Olam - Olam started at Neutral by Goldman; $3.20 target

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: Golman Sachs

Goldman Sachs starts Olam (O32.SG) at Neutral with a S$3.20 target price. Says the commodity trader’s ROE peaked at 30% in FY08 and has since de-rated to 17% in FY09-10.

Notes while the company is selectively investing in upstream and midstream businesses to boost margins and restore ROE, this may take time to mature, with upsteam earnings subject to agriculture commodity prices.

“Olam tends to sell on a forward basis for a long duration which we think may reduce the correlation with spot prices in the short term.”

Shares –0.6% at $3.19.