Olam - Olam target cut to $1.94 by CLSA; Keeps Sell

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: CLSA

CLSA cuts Olam (O32.SG) target price to S$1.94 from $2.17, based on 15x 2011 P/E, keeps Sell call, says Dow Jones.



CLSA cites high execution risks, deteriorating returns, weak balance sheet as investment risks.



Research house says commodities trader’s Queensland cotton, almond orchard segments recovering due to good rainfall in Australia, but operating risks remain high as any bad rainfall can significantly hurt profitability of cotton business.



Expects Olam to undertake more equity fund-raising exercises as it continues to acquire assets.



“This will dilute EPS growth.” Shares off 0.7% at $2.70.