Olam International

[Drizzt]

posted something last time on cash conversion cycle examples.

but the short one that comes to mind was DELL and tech companies, the more ready payments you have the shorter your cash conversion cycle

[EnSabahNur]

posted something last time on cash conversion cycle examples.

but the short one that comes to mind was DELL and tech companies, the more ready payments you have the shorter your cash conversion cycle

ah..that helps

[cif5000]

Can you give a few examples of companies or industries with long cash cycles?
Go to SGX website, start from A to Z(or Z to A) and look at the financial statements. And you won't be disappointed.

A quick google search will get you this... http://www.eurojournals.com/irjfe_24_16.pdf

I guess the numbers shouldn't be too far off from those listed on the SGX.

[EnSabahNur]

Can you give a few examples of companies or industries with long cash cycles?
Go to SGX website, start from A to Z(or Z to A) and look at the financial statements. And you won't be disappointed.

A quick google search will get you this... http://www.eurojournals.com/irjfe_24_16.pdf

I guess the numbers shouldn't be too far off from those listed on the SGX.

Thanks man

[Nick]

Olam plunged 9.3% today with over 32 million shares traded due to the below mentioned report by CLSA.

http://www.theedgesingapore.com/the-dail...cerns.html

[Nick]

Olam plunged 9.3% today with over 32 million shares traded due to the below mentioned report by CLSA.

http://www.theedgesingapore.com/the-dail...cerns.html

Clarifications on CLSA Analyst Report on Olam dated 21st February 2011

http://info.sgx.com/webcoranncatth.nsf/V...F007E799E/$file/Feb232011-ClarificationstoCLSAReport.pdf?openelement

Share price surged 8.8% from today's low to $2.59.

(Not Vested)

[Musicwhiz]

Oh if you are quick to catch the tops and bottoms, then you can make lots of money I am sure.

Then again, you could also lose your pants.....

Perhaps some punters out there view this as a so-called "high risk, high return" gamble!

[D123]

From the WSJ:

Olam Chief Disputes Concerns Raised by CLSA

SINGAPORE—Olam International Ltd. Chief Executive Sunny Verghese said in an interview Wednesday that accounting concerns raised in a recent CLSA analyst report were unfounded and that the issues identified had "no impact" on the agricultural products supply chain manager's profitability.

The CLSA report, issued Feb. 21, pointed to what it described as "multiple and sometimes significant differences in audited and unaudited statements," involving, among other things, realized losses on derivatives and bank loans. It added that "even cash balances in the cash flow statements are materially different in 2007, 2008."

Mr. Verghese attributed the differences to what he called "reclassifications," which he said weren't meaningful to the profitability of the Singapore-based company. The statements came just a few hours after Olam released a more detailed analysis which described the issues as "presentation differences" between the accounts of various subsidiaries and the group's consolidated accounts.

None of these adjustments had any impact on the group's profit and loss account, Olam said.

The Olam analysis noted that any material changes in financial statements between unaudited and audited versions would need to be approved by auditors and the company's board of directors, with a public disclosure via the Singapore stock exchange, but "there has not been a need for us to make such a statement since listing in 2005."

Mr. Verghese said the CLSA analyst had issued previous negative reports on the company and was now "spooking the market" by focusing on accounting matters, as well as by raising additional concerns over the role that export incentives from Nigeria play in the company's earnings.

The CLSA report estimated Olam generates between 30% and 40% of its profits from the incentives, which are part of an initiative by the Nigerian government to encourage exports of certain products, CLSA said.

Mr. Verghese said CLSA reached a "completely ridiculous conclusion" when it found that such a large part of its profits come from the incentives and that a number of sources drive Olam earnings.He said the export incentive program is "transparent" and a "level playing field" for all.

Olam is a major player in world agricultural markets as a supply chain manager and producer of some farm commodities, with operations spanning more than 60 countries, and it competes with the likes of Cargill Inc. and Bunge Ltd. It is the world's largest supplier of cashews and cocoa beans and among the biggest players in rice, cotton and other commodities.

[FFNow]

I went to look into the AR of Olam and found something peculiar. I compared the AR financial statement figures for FY2010 and FY2009. When I took 2009 as the base year, the figures like PPE, cash flow from ops, etc are different when comparing FY2010 and FY2009. I'm perplexed why is this so? Is this also a reclassification issue that Sunny mentioned?

[Musicwhiz]

Business Times - 24 Feb 2011

Olam shares dive despite firm's rebuttal

By FELDA CHAY

(SINGAPORE) Shares of Olam International continued to dive for a third day yesterday, even as the firm rebutted a research report from CLSA Asia-Pacific Markets that had raised red flags on its internal accounting controls, and supposed dependence on attractive export incentives from key market Nigeria.

The group's stock fell to $2.38 - its lowest level in more than two years - before it recouped some of those losses to close 2.7 per cent lower at $2.56. More than 121 million shares changed hands. Olam has shed 13.2 per cent since CLSA's report was issued on Monday. The Straits Times Index has fallen 2.8 per cent over the same period.

Yesterday's fall came even as Olam clarified that the differences between its audited and unaudited statements stem from presentation differences between the accounts of its various subsidiaries, and their eventual treatment in the group's accounts.

It added that the changes are not material edits. 'We can confirm that there have been no changes to the P&L (profit and loss) in any year between the unaudited Financials and the AR (annual report).'

Still, group chief executive Sunny Verghese acknowledged over a conference call with reporters that it was 'not becoming' for the firm to have reporting differences between its audited and unaudited financial statements in areas such as realised losses on derivatives and capital expenditure for 2008 and 2009, and that it will look to minimise such occurrences in the future. However, he insisted that these differences do not represent a lack of controls at the firm as its P&L statements and net asset values remained unchanged.

On Monday, CLSA's Swati Chopra issued a report that said Olam had some areas of concern, the first being its internal controls given 'significant differences' between its unaudited and audited numbers 'every year without any impact on the reported net profits'.

Another concern was its supposed dependence on export incentives from Nigeria, which Ms Chopra estimated made up 30-40 per cent of its profits. She said that Olam was a 'conviction sell' and cut its price target to $1.60.

Asked for a response to Olam's comeback, Ms Chopra declined to comment.

According to Olam, almost all the tax incentives it receives from Nigeria are passed on to its suppliers, and are recorded separately as a line item in its P&L statements. 'Therefore, what is recorded as export incentives does not directly flow down to our profits,' said Olam.

Ms Chopra has issued eight reports on Olam (including the latest statement on Monday), said Mr Verghese, all of which recommended that investors sell the stock. The company usually does not respond to analyst reports, but said it felt compelled to issue a clarification because 'in any blue chip company, if you say that their numbers are not right, that creates suspicion in people's minds, and that is what we are upset about. That's why we responded,' said Mr Verghese.

He also said that the company had tried to reach Ms Chopra last week to address her concerns, which she brought up during the group's second quarter results briefing held earlier this month, but could not reach her.

Yesterday, some analysts covering Olam said they believed the stock's selldown is overdone. Many who were bullish over the group issued statements following talks with Olam's management reiterating their 'buy' or 'overweight' calls. HSBC Global Research, for one, kept Olam at 'overweight'.