Olam

Olam: JP Morgan downgrades to Neutral with $2.80 TP. House note of slowing earnings growth on back of:

i) weaker than expected 2Q12 results (Feb. 14th),
(ii) muted outlook for industrials segment (cotton, timber) and
(iii) limited sizeable “new” assets to provide earnings lift in near term, estimate Olam is likely to experience “sub-20% earnings growth over the next 2 years.

Overall, house cutting FY12E/13E earnings estimates by 13% /17% and downgrade recommendation to “Neutral” with a revised DCF based Jun-2013 PT of $2.80. At current levels, prefer Noble Group (within the sector) given, (i)kely positive surprise on 4Q11 earnings (in our view) and (ii) its cheaper valuations (on 2012E, NOBL trades at 10x P/E, 1.5x P/B)