SINGAPORE (Nov 16): DBS is maintaining its “hold” call on Olam with a lower target price of $2.01 as it believes investors will remain on the sidelines until the company delivers on its positive free cash flow targets by 2016 and successfully integrates its recent US$1.2 billion ($1.7 billion) acquisition of ADM Cocoa.

In a Monday report, analyst Mervin Song says given the negative sentiment surrounding other commodity trading companies such as Glencore and Noble Group, he believes investors may continue to shun the sector and/or Olam in the near term.

But while Song is cautious near term, there is significant upside to Olam’s earnings over the medium term if Olam successfully executes on its plans, he says.

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