- Olam reported a - 69% YoY decline in PATMI due to a surge in net finance costs. However, core segments remain strong operationally. Olam’s Revenue and EBIT grew 16% YoY and 9% YoY respectively, with ofi and Olam Agri recording robust EBIT growth.
- Olam’s credit profile remain stable since our previous update. Liquidity remains strong and greatly mitigates any near-term liquidity risk. Debt metrics have worsened against FY23, but have stabilised in 2H24.
- Olam has announced that it will sell a 44.6% stake in Olam Agri to the Saudi Agricultural and Livestock Investment Company (Tranche 1), raising estimated cash proceeds of S$ 2.4B. Olam’s remaining 19.99% stake in Olam Agri will be sold over the next three years after the completion of Tranche 1.
- For OLAMSP 4.000% 24Feb2026 Corp (SGD), the sale of Olam Agri is unlikely to impact its redemption upon maturity. For OLGPSP 5.375% Perpetual Corp (SGD), the sale represents a potential loss in the Group’s cashflows and claims to assets but is balanced out by a higher likelihood to call.
- We like and continue to recommend OLAMSP 4.000% 24Feb2026 Corp (SGD). The bond is trading at an attractive yield of around 4.16%, one of the higher-yielding short-term SGD bonds.
Profits weighed down by higher finance costs and one-off charges…
Chart 1: PATMI fell in FY24 due to higher net finance costs
… but Olam’s core segments remain strong
Chart 2: Sales revenue and EBIT recorded robust growth in FY24
Debt levels have risen but ratios have largely remained resilient
Table 1: Debt metrics deteriorated versus a year ago, but has stabilised over the past 6 months
|
Metrics |
Dec '23 |
Jun '24 |
Dec '24 |
|
Net debt to EBITDA (x) |
5.1 |
7.3 |
7.3 |
|
Adj. net debt to EBITDA (x) (incl. perps) |
5.3 |
7.6 |
7.6 |
|
Reported net gearing (X) |
1.7 |
2.6 |
2.8 |
|
Reported adj. net gearing (incl. RMI and secured recievables) (X) |
0.6 |
1.0 |
0.7 |
|
EBITDA interest coverage (X) |
1.93 |
1.71 |
1.53 |
|
Adj. EBITDA interest coverage (incl. perps dist.) (X) |
1.88 |
1.69 |
1.50 |
|
Source: Company report, iFAST estimates, iFAST compilations. Data as of 31 Dec 2024 |
|||
Strong total available liquidity which sufficiently covers debt obligations
Chart 3: Total liquidity remains strong, sufficient to cover both total debt
Sale of Olam Agri to SALIC
Bond recommendations – Olam’s 2026 bond continues to look attractive
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 |
99.50 |
- / 1.35 |
- / 5.76 |
|
|
Olam International Limited |
24 Feb 2026 |
99.850 |
0.96 / - |
4.16 / - |
|
|
Source: Bloomberg Finance L.P., Bondsupermart, iFAST compilations. Data as of 10 Mar 2025 |
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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.
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