Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: CLSA
The new target implies 13% downside, “and reflects a 15% conglomerate discount, and a reduced premium for its Chinese business owing to greater regulatory risk.” It says Wilmar’s property move “represents a loss of focus,” and the house prefers “that the cash be deployed in related agri businesses, as management still sees opportunities for investment in Asia.”
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: CLSA
CLSA downgrades Wilmar International (F34.SG) to Sell from Underperform, lowers its target to $4.95 vs $5.70; “we do not buy into Wilmar’s argument that investors will condone its diversification into property as long as it makes money, the way they excused its investment in bank equities in 2009. We no longer see justification for valuing Wilmar as a pure agri play.”
The new target implies 13% downside, “and reflects a 15% conglomerate discount, and a reduced premium for its Chinese business owing to greater regulatory risk.” It says Wilmar’s property move “represents a loss of focus,” and the house prefers “that the cash be deployed in related agri businesses, as management still sees opportunities for investment in Asia.”
It adds, Wilmar’s marginal role in the property JV “reinforces the impression that this is simply a cash project, and sets a dangerous precedent for future use of capital.”
Wilmar’s shares are up 0.2% at $5.70.
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