- Olam reported an 8.3% YoY growth in EBIT to S$888.0M in 1H24 lifted by strong operating performance from Olam Food Ingredients. Profit after tax and minority interests (“PATMI”) remained resilient at S$48.1M, almost unchanged relative to 1H23 as the strong EBIT growth offset the impact from increased taxes and a jump in interest costs.
- Olam’s credit profile has moderated but remains stable. Debt ratios have deteriorated due to higher working capital requirements and interest costs but EBITDA from the Group’s core operating segments remains resilient and liquidity remains strong.
- We like OLAMSP 4.000% 24Feb2026 Corp (SGD) and find it attractively priced. The bond is trading at an attractive yield of around 4.25% with slightly over one year left to maturity.
1H2024 financial highlights
Chart 1: Revenue and EBIT contribution by operating segments
Chart 2: PATMI remained relatively stable in 1H24 despite higher net finance and taxation costs
Credit highlights
Table 1: Debt metrics have worsened in 1H23 primarily due to higher debt and financing costs
|
Metrics |
1H23 |
FY23 |
1H24 |
|
Adj. net debt to EBITDA (x) (incl. perps) |
5.7 |
5.3 |
7.6 |
|
Net gearing (X) |
1.7 |
1.7 |
2.6 |
|
Adj. net gearing (incl. RMI and secured recievables) (X) |
0.9 |
0.6 |
1.0 |
|
Adj. net gearing (incl. RMI, secured recievables, and perps) (X) |
1.0 |
0.8 |
1.2 |
|
Adj. EBITDA Coverage (incl. perps dist.) (X) |
1.9 |
1.9 |
1.5 |
|
Source: Company report, iFAST estimates, iFAST compilations. Data as of 30 June 2024 |
|||
Chart 3: Total liquidity remains strong, sufficient to cover both long and short term debt
Recommendations
Table 1: Olam’s fixed rate and perpetual bonds
|
Bond Name |
Issuer |
Maturity Date / Call Date |
Bond Price |
Years to Maturity / Call date |
Yield to Maturity / Next Call (%) |
|
Olam Group Limited |
18 July 2026 |
99.90 |
- / 1.59 |
- / 5.59 |
|
|
Olam International Limited |
24 Feb 2026 |
99.650 |
1.19 / - |
4.25 / - |
|
|
Source: Bloomberg Finance L.P., Bondsupermart, iFAST compilations. Data as of 16 December 2024 |
|||||
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in OLAMSP 4.000% 24Feb2026 Corp (SGD) and OLGPSP 5.375% Perpetual Corp (SGD) and the analyst who produced this report holds a NIL position in the abovementioned securities.
Our podcast series, Yield Hunters, is available on Spotify, iTunes Podcasts and Google Podcasts. We share our thoughts on new bond issues and hold discussions on the fixed income space. Listen to our latest episode below and follow us!
All materials and contents found in this site are strictly for general circulation and informational purposes only and should not be considered as an offer, or solicitation, to deal in any of the funds or products found/identified in this site. While iFAST Financial Pte Ltd ("IFPL") has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies and typographical errors. Any opinion or estimate contained in this report is made on a general basis and neither IFPL nor any of its servants or agents have given any consideration to nor have they or any of them made any investigation of the investment objective, financial situation or particular need of any user or reader, any specific person or group of persons. You should consider carefully if the products you are going to purchase are suitable for your investment objective, investment experience, risk tolerance and other personal circumstances. If you are uncertain about the suitability of the investment product, please seek advice from a financial adviser, before making a decision to purchase the investment product. Past performance is not indicative of future performance. The value of the investment products and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. In respect of any matters arising from, or in connection with the said research analyses or research reports, recipients of the report are to contact IFPL at 10 Collyer Quay, #26-01 Ocean Financial Centre Building, Singapore 049315, or by telephone at +65 6557 2853. Where the report contains research analyses or research reports from a foreign research house and if the recipient of such research analyses or research reports is not an accredited investor, expert investor, institutional investor or an ex-accredited investor, IFPL accepts legal responsibility for the contents of such analyses or reports to such persons only to the extent as required by law. Please note that only certain security(ies) herein are available to all investors, while the rest are only available for certain persons to invest in, such as Accredited Investors (as defined in the Securities and Futures Act) or one who invests at least S$200,000 (or its equivalent currency) per transaction. To qualify as an Accredited Investor, one needs to submit a declaration form and certain relevant supporting documents, according to iFAST’s prevailing policies and procedures.
Please read our full disclaimers on the website at ( https://secure.fundsupermart.com/fsmone/policies/328125/investment-account-terms-&-conditions).
iFAST Financial Pte Ltd (IFPL) (registered address: 10 Collyer Quay #26-01 Ocean Financial Centre Singapore 049315, Telephone: 6557 2000) holds the Financial Advisers Licence issued by the Monetary Authority of Singapore ('MAS') to conduct regulated activities of advising on securities, marketing of collective investment schemes and arranging of any contract of insurance in respect of life policies, other than a contract of reinsurance and the Capital Markets Services Licence issued by the MAS to conduct regulated activities of dealing in securities and providing custodial services for securities. While IFPL has made every effort to ensure the independence of the report's contents, IFPL's nature of business is such that IFPL and its connected and associated entities together with their respective directors, officers and staff may be involved in providing dealing or investment-related services in the abovementioned securities, and have taken or may take positions in the securities mentioned in this report, and may also act as the principal for any buy or sell trades.
Please note that only certain bond(s) herein are available to all investors, while the rest are only available for certain persons to invest in, such as Accredited Investors (as defined in the Securities and Futures Act) or one who invests at least S$200,000 (or its equivalent currency) per transaction. To qualify as an Accredited Investor, one needs to submit a declaration form and certain relevant supporting documents, according to Fundsupermart.com's prevailing policies and procedures. Please read our full disclaimers in the website.