Company Name: OLAM INTERNATIONAL LIMITED
Research House: DMG
DMG & Partners Research has upgraded commodities firm Olam International (OLAM.SI) to buy from neutral, and raised its target price to $3.70 from $3.24.
Olam reported on Monday a better-than-expected 8.5% fall in second quarter net profit to $145.4 million, as higher commodity prices and margins helped offset a decrease in one-time gains.
But merger talks between the firm and top flight commodity group Louis Dreyfus have failed, reviving speculation about the strategy of France-based Dreyfus.
DMG said it has raised its net profit forecasts for Olam’s 2011 and 2012 financial years by 7% and 2%, respectively, on top of increasing the long-term growth rate for the firm to 5.1% from 4.9%.
The brokerage said Olam’s strong core earnings for the first half of 2011, which typically account for around 35% of the full year figure, were helped by volume expansion for all four business segments.
It added that Olam has provided more value-added services to its coffee and cocoa customers and the firm is also preferred by its cotton clients as a reliable supplier.
While the news that Olam’s talks with Louis Dreyfus have ceased may be negative for the Singapore-listed firm’s share price, DMG said this will be more than offset by Olam’s strong results and positive outlook.
At 9:33 a.m., Olam shares were down 0.3% at $3.03 on a volume of 3 million shares.
No comments:
Post a Comment