Olam (CIMB)

Olam: CIMB downgrades to Trading Sell from Neutral and cuts TP to $1.59 from $2.08, pegged to 2013 NAV vs 11X 2014 P/E previously. Expects selling pressure once trading resumes as fear overrides the group's long-term growth plans, regardless of the verity of reported allegations from Muddy Waters. Notes, Muddy Waters' concerns are not new. High gearing is a feature of supply-chain managers. The house strips out hedged inventories to derive adjusted net gearing estimates , as well as biological assets in its core net profit forecasts. Tips Olam's $1.35 book value, as of end-Sep, may offer support, on top of mgt buybacks.