Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Nomura
Company Name: WILMAR INTERNATIONAL LIMITED
Research House: Nomura
Wilmar International, the world’s largest palm-oil trader, had its share-price target cut 16% at Nomura Holdings Inc. on concern it will make property investments a “long-term focus.”
The stock rating was lowered to “neutral” from “buy” by analysts Tanuj Shori and Tushar Mohata in a Jan. 7 client note, which said Singapore-based Wilmar will likely go into China’s second- and third-tier cities, having entered the nation’s property market in December. The target was cut to $6.40 from $7.60, also citing a risk that Wilmar may miss the fourth- quarter earnings estimates of analysts.
The stock rating was lowered to “neutral” from “buy” by analysts Tanuj Shori and Tushar Mohata in a Jan. 7 client note, which said Singapore-based Wilmar will likely go into China’s second- and third-tier cities, having entered the nation’s property market in December. The target was cut to $6.40 from $7.60, also citing a risk that Wilmar may miss the fourth- quarter earnings estimates of analysts.
“Although Wilmar will continue to invest substantially in agri, the valuation premiums may shrink as key shareholders may not like the non-core investment rationale,” Shori and Mohata said in the report published after a conference call with Wilmar’s management. “While Wilmar may make profits in property, the Street may attach more importance to the overall strategic intent of the company.”
Wilmar dropped 3.7% since announcing on Dec. 21 it will develop properties in China’s Liaoning province, missing out on the 5.2% advance by palm oil in the period. The shares fell as much as 0.9% to $5.64 and traded at $5.68 as of 12:47 p.m. in Singapore today.
The company, part-owned by Malaysia’s Kuok family, tied up with Kerry Properties (China) and Shangri-La China, in which the Kuok family are also shareholders, accordint to a Dec. 21 statement. Wilmar’s main contribution is in finding sites and implementing the projects with its partners, it said on Dec. 29.
“The demand for quality residential, commercial and hotel property in the second and third-tier cities in China is expected to experience strong growth in the future,” according to the Dec. 29 statement.
Nomura’s concern adds to those of Citigroup Inc. and Goldman Sachs Group Inc., whose analysts last month questioned the rationale for Wilmar’s diversification into real estate.
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