Nomura starts Mewah International (MV4.SG) at Buy with a S$1.30 target price. Says the palm oil refiner’s large scale and risk management capability help it achieve stable margins.

Cites company’s strong distribution network in Africa’s downstream business as one of its key strengths, given that more than 40% of consumer pack earnings have come from the continent over the past 3 years.

Forecasts 17% earnings CAGR over the FY10-FY13 period, driven by volume and margin growth. House says Mewah should be able to take on as much as US$500 million ($658 million) in loans to fund expansion.

Adds, valuations are attractive as the stock trades at 10.2X FY11 P/E vs Wilmar’s (F34.SG) 16.4x, Ruchi Soya’s (500368.BY) 13.9x.

Shares +2.7% at S$0.995.