Calculating The Fair Value Of Olam Group Limited (SGX:VC2)

Simply Wall St.11-02

Key Insights The projected fair value for Olam Group is S$1.52 based on Dividend Discount Model With S$1.22 share price, Olam Group appears to be trading close to its estimated fair value Olam ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2480913158?lang=en_US&edition=fundamental","thumbnail":"https://s.yimg.com/uu/api/res/1.2/qD9N5kLj9T0w7Ns8NRurOg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/83f76d21c91eb2ec8cc8f3adfb3843d7","is_english":true,"pubTime":"2024-11-02 10:03","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2480913158","market":"us","top_or_hot":-1,"title":"Calculating The Fair Value Of Olam Group Limited (SGX:VC2)","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n The projected fair value for Olam Group is S$1.52 based on Dividend Discount Model \n With S$1.22 share price, Olam Group appears to be trading close to its estimated fair value \n Olam ...</p>\n\n<a href=\"https://finance.yahoo.com/news/calculating-fair-value-olam-group-020342249.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance_sg","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Calculating The Fair Value Of Olam Group Limited (SGX:VC2)</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCalculating The Fair Value Of Olam Group Limited (SGX:VC2)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-02 10:03 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/calculating-fair-value-olam-group-020342249.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n The projected fair value for Olam Group is S$1.52 based on Dividend Discount Model \n With S$1.22 share price, Olam Group appears to be trading close to its estimated fair value \n Olam ...</p>\n\n<a href=\"https://finance.yahoo.com/news/calculating-fair-value-olam-group-020342249.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"DCF","symbol_name":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","start_time":0,"source_url":"https://finance.yahoo.com/news/calculating-fair-value-olam-group-020342249.html","article_id":"2480913158","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/qD9N5kLj9T0w7Ns8NRurOg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/83f76d21c91eb2ec8cc8f3adfb3843d7"],"rights":{"source":"yahoofinance_sg","url":"https://finance.yahoo.com/news/calculating-fair-value-olam-group-020342249.html","rn_cache_url":null,"customStyle":"","selectors":"article, body","filters":"","directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2480913158","pubTimestamp":1730513022,"columns":[],"sourceInfo":{"source_id":"yahoofinance_sg","name":"Yahoo Finance"},"weMediaInfo":null,"summary":"The projected fair value for Olam Group is S$1.52 based on Dividend Discount Model. With S$1.22 share price, Olam Group appears to be trading close to its estimated fair value. Olam Group's peers seem to be trading at a higher discount to fair value based onthe industry average of 51%. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Olam Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital  which accounts for debt. In this calculation we've used 5.5%, which is based on a levered beta o","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","BK6025":"食品分销商","VC2.SI":"Olam Group"},"translate_title":"计算奥兰集团有限公司（新交所：VC2）的公平值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DCF":1,"VC2.SI":0.9},"content_text":"Key Insights\n\n The projected fair value for Olam Group is S$1.52 based on Dividend Discount Model \n With S$1.22 share price, Olam Group appears to be trading close to its estimated fair value \n Olam Group's peers seem to be trading at a higher discount to fair value based onthe industry average of 51% \n\n In this article we are going to estimate the intrinsic value of Olam Group Limited (SGX:VC2) by taking the expected future cash flows and discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. \n We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. \n View our latest analysis for Olam Group \n What's The Estimated Valuation? \n We have to calculate the value of Olam Group slightly differently to other stocks because it is a consumer retailing company. In this approach dividends per share (DPS) are used, as free cash flow is difficult to estimate and often not reported by analysts. Unless a company pays out the majority of its FCF as a dividend, this method will typically underestimate the value of the stock. We use the Gordon Growth Model, which assumes dividend will grow into perpetuity at a rate that can be sustained. The dividend is expected to grow at an annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.2%. We then discount this figure to today's value at a cost of equity of 5.5%. Compared to the current share price of S$1.2, the company appears about fair value at a 20% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. \nValue Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)\n= S$0.07 / (5.5% – 2.2%)\n= S$1.5\n\n\n\n  SGX:VC2 Discounted Cash Flow November 2nd 2024\n \n\n The Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Olam Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 5.5%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Olam Group\n\n\nStrength\n\nEarnings growth over the past year exceeded the industry.\n\n\nDebt is well covered by .\n\n\nBalance sheet summary for VC2.\n\n\n\nWeakness\n\nInterest payments on debt are not well covered.\n\n\nDividend is low compared to the top 25% of dividend payers in the Consumer Retailing market.\n\n\n\nOpportunity\n\n Current share price is below our estimate of fair value.\n\n\nLack of analyst coverage makes it difficult to determine VC2's earnings prospects.\n\n\n\nThreat\n\nDebt is not well covered by operating cash flow.\n\n\nDividends are not covered by earnings.\n\n\nIs VC2 well equipped to handle threats?\n\n\n\n Looking Ahead: \n Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Olam Group, we've compiled three important aspects you should further examine: \n\n Risks: For instance, we've identified   3 warning signs for Olam Group  that you should be aware of. \n Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! \n Other Top Analyst Picks: Interested to see what the analysts are thinking? Take a look at our interactive list of analysts' top stock picks to find out what they feel might have an attractive future outlook! \n\n PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the SGX every day. If you want to find the calculation for other stocks just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2480913158"}