• BUY Entry – 1.78 Target – 1.92 Stop Loss – 1.71
  • Olam is a leading food and agri-business operating across the value chain in more than 60 countries, supplying food, ingredients, feed and fibre to more than 17,300 customers worldwide. Listed on 11 February 2005 on the mainboard of SGX, Olam currently ranks among the top 30 largest listed companies in Singapore in terms of market capitalisation and is a Singapore constituent stock of the FT Global All Cap Ex US Index.
  • Higher food prices are good for Olam but bad for our pockets. The FAO Food Price Index (FFPI), which measures the monthly change in international prices of a basket of food commodities, came in at 133.7 points in Dec 2021, down slightly from Nov 2021, but up 25% YoY (see chart below). Essentially, food prices are at the highest level in more than 10 years, which is set to benefit food producers such as Olam. Bad weather, labour shortages and supply chain bottlenecks are among the factors leading to higher food prices. 
  • Catalyst from the listing of Olam Foods Ingredients (OFI) and entry into STI.  OFI intends to seek a primary listing on the London Stock Exchange and a concurrent secondary listing in Singapore in the first half of 2022. The London listing could raise about 2 bn pounds (US$2.8 bn). OFI reported a 29.5% YoY increase in 1H2021 EBIT and the company expects its strong business momentum to continue into the second half of 2021. An additional catalyst for Olam is the inclusion in the STI Index. It is likely that Olam may replace ComfortDelGro in the STI when the quarterly review is announced on 3 March 2022. 
  • Technical analysis. Olam share price has gained 45% from the lows of 2021, and is currently trading within the price range of S$1.67-1.80. Key resistance level is at S$1.80. Since the rally from August 2021, the 100 day EMA has provided firm support to its ongoing uptrend. 
OLAM SP (Source: Bloomberg)