Company Name: OLAM INTERNATIONAL LIMITED
Research House: Daiwa
Daiwa keeps Olam International (O32.SG) at Buy with a $3.52 target price. Expects the situation in Ivory Coast -- where there is civil unrest after a disputed election -- will have a neutral impact on Olam.
“We expect Olam to generate more cocoa volume sales, but a thinner unit contribution” in 2Q-3Q FY11. Says Olam would theoretically face a price risk from the change in cocoa prices from the time of the cocoa harvest (typically October-December in Ivory Coast) and the time it can reset its hedge via deliverable futures.
However, says “the conditions in Ivory Coast are volatile now, but at this point, we are not changing our FY11 net-profit forecast, as we think the impact of higher cocoa volumes will offset the lower cocoa unit contribution.”
Adds “we believe in Olam’s business model, and forecast an adjusted net-profit CAGR of at least 25% for FY09-15.” Shares are up 1.6% at $3.09.
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