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No one wack olam... Must be TMS talisman... :)
Badly hurt by higher tax charges.
According to OSK, Olam 4Q profit fell by 48%. Hit by the jump in tax charges, Singapore commodities firm Olam?s 4QFY13 profits fell by 48% y-oy to SGD56.8m.
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Olam may hit 1.20
Here is the truth: None of the analyst covering China Minzhong had a sell rating before the stock price halved in one day.
Equity analysts don't see the picture of bigger forces at work, the global fund movements that are driving Asian and other emerging currencies down, global interest rates up etc.
Total outstanding debt at end Jun / mkt cap today = 2.60. As a reference point, Noble Group is 1.60 and Wilmar is 1.58.
Total debt is going even higher with the latest loan announcements. No need to take cash holdings into account and look at net debt because the cash cannot be used without consequences. Case in point: Apple has c.US$147 bn cash and still had to issue US$17 bn bonds to pay dividend.
Some progress in sight
Target S$1.58 (Long Term: Neutral)
Core profits missed expectations despite strong growth in revenue yoy due primarily to significantly higher tax. Nevertheless, we see Olam's strategy review earlier this year bearing fruit as volumes begin to recover across most segments. FY13 core net profit was below consensus and our estimates, coming in at 78% and 76% respectively, due mainly to higher taxes, partly one-off. We raise our FY14-15 EPS forecasts and raise our target price (based on 1x CY13 NAV) to S$1.58, upgrading to Neutral, from Underperform, on solid revenue growth.
FY13 core net profit was below consensus and our estimates, coming in at 78% and 76% respectively, due mainly to higher taxes, partly one-off. We raise our FY14-15 EPS forecasts and raise our target price (based on 1x CY13 NAV) to S$1.58, upgrading to Neutral, from Underperform, on solid revenue growth.
Steady recovery
Most segments saw an improvement in volumes and revenues for FY13. Food staples & packaged foods continued its strong run, with volume up 84% yoy and net contribution growth of 50.8% as the grains business benefited from capacity expansion in Nigeria. The industrial raw materials segment registered robust volume growth of 17.9% yoy as net contribution grew 47.3%. Growth was driven primarily by volume expansion in cotton.
But with caveats
Edible nuts, spices & beans swung back into growth for 4Q13, but full-year growth left much to be desired net contribution grew by 7.1% yoy compared to double-digit growth previously. The tomato business continued to drag 4Q13 margins. Confectionary & beverage ingredients' volume was stagnant, with net contribution falling 11.9% yoy. Coffee rust disease continued to depress coffee sales volumes. Core net profits were below expectations because of higher EBIT contribution from higher tax jurisdictions and one-off tax charges.
Glimmer of hope
Olam's strategy review has begun to see results, and adjusted net gearing is a manageable 0.55x. Free cashflow, though still negative, continues its upward trend, with capex slowing down. We upgrade the stock to Neutral on the back of stronger segmental performance.
Source: CIMB ...last: $1.43...
Olam posted poorer-than-expected 4QFYJun13 results. Net profit plunged 48% yoy to $56.8m, mainly due to higher tax charges and challenging market conditions. Olam booked tax charged of $50.6m in 4Q, representing a tax rate of 38%, compared to a net tax credit of $8.2m in the previous year, partly due to increased contributions from higher tax jurisdictions including the US, Australia, India, Indonesia and Brazil. Revenue however, grew 26% to $6.5b. Volume grew significantly across segments. But margins fell sharply in the Confectionary & Beverage segment (net contribution per ton -42% yoy) due to coffee rust disease across the Central and South American Coffee operations.
Margins also declined in the Food staples & Packaged foods segment (-12%), due to continued underperformance of the upstream Dairy business, lower origination margins for grains in Australia and Ukraine, and lower margins in palm in the upstream investments in SIFCA and in the core supply chain trading business. Management declared 4cts dividend, unchg from last year. Olam said nearer term macroeconomic uncertainty and increased volatility could impact the agri sector.
Will ah gong come in to support again?
Ooooooh OLAM.....
So many negative news! Time to short?
Now more and more bankers and shareholder realized the high risk of Olam with the gigantic debt obligation coupled with poor earnings. Solvency will be questionable going forward.
will the shareholder average down?
1st thing in the morning short this counter to holland,
Act now ....
stevenk ( Date: 05-Jul-2013 08:32) Posted:
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Time to get out fast ..... US interest rate go up..... US dollars strengthen ...... commodity will be badly affected....
stevenk ( Date: 06-Jul-2013 14:22) Posted:
As the USD dollar moves higher, commodities generally move lower. The
opposite happens as the dollar moves lower. It is not a perfect
correlation, but it is fairly close.
There are many reasons why the value of the dollar has an impact on
commodity prices. The main one is that commodities are priced in
dollars. When the value of the dollar drops, it will take more dollars
to buy commodities.
Another reason is that commodities are traded around the world.
Foreign buyers will purchase our commodities ? corn, soybeans, wheat,
oil, etc. ? with dollars. When the value of the dollar drops, they will
have more buying power and simple economics tells us that demand
typically increases as prices drop.
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Singapore's Olam Q4 net profit down 48% on higher tax charges
[SINGAPORE] Singapore commodities firm Olam International Ltd 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 (US$44.4 million) for the three months ended in June, down from S$109.5 million a year earlier. The result lagged the average net profit forecast of S$75.4 million from three analysts polled by Reuters.
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 in a statement.
Time: 1:04PM
Exchange: SGX
Stock: Olam(O32)
Signal: Support - Broken with High Volume
Last Done: $1.44
shortist in action again? any connection with CMZ?
Olam International Ltd.
- Strong Sell initiated on November 19, 2012 at inaugural Ira Sohn London conference.
- Olam sued MW in Singapore for defamation on November 21, 2012. On April 5, 2013, Olam voluntarily dismissed the suit. MW is seeking advice on its entitlement to recover legal expenses from Olam.
- MW released a 133-page report detailing our thesis on Olam. Among other items, the report detailed 79 unexplained revisions to Olam?s accounts over the years that total in absolute value S$2.7 billion. Olam has still not explained these issues.
- On November 30, 2012, MW made a bona fide offer to pay for Olam?s debt rating. The company has refused to accept the offer or otherwise obtain a debt rating.
- On November 28, 2012, Olam CEO Sunny Verghese told multiple media outlets that Olam would not return to the capital markets to raise money for at least five months. Five days later (Dec. 3, 2012), Olam announced that it was raising $712.5 million through a bond issue backstopped by Temasek. MW?s opinion is that this financing was an emergency bailout that was necessary to prevent Olam?s collapse, which could have had ripple effects across Singapore?s economy, especially its banks, which had lent billions to Olam.
- Michael Dee, a director of Temasek until 2010 and the former head of Morgan Stanley Asia, wrote in an Op-Ed in December in the Business Times of Singapore that Olam was at risk of failure if it did not raise equity. He also said Olam?s resistance to having its debt rated by an agency demonstrates ?lack of oversight by the Olam board to be fully committed to transparency, risk management and respect for Olam?s bondholders and lenders.? He praised MW for bringing to light important and systemic issues at the company.
- On April 4, Olam dropped its lawsuit against MW after consulting with shareholders.
- On April 25, Olam said it completed the annual strategy review that began immediately following the MW report. The company did what one can only describe as a complete 180 degree turn in strategy. It said it would slash capital spending by S$1 billion from fiscal 2014 to 2016 and sell assets to reduce debt. It also dropped its $1 billion earnings target for 2016, scrapped a sugar deal in Nigeria highlighted by MW and sold almond Orchards to generate cash.
- Mr. Verghase continues to refuse to answer questions about whether he pledged his shares in Olam for hundreds of millions in personal loans from outside banks.
Source: Muddy Waters Research
Olam Bak Kak
big brother must do something or say something
to support.
