Analysis suggests Olam could take ComfortDelGro’s place in Singapore’s top index
According to a note from CGS-CIMB, transport operator ComfortDelGro (C52) could be removed from the Straits Times Index (STI) during the upcoming quarterly review in December. Analyst Lim Siew Khee anticipates that Olam International (O32), a food and agri-business company, is likely to fill the gap. Olam has not been part of the index since September 2015.
Lim’s projection is based on ComfortDelGro’s current market capitalisation of S$3.29 billion (ranked 42nd), compared to Olam’s higher S$6.38 billion market cap, placing it 23rd. ComfortDelGro’s recent struggles, including the shelving of its Australian IPO plan and disappointing rerating catalysts, have further added to the likelihood of its removal.
In her note, Lim stated that ComfortDelGro’s share price may remain capped in the near term, but she still holds a positive outlook with an “add” rating and a target price of S$1.80. She expects the stock to recover as COVID-19 restrictions ease, with the stock trading at a discount relative to its historical average.
Olam, meanwhile, is planning to list its food ingredients arm, Olam Food Ingredients, on the London Stock Exchange’s premium segment in the first half of 2022. This move aims to raise capital, reduce debt, and unlock the value of its business. Olam’s shares were priced at S$1.74 on Nov 23, a 0.6% increase from the previous day, while ComfortDelGro’s shares dropped to S$1.51, down 0.7%.
