Thursday, November 29, 2012

Olam Spat with Muddy Water

The above hog the headlines for the last one week. I am vested in Olam and remain to be so. The incident actually give me a lot of opportunity to know and understand the business of Olam in greater detail than in the past.

There is no doubt that Muddy Water is acting in concert with some hedge funds to make monies out of their short positions in Olam. I think they might have made some but not significant as Olam has manage quite well to contain the crisis.

I read both Muddy Water report and Olam subsequent reply. Most of Muddy Water so called evidence are rather sporadic and incomplete. They tend to highlight certain discrepancies without being able to give the complete picture. It is often easy to pick out a piece of information to support your case but leaving out other equally information that can also invalidate your statement.

However, having said the above, I think Olam would do well to think and recalibrate its aggressive target of reaching $1b Net Profit by 2016. It may be worth the while to go slower and focus more tightly on ongoing projects.

The understanding I gain from reading both reports is that Olam typically like to pick underperforming assets at what they deem attractive prices. The assets are underperforming maybe due to bad management, lack of capital, etc. Then they wll bring in their expertise and try to turn it around. It will take some effort. If they succeed, the gains are tremendous but require hard work and a little bit of luck. Success is often not immediate or even guaranteed.

I also think Olam would need to convey more info on the 35+ initiatives a bit more clearly to investors. I do not expect all the initatives to succeed. I just need more to succeed than fail on the balance so that the overall profit objectives can be met. Among all the cases that Muddy Water bring out in their report, I would think Olam has not replied satisfactory on the Gabon Urea initiative.I like Olam to give detailed statistics on the NZ-URUGUAY diary project regularly as this is one of the project performing below plan.
I like to see EBIT numbers for Olam Tomatoes aka SK Foods.

Also, here is no need to give detailed info on all initiatives but the 'big' ones do matter. For investors, my advice is do not panic too easily. Try to understand the company as well as you can and in some cases, a crisis may be excellent an opportunity.

The stock price is not a major problem. A credit freeze would be more painful as Olam need huge capital to function being in the commodity business where they hold large liquid inventories.

Finally, I believe the worst is over between Olam and Muddy Water saga. Carson will move on to look for new targets.

Tuesday, November 13, 2012

SingTel Q2FY2013

Revenue                                           = $4,572m
Underlying Profit                             = $886m
Singapore (EBITDA)                      = $541m
Optus(EBITDA)                              = $560m
Regional Mobile                              = $549m
Net Debt                                           = $8.2b
Net Gearing                                      = 26%
Net Debt/EBITDA+Assoc Profits    = 1.1x
EBITDA+Assoc Profits/Int Exp       = 23.2x
EPS                                                   = 5.45 cents
FCF                                                   = $1,102m

Note : Optus revenue declined by 4% to $2,239m

Sunday, November 11, 2012

Sembcorp Q3FY2013

Revenue                       = $2,274M
Net Profit                     = $181M
EPS                             =  10.1 cents

Profit From Operations
Utilities                         = $155.2M
Marine                         = $138.6M
Urban Dev                   = $7.7M
Other Businesses          = $11.5M
Corporate                    = ($3.0M)
Total                            = $310.0M

NAV                            = 2.40
Interest Cover               = 11
ROE                             = 17.0%
Gearing Ratio                = 0.09
Free Cash Flow            = $244M (9MFY2012)


Results released on 9/11/2012.

Gross Revenue                                    = $30,553K
NPI                                                    =$29,521K
Distributable Amount                           =$15,848K
EPS                                                   =0.97 cents
DPU                                                   = 0.73 cents
Total Assets                                        =$1,752,584K
Total Liabilities                                    =$57,196K
NAV                                                   = 52.83cents
Gearing                                                = 22.7%

Thursday, November 8, 2012

US Presidential Election 332 vs 206

I highlighted an article previously that argue analytically that the just concluded US Presidential Election will not be as close as what the frantic media painted. Looking at the end result of Obama trouncing Romney with a 332 to 206 advantage in electoral votes, the author is vindicated. Nate Silver uses a dispassionate methodology that goes through all the numbers meticulously. Beat the hell out of instinct and gut feel employe by a lot of journalists and writers.

I hope to likewise to evaluate my portfolio and future stock prospects using a similar approach by looking dispassionately at the numbers, quality of the management etc rather then depening on emotions, hearsay, market opinion etc.

Tuesday, November 6, 2012

SAT Q2FY12/13

Results released on 6/11/2012

Revenue                                    = $461.5m
Operating Profit                        = $52.1m
PATMI                                     = $50.3m
Underlying Profit From Ops     = $50.7M
Underlying Net Margin             = 11%
Debt-to-Equity                          = 0.12
EPS                                           = 4.5 cents
NAV                                         = $1.22
Cash & Cash Equiv                   = $325.1m
FCF (1HFY2012/2013)            = $78.1m

Key costs are Staff Costs ($195.1m) and Raw Materials (100.5m)

Monday, November 5, 2012

Article on US Presidential Election

A thoughtful article on the coverage of the US Presidential Elections.

Let validate this on the next few days. Hopefully it can help train the mind to be clear in front of all the noise made by the media ie is it really down to the wire?

Sunday, November 4, 2012

StarHub- Shrinking Nett Debt/EBITDA Ratio

Notice that Starhub Nett Debt to Annualized EBITDA ratio shrinking over the last two years.

Q4FY2010 - 0.94X
Q2FY2011 - 0.71X
Q3FY2012 - 0.63X
Q2FY2012 - 0.55X
Q3FY2012 - 0.46X

This may explain StarHub elevated share price.