Olam International dropped the most since November 2008 after CLSA Asia Pacific Markets queried the commodity supplier’s accounting and its subsidies from Nigeria, cutting the stock to a “conviction sell.”
Olam shares slumped 9.3% to close at $2.63 in Singapore, the biggest one-day drop since Nov. 19, 2008. The stock tumbled as much as 10.7%. The benchmark Straits Times Index fell 1.7%.
Olam shares slumped 9.3% to close at $2.63 in Singapore, the biggest one-day drop since Nov. 19, 2008. The stock tumbled as much as 10.7%. The benchmark Straits Times Index fell 1.7%.
Hung Hoeng Chow, Olam’s associate general manager, investor relations, didn’t answer two Bloomberg News calls to her office and two calls to her mobile phone. She didn’t return phone or e- mail messages.
“We are concerned about internal controls given significant differences between unaudited and audited numbers every year without any impact on the reported net profits,” CLSA analyst Swati Chopra wrote in a report dated Feb. 21.
CLSA’s report questions the sustainability of Olam’s profits from Nigeria, where the company receives an export incentive from the government. The incentive, which makes up 30% to 40% of Olam’s profits, will fall over time, Chopra wrote in the report, without giving a timeline.
Olam began operations in 1989 exporting cashew nuts from Nigeria to India, according to its Web site. It is now the African nation’s largest non-oil exporter and has “a leadership position” in raw cashew nuts, cocoa, cotton, sesame and timber, it says on its Web site.
Olam said Dec. 3 it plans to set up a US$200 million ($256.5 million) sugar- refining venture at a port in Nigeria to tap growing demand in the nation.
“We are expecting the company to release a statement later today relating to the share drop,” Ben Santoso, an analyst with DBS Vickers Securities (Singapore), said by phone today.
