• EPS fell 0.2% YoY due to a 6% rise in G&A expenses, driven by salaries, wages, and bonuses. While the drop was expected, it still beat our estimate by 10% due to higher-than-expected revenue. Management expects only moderate growth in expenses in 2025.
  • Dividends increased 24% YoY to $7.20, aligning with our estimate.
  • Services revenue will likely continue benefiting from organic demand growth for alternative investments. OLY’s subsidiary, Olympia Trust Company, is currently in the process of registering as a federal trust corporation, which will allow it to actively market its services in ON. 
  • OLY’s EV/EBITDA is 7.3x vs the sector average of 12.6x, a 41% discount. 

 

 

Key Financials (FYE - Dec 31)
(C$)		 2024 2025(F) 2026(F)
Assets Under Admin. ($,000s) $12,045,978 $12,949,426 $13,920,633
Revenue $102,920,352 $101,856,273 $100,513,399
EBITDA $33,705,928 $31,903,121 $30,447,610
Net Income $23,919,120 $21,822,678 $20,686,320
EPS $9.94 $9.07 $8.60
Dividends/Share $7.20 $7.20 $7.20

 

Price Performance (1-year)

 

  YTD 12M
OLY -1% 4%
TSX 0% 16%

 

Primary Services

  • Investment Account Services (IAS): OLY is a trustee/custodian/administrator of self-directed registered investment accounts for alternative investments
  • Health Services Plans: Administers health spending accounts for small/mid-sized corporations
  • Currency and Global Payments: Facilitates the buying and selling of currencies for corporations and individuals
  • Corporate and Shareholder Services: Offers corporate trust, and transfer agency services, such as maintenance of security holder registries, organizing annual meetings, and administering dividend reinvestments
  • Exempt Edge: Provides IT services to exempt market dealers, issuers, and investment advisors 

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):

  • Operates in a regulated industry 
  • The company's target market is niche 
  • Although OLY dominates the alternative investment market, there is no guarantee that banks and large investment platforms will not enter this space in the future. 
  • Earnings are significantly affected by fluctuations in interest rates
  • Transaction revenue depends on market sentiment for alternative investments

 

Appendix