Olam

Olam: 4Q11 results in-line with expectations, albeit at the higher end of estimates.
Rev at $4.6b, +46.1% yoy and -2.1% qoq, while net profit at $127.4m, +38% yoy and flat qoq. Sales vol at 2.3m mt, +24.3% yoy and +2% qoq. Result brings FY11 Rev to $15.7b, +50.5% yoy and net profit to $444.6m, +23.6% yoy.

Strong rev led by increase in sales vol during FY2011 and enhanced margin per ton, with NC margins increasing 12.5% from $129 to $145 per ton. Edible Nuts, Spices & Beans, Confectionery & Beverage Ingredients, Food Staples & Packaged Foods and Industrial Raw Materials segments all contributing strongly to growth in Sales Vol during the period.

Net Contribution margins for 4Q11 declined slightly to 9% vs 10.6% yoy but ahead vs 6.5% qoq. Overall FY11 Net Contribution margins declined slightly to 7.8% vs 8.6% yoy. Going forward, grp note that Co. has been performing well ahead of its original five year plan, formed in 2009 and now expects to post Net Profit of US$1b by FY16 and aims to achieve this growth with no further equity dilution.

A first and final div of 5c has been recommended (2.1% div yield). At current price, valuations are compelling with grp trading at 13.3x P/E vs historical average of 23.3x. Kim Eng maintains Buy with $2.79 TP and DMG maintains Buy with $2.98 TP.