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When they cannot convince you... they confuse you...$file/27June2013-InvestorDay2013_SVI.pdf?openelement$file/27June2013-InvestorDay2013_EdibleNuts.pdf?openelement
Olam’s Q4 net profit plunges 48%

SINGAPORE - Singapore commodities firm Olam International reported a 48 per cent fall in fourth-quarter net profit, citing higher tax charges and challenging market conditions.

Olam posted net profit of S$56.8 million for the three months ended June, down from S$109.5 million a year earlier.

The company’s earnings in the fourth quarter were hit by increased tax charges of S$50.6 million, compared to a net tax credit of S$8.2 million a year earlier.

“While the long term trends in the agri-sector remain attractive, the nearer term macroeconomic uncertainty and increased volatility could impact the sector,” Olam said.

The company had dropped its target to achieve a US$1 billion (S$1.27 billion) net profit by 2016 and has shifted to a slower growth path after an attack by short-seller Muddy Waters last year sent its stock and bond prices tumbling. REUTERS
I wonder if Muddy Waters shortsold on OLAM and just waiting for OLAM to freefall so that they can profit.

To provide a contrarian view, Orbis Holdings Limited (OHL) has increased its OLAM shareholdings from 7.88% to 8.02%. recently.
(Refer to

Apparently, there are investors who have done their OLAM due dilligence to go against the herd (similar to the company who decided to buy up China Minzhong).

Based on Olam's latest results, the NAV is $1.51. Trading below its NAV and PE is 10x based on $1.42 (last done price) for an integrated commodities supplier from upstream to downstream. As a comparison, is Wilmar trading below its NAV? No.

I find this a value preposition. Of course, the lower the price the more attractive. As I am not familiar with OLAM management, I would be delighted if fellow investors can share with me more about OLAM management.

Based on the last quarter's operational cashflow and extrapolation, it generates sufficient cashflow to pay for its borrowing interest (assumed at 7%).

My advice to OLAM is to refinance its overdraft and its short term debts into secured loans to match its projects to reduce its debt interest obligations.
Do take note that Olam's Q4 results was helped by massive improvement in working capital changes. In addition, My personal preference is to look at OCF before working capital changes. Also I would prefer to observe a full FY as looking at just one quarter is lumpy.

Taking full FY, Olam's OCF before reinvestment in working capital was $1073M. Capex was $1050M and net interest expense $450M. Olam had a net cash outflow for the latest FY
Olam management will have to tone down on its CAPEX especially M&As and look into efficiently increasing its existing operational CF to boost the investors confidence. Going forward, I also recommend that Olam management use its excess cash to pay down its debt to reduce its gearing.

Net interest expense for the new FY could hover around $600m. Dividend payment is about $100m. The excess operating cash flow can be used to pay down its debt.

I like the four priority areas of Olam management identified in the review in the latest quarterly report which will be implemented in the next quarter are:
1. Accelerate free cash flow generation
2. Reduce gearing
3. Reduce complexity
4. Promote better understanding of Olam’s business

I will review and look at its next quarter report to ensure that the management walk its talk.
Muddy Waters: Game over for Olam if Temasek pulls out
The big question is if Temasek pull out.

Frankly speaking, after I read your post (and attached news), I brought some Olam and officially vested in Olam.

The articles highlighted the danger of Temasek pull out and then Olam stock price will drop.... dangerous right?

But, my instinct told me otherwise.

Lets give Olam a few months to prove itself.

not vested but I kinda agree with what Carlson Block said.

my personal view is that now with Olam trying to concentrate on positive cashflow, it would be hard for them to grow and earnings might even even with Temasek in the picture, valuation will drop.....

If I really have to buy a commodity player, I will look first at Wilmar....rather than Olam........I am not saying Wilmar is a good buy now but Wilmar will be the 1st I will look into if I am force to buy a commoditiy player.....

Happy investing ^^

(01-11-2013, 05:08 PM)chialc88 Wrote: [ -> ]The articles highlighted the danger of Temasek pull out and then Olam stock price will drop.... dangerous right?

This counter has hit 52-week high. What's the reason?