Olam

Olam: CEO highlights that despite the short-term volatility, the long-term outlook for most agricultural commodities is still bright, on back of growing demand for food and shrinking supply. Add that cyclically we will see probably a correction, but over the medium and long term see commodity prices remaining firm and see growing imbalances between supply and demand for food.

Reiterate that Co is unlikely to raise any equities to support medium-term growth and aims to achieve a target US$1b profit by FY16. Co is bullish on coffee, but sees a shaky outlook for cocoa due to a global supply surplus in the 2010/11 crop yr.

We note that valuations are compelling, with grp trading at 14x Forward P/E vs historical average of 23x, while majority of street has Buy Call and $2.94 Mean TP on counter.