Olam

Olam: hosted an Investor Day for its edible nuts, spices & vegetable ingredients businesses, as part of its strategy to promote better understanding of the company. While the US$34 bn edible nuts industry is expected to grow by 5- 7% pa, Olam believes it could potentially deliver stronger earnings growth through: 1) market share gains in cashew and hazelnuts 2) expansion into new nut categories like pecans and walnuts, and 3) contribution from upstream assets. In particular, some of its previous plantings in the US and Australia almond orchards are expected to reach full maturity in the coming years. Within spices and vegetable ingredients, the focus was on its tomato processing assets in the US. Mgt noted positive signs of a turnaround, with an increase in processing volume expected for the 2013 crop. While Olam has taken initiatives to raise industrial exports, global demand supply conditions have also improved. Credit Suisse is confident that Olam’s past invmts can drive decent earnings growth in FY14. But keeps at Neutral with TP $1.65. Morgan Stanley maintains Equal weight with TP $1.75. HSBC lowers TP to $2.10 from $2.35, under Olam’s new strategy that may see project cancellations, but reiterates Overweight, as the group should deliver robust, above-peer medium term growth while near term bottlenecks are being resolved.