Noble / Wilmar / Olam

Noble / Wilmar / Olam: DBSV bullish on Noble, cautious on Wilmar and Olam. (View is very similar to Maybank Kim Eng recent commodities traders report.) House note that vol and margins could take a hit given volatile demand and supply in the current environment. Add that overcapacity can become expensive to maintain, and when vols pick up, likely to see higher borrowing costs, which may not be easy to be passed on to clients. Margin enhancements through hedging and taking positions can also be less opportunistic in a more volatile environment. House note of the 3, Noble has brightest prospects this yr, following its resilient 1Q12 results, while cash proceeds from its sales of Gloucester Coal will strengthen Co’s war chest, which held some US$9.9b unused funds. Note also that vols in its agri business are expected to perform better in the qtrs ahead as Brazil enters its sugar harvesting season. For Wilmar, recommend a Hold, noting that the grp faces intensifying completion in the downstream processing in China, although highlight that revs for Wilmar could improve in subsequent qtrs, with sugar rev expected to rise going forward, while growth at its Indo plantation business has been rising. For Olam, outlook appears murky, as farmers continue delaying cotton sales for the rest of the yr. Tip a better FY13 for Olam though, as there is unlikely to be any storage facilities left, which will force farmers to sell their cotton.