ANALYSTS SAY: Buy, Sell, Hold (18 Mar)

CGS CIMB

Olam Group (OLG SP)
Exciting Time With Upcoming IPO Set to Unlock Huge Value And Positive Outlook

Olam aims to complete the spin-off of its OFIGL subsidiary in the UK, along with a secondary listing on the SGX in 2Q22. OFIGL’s IPO is expected to be valued around S$8.0b-14.0b (S$2.17-3.79 per share), assuming 12-17x EV/EBITDA multiple based on global peers’ average, lower than the valuation of S$23b reported by Bloomberg on 23 Feb 22. Further strategic options could unlock more value, with OFIGL’s IPO alone set to provide around 100% upside.

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Singapore Airlines
Near-term cargo yield upside

■ The Russia-Ukraine war and the Covid-19 lockdowns in China will likely raise
cargo yields in Mar 2022, after the seasonally-weak Lunar New Year period.
■ High oil prices from late-Feb onwards will not materially affect SIA’s 4QFY22F performance, as jet fuel is usually priced with a one-month lag.
■ Reiterate Add with an unchanged TP of S$5.88, still based on FY23F P/BV of
1.06x (+1 s.d. from the mean since 2011) on our adjusted BVPS.

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MAYBANK KIM ENG

UOB KAYHIAN

Regional Plantations
A more realistic solution but at the expense of growers?

Maintain NEUTRAL on the sector
If the proposal to raise Indonesia’s CPO export levy materialize, Indonesian based upstream growers’ CPO net receipts will probably be worse off whenever global prices exceed USD1,000/t. Using 16 Mar as an illustration, we estimate their CPO ASP would be lower by USD158/t under the new
proposal. As details remain sketchy, we make no changes to our forecasts for now. Meanwhile, removing the export curbs may pressure CPO prices in the near term. Preferred BUYs: KLK, TAH & BAL.

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Gloves – Malaysia
4Q21: Upgrade To MARKET WEIGHT As Reward-to-risk Appears Balanced

4Q21’s ASP-led woeful earnings were further weighed by soft volume output.
Positively, the sector is expected to bottom over the immediate term. Meanwhile, sector
valuations are trading below -2SD of its pre-pandemic five-year PE mean. While sentiment could decline in tandem with the sector bottoming out, we think downside risks to earnings have largely been factored in. Thus, the reward-to-risk payoff appears
balanced at this juncture, prompting us to upgrade the sector to MARKET WEIGHT. 

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