Tuesday, March 20, 2012

Olam International - Bouncing upstream

Stock Name: Olam
Company Name: OLAM INTERNATIONAL LIMITED
Research House: CIMBPrice Call: BUYTarget Price: 3.17




Target S$3.17

Olam is investing in greenfield rubber plantations in Gabon. This investment is not earnings accretive in the near term, but should boost upstream margins to enhance longer-term profitability. This long-dated investment should reach steady state in FY25. We see room for operational synergies with its supply chain businesses. Our Outperform rating, EPS estimates and 15x CY13 P/E target are intact. Catalysts are expected from earnings resilience vs. its peers.


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