Saturday, August 14, 2021

Company prospecting: Olam

Just sharing some of my thoughts here.

Olam is a food commodity trader, processor, producer and distributor. There are a few pieces of good news that I thought but Olam shares are trading a recent low. (Post rights theoretical price should be around $1.6) 

Yet, they recently announced record earning and has firmed plans for demerger of OFI to primary list in LSE and secondary listing in SGX. 

Given commodity prices has a good run, and with 1H earning of 11 cents, even if they only 4 cents in 2H (Which is highly unlikely given the elevated food prices, as well as worries over supply disruptions and inflation etc), Olam will be in the PE range of 10. 

Olam also increase dividends in 1H, signaling the confidence of management. 

In terms of valuations, this is the first time in a decade that you will have a chance to get a "discount" in terms of PE of 10 (Lowest), and with PS and PB below 0.15 and 1 respectively. (Barring big writedown of assets due to big swing down of commodity prices.)

If earnings is good, expanding, and there is no obvious dark clouds in the horizon, why such low valuation?

Next, when Capitaland announce it's restructuring, everyone cheers!

When Olam announce it's restructuring, people cheers then start dumping? 

Next, is commodity super cycle coming?

Since June 2020 the price of food is on a tear, 

Even the high prices continue, it is a bonus, if it doesn't, I hardly think with the restructuring going on, the new IPOs will command a valuation that is lower than the 3 metrics I mentioned earlier.

So in conclusion, I think Olam is underappreciated by the market now.  



  1. Right issue at $1.25 generating nice paper gains for Temasek

  2. Hi CW, let us not forget that u need a to be a existing shareholder befor u get the Rights. Is not aa cheap as it seems.

    I also need to buy some at high price before i can apply for excesses

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