Olam: Kim Eng maintains Buy Call with $3.88 TP, pegged to 25x blended FY11F/12F, following grp’s recent JV plans to set up a US$200m sugar refinery in Nigeria. Note that grp offers a unique exposure to the Africa, which has vast untapped potential in terms of agricultural commodities….
Highlight that since 2007, grp has invested more than US$1.4b, mainly in M&As to transform the group into an integrated agribusiness, resulting in a portfolio that has achieved 25% ROE & 14% ROIC for FY10. Going forward, tips Africa to remain an attractive market for Olam, given grp’s experience and presence there.
Olam’s latest investment is in an 80-20 JV with the Lababidi Group (LG), one of Africa’s major business groups, to set up a port-based sugar refinery, expected to serve the Nigerian/ African market, refining 450,000 MT of raw sugar and returning an estimated EBITDA of at least US$68m from FY14.
HSBC meanwhile has a Neutral Call on Olam with $3.63 TP.
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