Disclosure: Olympia Financial Group Inc. has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
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Price Performance (1-year)
Primary Services
The leading Canadian custodian/ administrator of alternative investments
OLY manages 137k+ accounts; its platform caters to a comprehensive range of investments not supported by banks, and other traditional trading/investment platforms
In 2024, 77% of revenue came from IAS (2023: 76%), 10% from health service plans (unchanged), and the remaining 13% from other services (2023: 14%)
Client assets were up 9% YoY to $12.1B vs our forecast of $11.9B
Financials (Year-End: Dec 31st)
2024 revenue was up 2.7% YoY amid higher client assets, and revenue from interest on unallocated client capital, beating our forecast by 2.5%
Total services revenue from core divisions (IAS and Health Service Plans) was up 2.2% YoY, driven by higher transaction volumes
G&A expenses were up 5.7% YoY, exceeding our forecast by 0.9%
EPS declined 0.2% YoY, but exceeded our forecast by 10.1%, driven by higher than expected revenue
Dividends increased 24% YoY to $7.20, aligning with our estimate. The payout ratio was 72% vs the historic average of 70%. Strong balance sheet
FRC Projections and Valuation
Since client assets under administration exceeded our forecast, we are raising our 2025 revenue and EPS
As a result, our DCF valuation increased from $133 to $142/share. Our comparables valuation increased from $137 to $145/share
We are reiterating our BUY rating, and adjusting our fair value estimate from $135.19 to $143.52/share (the average of our DCF and comparables valuations), implying a potential return of 40% (including dividends) in the next 12 months. Despite a slight EPS decline due to increased expenses, OLY demonstrated strong asset growth in 2024. However, we anticipate a material decrease in interest revenue this year, while recognizing the significant growth potential from the company's federal trust corporation registration, and the substantial discount in EV/EBITDA compared to the sector average.
Risks
We believe the company is exposed to the following key risks (not exhaustive):
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