TIMOTHY KHOO | JACK CHONG FU | LEONG WEILING | CHARISSA CHANG | MRIGANK KANOI

Company Information

Agricultural products and agribusiness company

Corn processing Oilseed crushing and refining (Biodiesel) Transportation dry bulk carriers Cocoa processing
Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Agricultural services

Other business segments

Effect of Commodity Prices on ADM

Commodity Futures Indexes

Archer Daniels Midland Co.

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Surge in Agricultural Commodity Prices

Cotton futures surged to a record on mounting supply concerns after flooding in Pakistan and Australia slashed crops. Cotton futures for March delivery rose 2.3 percent, to $1.7622 a pound. Corn and soybeans rose to 30-month highs in Chicago as a strike by port workers in Argentina disrupted crop shipments. Rice climbed to the highest price in 13 months.
Rise in Commodity Prices Greater Demand for Agricultural Stocks Market for Agricultural Stocks dominated by buyers

BUY Archer Daniels Midland Co.

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Agricultural Sector Performance

S&P GSCI Index (January) 5.89%

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Future industry prospects

Huge winter storm threatens U.S. wheat, cattle Impact on agricultural operations Robust global demand Supply from Russia and Australia decreased due to drought and flooding Demand shifts to US Rising grain prices

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

TECHNICAL ANALYSIS

Patterns: Inverted Head & Shoulders

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Patterns: Support & Resistance

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Pattern: Flag

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Patterns: Three White Soldiers

ADM Acquires Alimenta (USA), Inc.: ADM now controls 100 percent of Golden Peanut Company. With well-positioned assets, strong customer relationships and an experienced management team, we believe Golden Peanut Company will realize profitable growth in the future. In addition to generating solid financial returns, this acquisition will also create synergies with current ADM operations.

FLAG

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Accumulation/Distribution
Buying pressure ADM Reports Poor Operating Results for
Q1:

Selling pressure

ADM reported net earnings of $ 345 million and segment operating profit of $ 765 million for the quarter ended Sept. 30, down $ 151 million and $ 9 million, respectively, from the same period one year earlier. ADM earned $ 0.54 diluted EPS for the first quarter, versus last year's $ 0.77 first quarter. Effects of changing commodity prices on LIFO inventory valuations resulted in a charge of $123 million compared to a credit of $76 million for the prior year quarter. Corporate unallocated interest expense increased $55 million

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Relative Strength Index

ADM Profit Tops Estimates on Higher U.S. Grain Exports

Resistance line

Higher Low Overbought Lower Low Sell Signal ?

Pullback

Support Break

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Bollinger Bands

Resistance line

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Bollinger Bands
Gap

Base SMA as support line

MACD crosses Signal line

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Ichimoku Kinko Hyo

Prices trading above the base line

Conversion price moves above base line

Prices trading above cloud

Green cloud created

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

FUNDAMENTAL ANALYSIS

SWOT Analysis
Strengths Strong Research and Development Activity Diversity of end-use customer base Strategic location of manufacturing facilities Broad spectrum of supporting services Efficient resource management Opportunities Strategic acquisitions Increase in foodservice sales Growing veterinary market Focus on China and India New expansion plans Rising demand for biofuels Weaknesses Poor financial performance Decline in performance of key business segments Litigation and legal proceedings

Threats Increasing biofuel players in Europe Regulatory obligations Energy price fluctuations Competitive landscape

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Attractive Valuations

Valuation ratios
Company Industry 21.55 Sector 18.04 S&P 500 19.68 11.85

P/E Excluding Extraordinary (TTM)

P/E High Excluding Extraordinary - Last 5 Yrs

P/E Low Excluding Extraordinary - Last 5 Yrs Beta Price/Revenue (TTM) Price/Book (MRQ) Price to Tangible Book (MRQ) Price to Cash Flow Per Share (TTM) Price to Free Cash Flow Per Share (TTM)

20.65
8.62 0.21 0.33 1.36 1.41 7.66 -

30.50
13.50 0.55 1.70 4.07 7.67 15.25 39.77

31.70
13.50 0.66 2.38 6.62 7.14 13.96 35.43

32.79
10.71 1.00 2.57 3.67 5.21 14.22 26.26

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Robust Growth Rates

Growth rates
Company Industry 11.20% 10.00% 6.97% -4.50% 13.03% 7.70% Sector 9.73% 20.06% 6.14% 6.69% 27.67% 7.73% S&P 500 15.58% 17.69% 8.97% 19.49% 32.55% 9.86%

Revenue (MRQ) vs Qtr 1 Yr Ago Revenue (TTM) vs TTM 1 Yr Ago Revenue 5 Yr Growth EPS (MRQ) vs Qtr 1 Yr Ago EPS (TTM) vs TTM 1 Yr Ago EPS 5 Yr Growth

12.59% 0.94% 11.41% -30.12% 56.67% 13.49%

Capital Spending 5 Yr Growth

20.83%

7.52%

3.06%

-2.04%

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Poor Profitability

Profitability ratios
Company Industry 33.20% 31.81% 14.25% 13.52% 11.94% Sector 44.52% 44.52% 20.28% 19.53% 17.97% S&P 500 45.21% 44.91% 24.43% 22.84% 20.63% 5.79% 6.39% 4.95% 5.35% 3.43%

Gross Margin (TTM) Gross Margin - 5 Yr Avg EBITD Margin (TTM) EBITD Margin - 5 Yr Avg Operating Margin (TTM)

Operating Margin - 5 Yr Avg

Pretax Margin (TTM) Pretax Margin - 5 Yr Avg Net Profit Margin (TTM) Net Profit Margin - 5 Yr Avg Effective Tax Rate (TTM) Effective Tax rate - 5 Yr Avg

4.00%
3.67% 4.51% 2.78% 3.15% 24.29% 30.12%

11.15%
10.29% 9.62% 7.06% 6.55% 30.47% 32.51%

17.19%
16.99% 17.19% 13.74% 12.87% 27.02% 28.54%

18.28%
17.95% 17.10% 13.65% 12.10% 28.45% 29.92%

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Low Debt High Liquidity

Financial ratios
Company Industry 0.78 1.53 0.94 1.14 12.42 Sector 0.77 1.40 0.98 1.25 16.43 S&P 500 1.24 1.79 0.64 0.73 13.80

Quick Ratio (MRQ) Current Ratio (MRQ) LT Debt/Equity (MRQ) Total Debt/Equity (MRQ) Interest Coverage (TTM)

1.07 1.81 0.44 0.58 -

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Mixed Bags Returns

Management Ratios
Company Industry 7.05% Sector 11.53% S&P 500 8.54%

Return on Assets (TTM)

5.20%

Return on Assets - 5 Yr Avg

Return on Investment (TTM) Return on Investment - 5 Yr Avg Return on Equity (TTM) Return on Equity - 5 Yr Avg

6.33%
7.50% 9.28% 12.03% 14.85%

7.12%
4.72% 5.31% 21.45% 21.78%

11.74%
8.43% 9.81% 29.23% 31.40%

8.40%
7.90% 8.27% 19.72% 20.06%

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Valuations at a glance

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Technical Analysis Buy

Our Recommendations
Fundamental Analysis Buy

Strong upward trend expected to continue Bullish momentum with no noticeable divergences No expected flags to manifest

Stock undervalued due to poor performance previous quarter (post dated Jan 2011) Future revenues expected to rise Low debt levels Above average levels of liquidity

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Support Slides: Accumulation/Distribution

Money Flow Multiplier = [(Close - Low) - (High - Close)] /(High - Low) Money Flow Volume = Money Flow Multiplier x Volume for the Period ADL = Previous ADL + Current Period's Money Flow Volume Increasing ADM signals buying pressure Decreasing ADM signals selling pressure

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Support Slides: Relative Strength Index

RSI = 100 - 100/ (1+ RSI) RS = Average Gain / Average Loss

RSI>70%, Overbought => Bearish pullback RSI<20%, Oversold => Bullish Pullback

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Support Slides: Bollinger Bands

Formulae Middle Band = 20-day simple moving average (SMA) Upper Band = 20-day SMA + (20-day standard deviation of price x 2) Lower Band = 20-day SMA - (20-day standard deviation of price x 2) Used in conjunction with other tools and not meant to be a stand alone tool

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Support Slides: MACD

Formulae MACD: (12-day EMA - 26-day EMA) Signal Line: 9-day EMA of MACD MACD crosses above signal line: Bullish signal MACD crosses below signal line: Bearish signal

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Support Slides: Ichimoku Kinko Hyo

4 indicators Conversion line Base line Cloud Lagging line

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.

Support Slides: ADM Records lower profits

The Farm Products sector is closely tied to the overall health of the agriculture market. Generally speaking, the market has been strong with this year's U.S. farm exports reaching a record $126.5 billion up from $108.7 billion last year. Wheat, soy bean, and corn futures are all up 15% so far this year. U.S. wheat prices were motivated by a Russian drought while soy bean prices are up because supply has been pressured by an increased demand from China. Corn prices have reached $6 per bushel on the back of increased demand from ethanol producers as the EPA increased ethanol ratio standards for new vehicles from 10% to 15%.

Higher corn prices have actually hurt companies within the Farm Products sector that produce ethanol. The ethanol segment has further cause for concern as the U.S. government is considering a non-renewal of the $0.45 per gallon tax credit currently aimed at subsidizing the product. The downturn for the segment could be further exacerbated if Congress chooses to repeal the tariffs on Brazilian sugar-based ethanol which is much cheaper to produce. The government wants to repeal the credit because it cost $6 billion last year. Looking at earnings posted by some of the players in this industry, Archer-Daniels-Midland Co. saw lower profits this quarter hurt by inventory charges and inferior earnings in its agricultural business segment. Revenue was up to $16.8 billion.

Sources: One Source, Thomson One Banker, Credit Suisse, Chartnexus and Jefferies & Co.