$Olam(VC2.SG)
Olam Group: Deleveraging Before the Dividend Payoff
Olam Group’s share price has come under pressure after investors were disappointed by the lack of an immediate special dividend following the Olam Agri disposal. However, the strategy looks rational: the first US$1.88bn Tranche 1 proceeds are primarily a balance-sheet repair exercise, with management targeting about US$2bn of debt reduction across Tranches 1 and 2. (Olam Group)
The bigger catalyst could come from the remaining 18.19% Olam Agri stake, worth about US$800m before option consideration and 6% IRR, alongside monetisation of OGH assets including Palm Gabon, Rubber Gabon, Caraway and Rusmolco. Net proceeds are intended for progressive special dividends. (Olam Group)
Fundamentally, ofi is becoming the core investment case. Its 2025 EBIT was S$1.07bn, while higher-value Ingredients & Solutions already contributed 70% of ofi EBIT versus 55% in 2020. Management targets high-single-digit adjusted EBIT growth over the medium term. (Olam Group)
Technically, the stock had surged from S$0.96 at end-2025 to around S$1.40, making consolidation healthy rather than alarming. Maybank’s S$1.60 target implies further upside. (fool.com)
Stance: HOLD / ADD ON WEAKNESS. The rerating story remains viable, but patience is required. The real payoff comes when deleveraging converts into dividends and ofi’s higher-margin transformation becomes visible in earnings.
Not financial advice.
