Noble Group (N21.SG) is +2.5% at $2.09 on the prospect of a boost to earnings from 2 sugar cane mills in Brazil it's paying US$950 million ($1.25 billion) to acquire.

Both mills generated a combined net profit of $64.9 million for the FY ended April.

DMG, which has a Buy call with a $2.58 target, says while the consideration is expensive as it's priced at 25x P/E, the move is positive, with rising sugar prices suggesting stronger earnings prospects.

CIMB, which has an Outperform call and a $2.60 target, says the proximity of the 2 mills to Noble’s existing sugar mills offers economies of scale and should allow the company to raise the utilisation of its newly completed export terminal in Santos.

Noble will fund the acquisition using internal resources. Resistance is expected at last week’s $2.14 high.