Olam

Olam: Jefferies initiates at Buy, $3.05 target. Expects EPS growth to accelerate to 30%-plus, ROE to pick up from FY13 onwards "as the benefits of new investments start paying off in the form of higher margins and asset utilization." Says Olam's long-term strategic plan to expand across the value chain is key to its future and expects Olam's consistent, non-cyclical volume growth (22% CAGR since FY05) to continue; though leverage is high, "it is not a concern in our view given Olam's business and its hedging strategy." Says the stock, which is trading at 13X 12-month forward P/E and 2.1X trailing P/B, the lower end of its historical valuation range, "is pricing-in most of the risks/concerns, and provides a good entry point." Target is based on 14X FY13 EPS of S$0.0218, the lower end of its historical valuation range and in-line with peers such as Noble and Wilmar .
Shares down 1.3% at $2.34.