Wednesday, August 31, 2011

DMG cuts Olam price target

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: DMGPrice Call: BUYTarget Price: 2.98



DMG & Partners cut its share-price target for Singapore commodities firm Olam International (OLAM.SI) to $2.98 from $3.70, but kept its “buy” rating.

Olam’s fourth-quarter net profit, excluding exceptional items, was above DMG’s expectations.

The brokerage also said it expects Olam’s earnings to be resilient going forward as it derives a high%age of profits from food-related segments.

“We believe food-related segments would be more resilient moving ahead, but the weakness in industrial raw materials such as wood and cotton would partly offset the positives,” DMG said in a report.

The brokerage cut its earnings estimates for Olam to reflect its expectations the company will see negative free cash flows till fiscal 2013.

Olam shares have lost 25.6% since the start of the year. They closed at $2.33 on Monday.

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