculture production:
 Subsidies to cut the cost of mineral fertilizers up to 50% - granted directly to farmers to reduce the cost of
cultivation
 Subsidies for modern production technologies –granted in order to reimburse up to 30% of new production
equipment cost
CONFIDENTIAL
 Fuel subsidies – granted in order to reduce the
cost of mechanizing Kazakh agriculture, up to 40% of fuel cost
8
per hectare
Main producers and contact for
grain production
The largest producers and processors of grain and oilseed are private companies and potential acquisition targets
Producer
Industry
Capacity (ths tones
annually)
Ivolga Holding LTD
Grain processing
420
Shymkent Mai JSC
Soybean processing
180
Key producers
Cotton seed processing
Employment
105
Region
-
Kostanai region
612
South Kazakhstan
Maslodel LLP
Rapeseed processing
140
170
Almaty
MS LLP
Soybean processing
120
-
Almaty
Alibi LTD
Grain processing
115
-
Kostanai region
TPK Karasu LTD
Grain processing
100
-
Kostanai region
Mart LLP
Sunflower processing
ca. 100
-
East Kazakhstan
Tan LLP
Sunflower processing
ca. 100
-
East Kazakhstan
Mai JSC
Sunflower processing
90
-
East Kazakhstan
84
207
South Kazakhstan
Kainar Mai JSC
Cotton seed processing
Sarybulak LLP
Soybean processing
75
-
Almaty
Baumanskoe 07 LTD
Grain processing
50
-
Akmola region
Investment hypothesis
 Kazakhstan is one of world’s main exporters of wheat and flour
 Vast farmland and access to raw agricultural products offer investors an opportunity for supplying and
providing the market with processed high-margin food products
 As the agriculture in Kazakhstan is highly extensive, with fertilizer consumption growth, yields per hectare
should increase, offering investors an opportunity for further development
Contact
 All producers in this market are relatively small, can be consolidated and scale advantages can be
achieved
Contact information
Veronika Yun
Manager at the Department on Pre-investment affairs, KAZNEX INVEST, JSC
Mob: +7 771 805 4083
E-mail: [email protected]
CONFIDENTIAL
9
Agenda
1. Executive summary and basic information
2. Grain Production
3. Acquisition and greenfield investment opportunities
CONFIDENTIAL
1
0
Project information
Establishing Wheat Starch and Gluten Plant
Project cost: USD 50-60 mln.
Location: Almaty region, Yeskeldi District, Baktibay village
Implementation period: 2016-2017
Project scope: Construction of a modern wheat starch
and gluten plant in Kazakhstan’s Kostanai Region. Being
located in the center of wheat harvesting region, the
project gains advantage from wheat harvesting farm
proximity.
Finished product: Gluten, wheat starch, cattle fodder.
Production capacity: Gluten – 4 500 t/year, wheat starch
– 23 600 t/year, cattle fodder – 23 000 t/year
Potential markets: USA, Mexico, Holland, Kazakhstan and
CIS countries
Provision of land and premises: The company owns land
spot for the construction of the plant. Permissions had
been granted on infrastructure. The project development
team is completed.
Required financing: USD 45,5 mln.
Required investor type:
☑ Equity
☑ Debt
Project initiator
Company
name
AL-BM LLP
Year of
establishment
2002
Presence on
the market:
2002
Current
operation:
Agricultural
complex
on
production of
wheat
starch
and
gluten
located
in
Kostanai
Region,
Zarechnyi
village
☐ Technology transfer
☐ Other
Project profitability for the period of 5 years (in th. USD)
Project profitability
In USD thousands
Sales
COGS
EBITDA
Interest, depreciation and other
Taxes
Net profit
Year 1
Year 2
Year 3
Year 4
Year 5
Total
25 045
14 927
10 118
26 297
15 673
10 624
27 612
16 457
11 156
28 993
17 280
11 713
30 443
18 144
12 299
138 390
82 481
55 910
5 120
1 000
3 999
4 096
1 306
5 223
3 584
1 514
6 057
3 072
1 728
6 913
2 560
1 948
7 791
18 432
7 496
29 983
Project profitability
Project capex
45,5 mln USD
Project IRR
25%
Contact
Contact information
Project initiator’s contacts:
AL-BM LLP
Kazakhstan, Kostanay City, 71 Mailin street
Veronika Yun
KAZNEX INVEST, JSC
+7 7172 91 90 40 (int. 1124)
E-mail: [email protected]
CONFIDENTIAL
1
1
Project information
Establishment of the factory on deep processing of wheat
Project cost: USD 30-40 mln.
Location: Karaganda region, Karaganda city
Implementation period: 2016
Project scope: Establishment of the modern factory on
deep processing of wheat with consequent production of
glucose syrup on a basis of existing factory
Finished product: glucose syrup, gluten, feed supplement
Production capacity: 4 500 tons of gluten, 23 700 tons of
glucose syrup, 19 000 tons of feed supplement per annum
Potential markets: local market of Kazakhstan, Russia,
China and countries of Eurasian union
Provision of land and premises: Availability of land and
premises required for the project as well as
documentation for the required infrastructure of electricity
and water. Availability of contract agreements with
technology and equipment suppliers.
Required financing: USD 35,4 mln.
Required investor type:
☑ Equity
☑ Debt
Project initiator
Company
name
Nomad LLP
Year of
establishment
2000
Presence on
the market:
2000
Current
operation:
Deep
processing of
wheat with
consequent
production of
glucose
syrup
☑ Technology transfer
☐ Other
Project profitability
Project profitability
Project profitability
Project capex
USD 35,4 mln.
Project IRR
26%
Project NPV
USD 36,8 mln.
Payback Period
4 years
As for confidentiality terms, additional information on financial model and project
documentation will be provided upon personal request
Contact
Contact information
Veronika Yun
Manager at Sectorial department on agriculture
and food processing, KAZNEX INVEST, JSC
Mob: +7 771 805 4083
E-mail: [email protected]
Project initiator’s contacts:
Nomad LLP
CONFIDENTIAL
1
2
Project information
Construction of a Plant for Industrial Grain Processing
Project cost: USD 40-50 mln.
Location: Kostanai region, Zarechnoe village
Implementation period: 2016-2024 (7-8 years)
Project scope: Construction of a plant that will deal with
the deep processing of grain into starch, gluten and
condensed fodder for domestic animals
Finished product: Grain starch, grain gluten and
condensed forms of fodder
Production capacity: 4500 tones of gluten at 8%
concentration; 23600 tones of starch type A with humidity
level at 10%; 23000 tones of dry fodder products with
humidity level at 12,5%
Potential markets: Local markets; Baltic states;
Netherlands and Iran
Provision of land and premises: A land of 2 hectares has
been provided by the local government for the purposes
of construction of the plant
Required financing: USD 45,4 mln.
Required investor type:
☑ Equity
☑ Debt
Project initiator
Company
name
“Al Rudan” LLC
Year of
establishment
2001
Presence on
the market:
2001
Developed
brands:
“Rudan”
Current
operation:
Business plan
is
being
developed.
Economic
feasibility study
is ready
☐ Technology transfer
☐ Other
Project profitability
Project profitability
Project profitability
Project capex
20,4 mln Project
USD
Project IRR
25 %
Payback Period
profitability
7 years
As for confidentiality terms, additional information on financial model
and project documentation will be provided upon personal request
As for confidentiality terms, additional information on financial model and
project documentation will be provided upon personal request
Contact
Contact information
Veronika Yun
Manager at Sectorial department on agriculture
and food processing, KAZNEX INVEST, JSC
Mob: +7 771 805 4083
E-mail: [email protected]
Project initiator’s contacts:
“Al Rudan” LLC
CONFIDENTIAL
1
3