Olympia Capital good for value or dividend investing

Good morning, let’s get into it!

This series has ended, but I have been interested in another company since last year. What caught my interest was that it was undervalued, not in the spotlight, and had a good debt-to-equity ratio. But my research on it had not fully taken place, and I didn’t know exactly what determined a good company to invest in, unlike now.

But now let’s start to analyze the company called Olympia Capital:

Business Model

OCCL is a Gaborone-listed investment holding company focused on building-related manufacturing. Its main asset is Kalahari Floor Tiles (Pty) Ltd, Botswana’s sole vinyl floor-tile maker (capacity ~1,000,000 m²/yr, 24/7 operations)occl.co.bw. The group is organized into three core segments: vinyl floor tiles, aluminium window/door systems, and cleaning chemicalsmarketscreener.com. In practice, Kalahari operates four divisions: floor tiles, Aluminium (architectural hardware and glazing), Yokota Blinds (aluminium/plastic/bamboo blinds), and BotFic (cleaning/hygiene chemicals)occl.co.bwoccl.co.bw. The company also holds investment properties (commercial and residential), but the bulk of revenues comes from manufacturing and exports of these products. In summary, OCCL sells affordable, quality building and hygiene products in Botswana and the SADC region, leveraging its manufacturing base in Gaboroneoccl.co.bwmarketscreener.com.

• Key Products: Vinyl floor tiles (various colors/thickness), aluminium windows/doors, blinds, and BotFic cleaning chemicalsoccl.co.bwmarketscreener.com.

• Customers: Government, retailers, wholesalers, and individuals in Botswana and neighboring countriesseednetworksa.com.

• Geographic Footprint: Production is in Botswana (Mogoditshane Industrial area) with exports mainly to Southern Africa (see End Market).

Management Capability

The board and executive team combine long-tenure insiders with recent hires. Dr. Christopher Obura (age ~89) remains chairmanmarketscreener.com. Other long-serving directors include Patrick Wamae (since 2021) and Oupa Mothibatsela (appointed 2023)marketscreener.comuk.marketscreener.com. In 2025 the board added Felix Kimanthi as Executive Director (previously Group CEO in Kenya) to bolster management, citing his 15+ years of industry experiencemarketscreener.com. The finance function is led by CFO Alex Kimani (since 2018marketscreener.com).

Overall, management appears technically capable (ISO-certified manufacturing, multi-decade track record) and internationally connected (Kenyan leadership experience), but the chairman’s advanced age and historical dependence on founder leadership may be governance considerations. The recent ED appointment and a professional CFO suggest a push for more modern oversight.

Historical Free Cash Flow Growth

OCCL’s cash flow has been volatile. After a large operating loss in 2021, cash from operations (CFO) turned positive in 2022 as sales rebounded. In FY2022, CFO was about P1.37 M (including working-capital effects), funding P0.76 M of capex and leaving roughly P0.71 M free cash flow. By FY2023, CFO fell to P0.72 Mapis.bse.co.bw. Capital expenditures were only P0.28 M (2023) down from P0.76 M (2022)apis.bse.co.bw, so free cash flow was roughly P0.33 M (721k–388k) in 2023.

• FY2022: CFO ≈ P1.37M, CapEx P0.76M → FCF ≈ P0.71M.

• FY2023: CFO ≈ P0.72M, CapEx P0.28M → FCF ≈ P0.33Mapis.bse.co.bw.

Cash generation weakened in 2023 (down ~47% vs 2022) as revenue flattened. The company has no large expansion plans on file, so future FCF will largely track sales and working capital trends. The modest free cash flows have primarily serviced debt reduction rather than dividends or new investments.

End Market (Botswana & SADC)

Domestic (Botswana): OCCL’s products serve local builders, offices, and household markets. Botswana’s economy and construction sector have been sluggish. A Dec 2024 Bank of Botswana survey noted that firms in Construction/Real Estate were pessimistic about near-term growthbankofbotswana.bw. (National GDP growth is forecast near zero due to weak diamond revenues, suggesting limited domestic stimulusreuters.com.) High construction costs and subdued public spending constrain demand for new floors, windows, and fittings.

Regional (SADC): About 60–80% of Kalahari’s vinyl tiles are exported to neighboring SADC countriesseednetworksa.com. Major export markets include South Africa, Namibia, Lesotho, and Eswatiniseednetworksa.com. Unfortunately, South Africa’s construction industry is forecast to shrink by ~5% in 2024 (with only 0.5% growth in 2025) due to weak economic activity and high costsbusinesswire.com. Neighboring economies (Namibia, Lesotho, etc.) face similar headwinds. On the positive side, some large infrastructure projects (e.g. power plants, roads) could spur demand in the medium term, but these are uneven.

In sum, OCCL’s end markets are currently challenging: Botswana’s construction demand is weak, and even the broader South African market is in declinebusinesswire.combankofbotswana.bw. The company’s diversification across several product lines and countries helps, but end-market growth is likely subdued.

Main Risks

• Economic & Market Risk: A downturn in Botswana’s economy or key export markets could hit sales. Both domestic construction and South African building sectors are under pressurebankofbotswana.bwbusinesswire.com.

• Concentration Risk: The core vinyl-tile business dominates revenue. A sustained slump in flooring demand or entry of a competitor (there is only one other local tile maker) could impact results.

• Going-Concern/Profitability: Auditors have flagged OCCL’s profitability issues: Mazars expressed doubt about OCCL’s ability to continue as a going concern for FY2022 resultsuk.marketscreener.com. (The company did generate a small profit, but with thin margins.) Continued low earnings could renew these warnings.

• Input Costs and Currency: OCCL imports raw PVC, chemicals and capital equipment, making it vulnerable to commodity price swings and USD/BWP currency moves. Rising interest rates (local borrowings have carried ~high effective rates) also increase finance costs (FY2023 interest ~P0.23M on ~P1.33M debt).

• Operational Risk: Manufacturing outages (as in COVID lockdowns) or supply-chain disruptions (e.g. raw materials, logistics) could severely affect output. Energy interruptions could also hurt a 24/7 plant.

Balance Sheet Health

The balance sheet is strongly equity-financed. As of Dec 2023, shareholders’ equity was ~P55.66M on total assets P64.27Mapis.bse.co.bw, implying an equity ratio of ~87%. Total liabilities were only ~P8.61M (mostly deferred tax and payables)apis.bse.co.bw. Interest-bearing borrowings are minimal (~P0.74M non-current + P0.59M currentapis.bse.co.bw), down from prior years as the company has been repaying debt. At year-end 2023, cash and equivalents stood at P1.46M (down from P2.19M in 2022)apis.bse.co.bw, with an overdraft of P1.38M.

Notably, investment properties (valued at P15.32M) and PPE (P21.65M) underpin the asset baseapis.bse.co.bwapis.bse.co.bw. Inventory is about P14.03M (major working-capital investment)apis.bse.co.bw. The low debt and large equity buffer give financial flexibility, though the cash position is modest. In sum, balance sheet risk is low – the company is not highly leveraged – but returns on equity have been modest.

Capital Allocation Strategy

OCCL has pursued a conservative capital allocation policy. Management prioritizes sustaining operations and strengthening the balance sheet over payouts. Key points:

• Reinvestment: The company invests moderately in upkeep and minor expansion of its factories. FY2023 capex was P0.28M (vs P0.76M in 2022)apis.bse.co.bw, roughly matching depreciation.

• Debt Reduction: A portion of cash flow goes to deleveraging. In 2023 the company repaid P0.61M of borrowingsapis.bse.co.bw.

• Dividends/Buybacks: No dividends have been paid in recent years (see below), and no share buybacks are disclosed. The retained earnings have accumulated on the balance sheet.

• Other Investments: No material acquisitions or new lines have been announced. The business remains focused on its existing operations.

Overall, OCCL has retained nearly all earnings to fund capex and debt paydown. This has built up equity but provided zero cash return to shareholders to date.

Past and Projected Growth

• Historical Growth: Revenue expanded from ~P39.9M in 2021 to P46.36M in 2022 (↑16%)apis.bse.co.bw, driven by post-COVID demand recovery. In 2023 revenue held roughly flat at P46.62Mapis.bse.co.bw. Net profit has been erratic: after a near break-even 2021 (P0.05M profit), OCCL earned P2.96M in 2022apis.bse.co.bw, but profit fell to P2.25M in 2023apis.bse.co.bw. EPS were about 6 thebe (2022) vs 4 thebe (2023) on ~64.35M shares.

• Recent Trend: Early 2024 indications are more positive. StockAnalysis.com reports FY2024 revenue of P49.00M (+5.1%) and earnings of P3.66M (+62.5%)stockanalysis.com (market sources suggest higher volumes and cost control improved margins). If accurate, 2024 saw a rebound in profitability, though this data isn’t an official release.

• Outlook: Management has given no formal guidance. The chairman’s commentary for 2023 noted second-half weakness but expressed hope of better performance going forwardapis.bse.co.bw. Growth likely depends on macro recovery: any uptick in Botswana/SADC construction or margin improvement (e.g. through cost savings) would boost results. Absent a major new investment, near-term growth will be modest.

Dividend Sustainability

OCCL has not paid dividends in recent years. Historical records show only token distributions (the last known dividend was in 2006). Stock analysts list its dividend as “n/a”stockanalysis.com. Official commentary has confirmed no interim dividends (even in good years management retained earnings for year-end purposes)apis.bse.co.bw. Given the modest net profits and reinvestment needs, the company appears to prefer funding operations internally. Unless profitability and cash flow significantly improve, dividend payouts seem unlikely. In short, dividend income is not part of OCCL’s value proposition at present.

Current Valuation and Value Assessment

As of late 2025 OCCL’s share price is around P0.27 (market cap ≈P17.4M)stockanalysis.com. On trailing EPS (~P0.06), this implies a P/E of only ~4.5stockanalysis.com and a P/B of roughly 0.3 (since book value ≈P55.6M or ~P0.865 per shareapis.bse.co.bw). These multiples suggest the stock is “cheap” on a raw basis. However, two caveats: (a) no dividend yield (Dividend = n/astockanalysis.com) means total return depends entirely on share price gains, and (b) the company’s earnings and cash flows have been inconsistent and sector cyclical.

Relative to peers, benchmarks are hard to find on the BSE, but the sub-5 P/E signals a market expecting low growth or higher risk. Given the thin trading and small float, valuation ratios should be viewed cautiously. The low valuation could be considered a margin of safety if one believes in a turnaround or recovery in demand. Conversely, the valuation may reflect persistent profitability risks and market illiquidity.

Conclusion: Suitability for Value or Dividend Investors

For a value investor, OCCL’s low P/E and high equity cushion make it an intriguing deep-value candidate. The company trades below net asset value (P0.27 vs ~P0.865 book/shr) and has turnaround potential if SADC construction revives. Its cash-generative core business (tiles/chemicals) has long-run demand, and management is addressing costs. However, the small size, historical earnings volatility, and auditor concerns caution that the stock could remain discounted. A value investor should weigh the margin of safety against the risk that OCCL may underperform or require recapitalization.

For a dividend investor, OCCL is not attractive. No dividends have been paid in over a decadeapis.bse.co.bwstockanalysis.com, and no near-term payouts are indicated. Income-focused investors would need to rely on speculative share appreciation, which is inconsistent with a dividend strategy.

Bottom Line: Olympia Capital may appeal as a contrarian or deep-value stock (very low P/E/P/B) if one is comfortable with small-cap, emerging-market risk and business cyclicality. It is not suitable for investors seeking steady income or stable growth without significant risk.

Sources: Company filings and disclosures (FY2022–2024), BSE announcements, analyst summaries and financial mediaoccl.co.bwmarketscreener.comapis.bse.co.bwapis.bse.co.bwuk.marketscreener.comapis.bse.co.bwbankofbotswana.bwbusinesswire.comstockanalysis.comstockanalysis.com.