Daiwa keeps Olam (O32.SG) at Buy, raises its target price to $3.72 from $3.52; “we like the company’s business model, as we believe the company will perform well regardless of most exogenous factors, including flooding in Queensland and civil unrest in Ivory Coast (the world’s largest producer of cocoa).” 

It adds, “the flooding in Queensland should have a negative impact on Olam in that there will be less cotton volume available for procurement than if the floods had not happened. Notwithstanding this, we forecast Olam to more than triple its Queensland cotton-procurement volume in FY11.”

 

The house notes, Olam has increased its share of the Australia cotton market over the past two years due to the bankruptcy of two leading competitors last year, to about 35%. 

 

Shares are off 2.7% at $3.20.