Olam

Olam: Olam's deal to sell a 25.5% stake in its instant-noodle business in Nigeria to Japan's third largest instant-noodle maker Sanyo Foods for US$20m is value affirmation from a third party, Citigroup says. Attacks on the firm by short-sellers in November last year hinged upon excessive leverage and acquisition of 'poor quality' assets. House believe that value affirmation from third-party investors/partners, especially those with industry knowledge would offer the best guide to the value of Olam's acquisitions and assets. Citigroup notes Olam has grown its share of Nigeria's instant-noodle market to the No.4 position from No.8 when it was acquired. The deal marks Olam's recent third transaction as part of its strategic view to undertake JVs, asset sale-leasebacks and reduced capex; successful execution of key thrust from its strategic review will help rerate the stock. House rates the stock at Buy with $2.60 target.