Company Name: WILMAR INTERNATIONAL LIMITED
| Research House: Maybank Kim Eng | Price Call: SELL | Target Price: 3.25 |
Palm oil firm Wilmar International’s second quarter earnings may disappoint investors, as an expected recovery in the oilseeds and grains segment may not materialise, said Maybank Kim Eng.
By 10:32 a.m., shares of Wilmar were 1.4% lower at $3.64, and have plunged 27% so far this year, versus the Straits Times Index’s 11% gain. Wilmar is the worst performer on the Straits Times Index year-to-date.
The oilseeds and grains segment, which made up 21% of Wilmar’s profit before taxes last year, could continue weighing on its earnings if the industry sees over-capacity, Maybank said. It has a ’sell’ rating on Wilmar with a target price of $3.25.
Maybank cited industry sources as saying China’s soybean crushing utilization rate is at about 50%, and with state-owned companies continuing expansion, over-capacity could hurt even efficient producers.
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