Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes – just in case they’re material to our investing thesis. The Straits Times Index (SGX: ^STI) has ended the week on a slightly dour note as it has slipped by 0.1% to 3,327 points today. Let’s take a closer look at some market beaters. Commodities trader Olam International Ltd (SGX: O32) is up 3.9% to S$2.65 following the release of its full-year results this morning. For the three months ended 30 June 2014, Olam actually reported…
Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes – just in case they’re material to our investing thesis.
The Straits Times Index (SGX: ^STI) has ended the week on a slightly dour note as it has slipped by 0.1% to 3,327 points today.
Let’s take a closer look at some market beaters.
Commodities trader Olam International Ltd (SGX: O32) is up 3.9% to S$2.65 following the release of its full-year results this morning.
For the three months ended 30 June 2014, Olam actually reported a broad-based decline in its business. Sales revenue had dropped by 11.4% year-on-year to S$5.76 billion, fuelled by an 18.6% slide in sales volume to 3,498 MT. The shrinking top-line had flowed to Olam’s bottom-line; the company saw its profit after tax and minority interests (PATMI) crash by some 44% to S$31.8 million. Exceptional losses of S$16.7 million had also contributed to the fall.
Nonetheless, the company commented that it had reported results which “reflected significant progress in the implementation of its strategic plan.” Here’s Olam’s Group Managing Director and Chief Executive Officer, Sunny Verghese, adding more colour to the topic:
“We are pleased with the progress made in this first full year of our revised strategic plan. Disciplined execution on various strategic initiatives has helped to release cash and unlock intrinsic value across projects and platforms that we have built over the years.
We will stay focused on our twin objectives of pursuing profitable growth and accelerating free cash flow generation, while investing in selective growth opportunities that can enhance shareholder value over time. In this context, Temasek’s recent investment to become the new majority shareholder in Olam will provide a strong base for a more resilient future for the Company.”
Olam’s Strategic Plan was revealed back in April 2013 and since then, the company has announced 17 initiatives, with three completed in FY2013 (financial year ended 30 June 2013) and 11 in FY2014. I’d let the company describe the benefits of the Strategic Plan and what investors can look forward to regarding it:
“These 14 completed initiatives had released cash of S$603.9 million, generated a P&L [Profit & Loss statement] gain of S$94.0 million and added S$16.5 million directly to capital reserves. Three remaining initiatives, including the recently announced sale of 25.0% equity interest in the Packaged Foods business unit to Sanyo Foods, are expected to be completed within FY2015. These are likely to release further cash of approximately S$313.1 million, generate a P&L gain of approximately S$22.4 million and add approximately S$118.8 million directly to capital reserves.”
STATS ChipPAC Ltd. (SGX: S24) is next in line with its shares surging by some 13.6% to S$0.75. As early as May this year, the semiconductor chip packaging and testing outfit has made known that it’s in talks of being acquired. But yesterday, it revealed the names of two of its potential acquirers and they are the Chinese-based duo of Jiangsu Changjiang Electronics Technology Co., Ltd., and Tianshui Huatian Technology Co., Ltd.
For investors who might be interested in the company since it’s been generating such strong interest from acquirers, I’d leave you with some thoughts from my colleague Stanley Lim:
“For investors looking at STATS ChipPAC as a possible investment, perhaps the right question to ask is not whether the company will be acquired. Instead, the right question should be: How much is STATS ChipPAC worth as a business? And to answer that question, investors could look at the possibility of STATS ChipPAC turning its operations around to regain profitability and perhaps even build a competitive edge around its business.
If anything, trying to determine the real economic value of STATS ChipPAC would be a much more fruitful exercise for an investor as compared to merely speculating on the possibility of an acquisition.”
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn’t own shares in any companies mentioned.