atans1

Olam: Hang on, buy for the ride?

In Africa, Commodities, Temasek on 18/03/2014 at 4:50 am

(Or “Temasek and Ho Ching haters getting more frus“)

Methinks that all those posters on TRE’s piece on Olam are banging their private parts real hard and crying in frustration http://www.tremeritus.com/2014/03/15/temasek-leads-consortium-to-buy-out-debt-ridden-olam/ . They missed making $ and are also upset that Temasek made gd (but peanutty ) money supporting Olam. Even those who pretend rationality while hating all things PAP ( s/o JBJ and Chris Balding?) can only sputter that if Olam is so gd, why buy now not earlier? May I suggest that they read FT’s Lex (behind paywall): squeezing the shorts leh; and Breakingviews (see below).

My tots on the stock: don’t tender the shares. Let’s go for the ride. At worse, kanna bot out if delisted. If buying lose only “peanuts” if kanna bot out. Remember my previous tots which TRE republished late last yr?

Last chance to buy Olam?

More bull points to add to this:

– When Olam released its quarterly results in early November, it showed it  had generated positive free cash flow – the first time in four years for a seasonally weak quarter.

Its executive director of finance and business development A Shekhar told analysts and reporters: “We’re very pleased that we’re striking the right notes on both objectives of profit growth as well as free cash-flow generation.”

– Ang mohs are still sceptical about the parts of the stock’s biz model.

– But they bulls on Africa and Olam got an edge there. Africa is now seen a destination mkt, not juz an exporter of commodities i.e. origination mkt:

The commodities houses are attracted to the African destination business for three reasons. First, demand is rising fast, in many cases at double-digit annual rates. Second, many African governments subsidise basic commodities such as petrol and wheat, in effect guaranteeing a return to the traders. Third, most African countries lack the infrastructure needed to import raw materials, from silos for storing wheat and rice to terminals for unloading petrol. The commodities houses say that, as they build this infrastructure, they will be able to secure a market and benefit from years of rising demand. (FT report on Africa dated 10 November 2013)

https://atans1.wordpress.com/2013/11/26/temasek-tales-tlc-overpaid-olam-cheong-wont-read-this-in-tre-toc/

This is what the deal’s all about (other than squeezing the shorts’ balls, hard real hard):

The most immediate beneficiary of the buyout is Olam’s creditworthiness. Despite Temasek’s minority shareholding, the company has faced persistent queries about its debt load. That’s particularly damaging for a trading house like Olam, which relies on the confidence of its counterparties. In future, creditors will view Olam as an extension of its sovereign parent.

http://blogs.reuters.com/breakingviews/2014/03/14/temasek-buyout-throws-sovereign-weight-behind-olam/

My next piece of advice to those TRE readers who keep on cursing Temasek and its CEO but who end-up banging banging their balls in frustration: Go analyse SMRT.

Trmasek and Ho Ching haters should come up with new lines of attack. The world has moved on from the crisis of 2007-2009. The recovery of global markets means that post Temasek’s losses on ABC Learning, Barclays and Merrill Lynch/BOA, performance has been in line with the recovery in world equity markets. Two of its dogs are dogs no more:  Shin is 50% up from its purchase price (though how to exit is an issue), and go check the price of Chesapeake. And the glee over Olam has turned to tears as Olam powers ahead, giving Muddy Waters a bloody nose. Big playpen bully has met a bigger bully. True blue S’poreans and xenophobes should be cheering Ho Ching on, not cursing her. But then hatred of the PAP is often irrational.

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  1. Don’t get so negatively charged lah mate. Get some right get some wrong, life goes on.

  2. dunno what you writing

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