Kim Eng lowers target on Olam to $3.38; keeps buy

Olam announced earlier this month that it was raising $740 million through a placement of new shares with an eye on future acquisitions.

The stock had fallen to as low as $2.52 on June 17. At midday on Monday, Olam shares were down 0.7% at $2.71 on a volume of 4.2 million shares.

Kim Eng said it views the equity-raising exercise negatively because of the high discount offered, which could be dilutive to minority shareholders.

However, the brokerage said the share price correction was overdone and it sees a good entry opportunity. Olam management is likely to have identified attractive investment targets and is building up a huge warchest, Kim Eng said.