Once a Singapore stock market darling, Olam's share price has been depressed despite Temasek's VGO at S$2.23 and Mitsubishi's entry at S$2.75.
Factors including its high leverage, repeated restructuring delays, inconsistent profitability, and difficulty in understanding its complex operations has further exacerbated the decline. However, with the incoming proceeds from the recent approval of the SALIC sale, ofi will be able to reduce its gearing; resulting in ~S$200M of interest savings and potentially enabling the delivery of special dividends from ROG divestments.
3 Reasons to buy Olam
1. Final approval of the Olam Agri sale removes a key overhang and triggers re-rating.
- Read this at SGinvestors.io -
2. Extremely cheap valuations - No longer a value trap
- Read this at SGinvestors.io -
Considering that Olam just sold Olam Agri at 3.5x P/B and that latest ROG transactions is above book, we think Olam's valuations are unjustified. As such, there now represents a wide margin of safety for investors, and we think every restructuring milestone from here should narrow the discount.
3. Special dividend pipeline from ROG asset sales.
Read more at SGinvestors.io.
Above is an excerpt from a report by Lim & Tan Securities Research. Clients of Lim & Tan Securities may be the first to access the full PDF report @ https://www.limtan.com.sg/.
Nicholas Yon 
