Olam: UOBKH initiates Buy with $3.80 target price, implying 18.8x forward P/E. Tips investors seeking to hedge against falling USD or inflation can consider Olam as company will benefit from agri-commodity inflation. As demand for agri-commodities is relatively inelastic, most price increases can be passed on to their customers with relative ease, resulting in higher profits, assuming no change in margins. Forecasts FY12-FY13 earnings growth of 18-30%, boosted by profits generated from acqns.
Confident ongoing merger talks with Louis Dreyfus Commodities, if successful, will lead to mutual benefits. Stock is holding above 20-day MA at $3.11.
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