Company Name: WILMAR INTERNATIONAL LIMITED
| Research House: Phillip Securities | Price Call: HOLD | Target Price: 3.70 |
Phillip Securities downgrades Wilmar (F34.SG) to Neutral from Accumulate as the stock’s recent gains suggest limited upside. “Based on our estimates, Wilmar is trading at an estimated FY13E P/E of 14.5x, which is in line with its five-year average of 14.4x.”
The house raises its target to $3.70 from $3.47, based on 14.0x PER blended with DCF from the previous 13.0x FY13 PER.
Phillip expects CPO prices to continue gaining strength in 1Q13 before fading gradually heading into 2Q13 amid seasonally weak CPO demand, stronger CPO supply production in both Malaysia and Indonesia and the record high palm-oil stockpile at 2013’s start.
But while Wilmar’s revenue may fall, it doesn’t expect lower edible-oil prices to have much of a negative impact on the company as it is a significant downstream player, which may benefit from the lower feedstock prices. Wilmar is up 0.3% at $3.60.
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