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Saturday, January 19, 2013

Maybank upgrades Wilmar to ‘buy’

Source: http://www.theedgesingapore.com/the-daily-edge/business/42348-maybank-upgrades-wilmar-to-buy.html


Maybank Kim Eng upgraded palm oil company Wilmar International to ‘buy’ from ‘sell’ and raised its target price to $4.65 from $2.75, on expectations its earnings will improve along with a recovery in its biggest market China.

By 10:30 a.m., Wilmar shares were flat at $3.64, having risen nearly 9% since the start of the year, compared with the Straits Times Index's 1.2% gains.
Expectations of low crude palm oil (CPO) prices in 2013 will benefit Wilmar, as it is a net buyer of CPO, although it owns some plantations, Maybank said, adding that lower feedstock cost will likely improve margins of its refining, trading and consumer divisions.

An improvement in China, which accounts for almost 50% of Wilmar's revenue, will boost the palm oil company and its plans to cut back capital expenditure will strengthen its balance sheet.

“With China’s soybean imports hitting a surprising high towards the end of 2012, we believe earnings surprises lie ahead,” said Maybank in a report.

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