SGX:O32

Stock Analysis Report

Executive Summary

Olam International Limited engages in sourcing, processing, packaging, and merchandising of agricultural products worldwide.

Rewards

Trading at 74.6% below its fair value

Risk Analysis

Interest payments are not well covered by earnings

Unstable dividend track record

Profit margins (0.8%) are lower than last year (1.6%)



Snowflake Analysis

Mediocre balance sheet second-rate dividend payer.


Similar Companies

Share Price & News

How has Olam International's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: O32 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.1%

O32

-4.2%

SG Consumer Retailing

-1.4%

SG Market


1 Year Return

0%

O32

-28.3%

SG Consumer Retailing

0.8%

SG Market

Return vs Industry: O32 exceeded the SG Consumer Retailing industry which returned -25.8% over the past year.

Return vs Market: O32 matched the SG Market which returned 0.7% over the past year.


Shareholder returns

O32IndustryMarket
7 Day-4.1%-4.2%-1.4%
30 Day2.8%-2.4%0.3%
90 Day2.8%-1.2%1.8%
1 Year3.9%0%-26.0%-28.3%4.9%0.8%
3 Year3.4%-7.0%-15.9%-22.9%13.7%1.6%
5 Year10.3%-5.6%-14.1%-25.5%10.8%-7.7%

Price Volatility Vs. Market

How volatile is Olam International's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Olam International undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: O32 (SGD1.88) is trading below our estimate of fair value (SGD7.42)

Significantly Below Fair Value: O32 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: O32 is poor value based on its PE Ratio (22.2x) compared to the Consumer Retailing industry average (20.4x).

PE vs Market: O32 is poor value based on its PE Ratio (22.2x) compared to the SG market (13.5x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate O32's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: O32 is overvalued based on its PB Ratio (1x) compared to the SG Consumer Retailing industry average (0.8x).


Next Steps

Future Growth

How is Olam International forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

13.3%

Forecasted Consumer Retailing industry annual growth in earnings


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if O32's forecast earnings growth is above the savings rate (1.8%).

Earnings vs Market: Insufficient data to determine if O32's earnings are forecast to grow faster than the SG market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: Insufficient data to determine if O32's revenue is forecast to grow faster than the SG market.

High Growth Revenue: Insufficient data to determine if O32's revenue is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if O32's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Olam International performed over the past 5 years?

8.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: O32 has high quality earnings.

Growing Profit Margin: O32's current net profit margins (0.8%) are lower than last year (1.6%).


Past Earnings Growth Analysis

Earnings Trend: O32's earnings have grown by 8% per year over the past 5 years.

Accelerating Growth: O32's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: O32 had negative earnings growth (-44%) over the past year, making it difficult to compare to the Consumer Retailing industry average (3.4%).


Return on Equity

High ROE: O32's Return on Equity (4.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Olam International's financial position?


Financial Position Analysis

Short Term Liabilities: O32's short term assets (SGD15.2B) exceed its short term liabilities (SGD12.0B).

Long Term Liabilities: O32's short term assets (SGD15.2B) exceed its long term liabilities (SGD6.1B).


Debt to Equity History and Analysis

Debt Level: O32's debt to equity ratio (176.1%) is considered high.

Reducing Debt: O32's debt to equity ratio has reduced from 216.4% to 176.1% over the past 5 years.

Debt Coverage: O32's debt is not well covered by operating cash flow (17.9%).

Interest Coverage: O32's interest payments on its debt are not well covered by EBIT (1.4x coverage).


Balance Sheet

Inventory Level: O32 has a high level of physical assets or inventory.

Debt Coverage by Assets: O32's debt is covered by short term assets (assets are 1.4x debt).


Next Steps

Dividend

What is Olam International's current dividend yield, its reliability and sustainability?

4.03%

Current Dividend Yield


Dividend Yield vs Market

company4.0%marketbottom25%2.5%markettop25%5.5%industryaverage1.8%forecastin3Years4.3%

Current dividend yield vs market & industry

Notable Dividend: O32's dividend (3.99%) is higher than the bottom 25% of dividend payers in the SG market (2.5%).

High Dividend: O32's dividend (3.99%) is low compared to the top 25% of dividend payers in the SG market (5.41%).


Stability and Growth of Payments

Stable Dividend: O32's dividend payments have been volatile in the past 10 years.

Growing Dividend: O32's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (88.4%), O32's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of Olam International's salary, the management and board of directors tenure and is there insider trading?

4.7yrs

Average board tenure


CEO

Sunny Verghese (59yo)

0yrs

Tenure

0

Mr. Sunny George Verghese is a Co-Founder of Olam International Limited. Mr. Verghese serves as Group Chief Executive Officer of Olam International Limited and also serves as Chief Executive Officer of Ola ...


Board Age and Tenure

4.7yrs

Average Tenure

59yo

Average Age

Experienced Board: O32's board of directors are considered experienced (4.7 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Sunny Verghese (59yo)

    Co-Founder

    • Rajeev Kadam (58yo)

      President & Head of Internal Audit

      • Shekhar Anantharaman (55yo)

        CEO of Olam Food Ingredients & Executive Director

        • Tenure: 21.8yrs
      • Joydeep Bose (56yo)

        President & Global Head of Human Resources

        • Vasanth Subramaniam

          General Manager of Accounts

          • Supramaniam Ramasamy

            President & Global Head of Plantations

            • Suresh Sundararajan

              President and Group Head of Strategic Investments & Shared Corporate Services

              • Muthu Muthukumar (47yo)

                President & Group CFO

                • Tenure: 6.3yrs
              • Martial Genthon

                President and Global Head Manufacturing

                • Prakash Jhanwer

                  President and Regional Head of Southeast Asia & China

                  • Tenure: 1yrs

                Board Members

                • Ah Doo Lim (70yo)

                  Independent Chairman

                  • Tenure: 3yrs
                  • Compensation: S$322.57k
                • Nihal Vijaya Devadas Kaviratne (75yo)

                  Independent Non-Executive Director

                  • Tenure: 5.3yrs
                  • Compensation: S$156.20k
                • Sunny Verghese (59yo)

                  Co-Founder

                  • Shekhar Anantharaman (55yo)

                    CEO of Olam Food Ingredients & Executive Director

                    • Tenure: 21.8yrs
                  • Chee Keong Yap (59yo)

                    Independent Non-Executive Director

                    • Tenure: 4.1yrs
                    • Compensation: S$245.00k
                  • Jean-Paul Pinard (69yo)

                    Independent Non-Executive Director

                    • Tenure: 11.3yrs
                    • Compensation: S$195.30k
                  • Sanjiv Misra (59yo)

                    Independent Non-Executive Director

                    • Tenure: 6.2yrs
                    • Compensation: S$214.90k
                  • Yutaka Kyoya (57yo)

                    Non-Executive Director

                    • Tenure: 4.2yrs
                    • Compensation: S$169.30k
                  • Marie Teo (52yo)

                    Independent Non-Executive Director

                    • Tenure: 4.1yrs
                    • Compensation: S$216.90k
                  • Kazuo Ito (50yo)

                    Non-Executive Director

                    • Tenure: 1.1yrs
                    • Compensation: S$18.07k

                  Company Information

                  Olam International Limited's company bio, employee growth, exchange listings and data sources


                  Key Information

                  • Name: Olam International Limited
                  • Ticker: O32
                  • Exchange: SGX
                  • Founded: 1989
                  • Industry: Food Distributors
                  • Sector: Consumer Retailing
                  • Market Cap: S$5.927b
                  • Shares outstanding: 3.19b
                  • Website: https://olamgroup.com

                  Number of Employees


                  Location

                  • Olam International Limited
                  • No. 20-01 Marina One East Tower
                  • 7 Straits View
                  • Singapore
                  • 18936
                  • Singapore

                  Listings

                  TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
                  O32SGX (Singapore Exchange)YesOrdinary SharesSGSGDFeb 2005
                  OLMI.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDFeb 2005
                  O5IDB (Deutsche Boerse AG)YesOrdinary SharesDEEURFeb 2005
                  OLMI.YOTCPK (Pink Sheets LLC)ADRUSUSDNov 2008

                  Biography

                  Olam International Limited engages in sourcing, processing, packaging, and merchandising of agricultural products worldwide. It operates in five segments: Edible Nuts and Spices; Confectionery and Beverage Ingredients; Food Staples and Packaged Foods; Industrial Raw Materials, Infrastructure and Logistics; and Commodity Financial Services (CFS). The Edible Nuts and Spices segment offers cashews, peanuts, almonds, hazelnuts, pistachios, walnuts, and sesame, as well as beans, including pulses, lentils, and peas; and spices, such as pepper, onion, garlic, capsicums, and tomato, as well as tropical spices, chilies, and specialty products. The Confectionery and Beverage Ingredients segment provides cocoa and coffee products. The Food Staples and Packaged Foods segments offers rice, sugar and sweeteners, grains and animal feed, edible oils, dairy products, and packaged foods. The Industrial Raw Materials, Infrastructure and Logistics segment offers cotton, wood products, rubber, fertilizers, and infrastructure and logistics services. The CFS segment provides Fund Management services. The company was founded in 1989 and is headquartered in Singapore. 


                  Company Analysis and Financial Data Status

                  All financial data provided by Standard & Poor's Capital IQ.
                  DataLast Updated (UTC time)
                  Company Analysis2020/01/27 12:48
                  End of Day Share Price2020/01/24 00:00
                  Earnings2019/09/30
                  Annual Earnings2018/12/31


                  Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.