SG: MARKET PULSE: Wilmar, Venture Corp (24 Jun 2013)

Stock Name: Wilmar
Company Name: WILMAR INTERNATIONAL LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 3.25

Stock Name: Venture
Company Name: VENTURE CORPORATION LIMITED

Research House: OCBC

Price Call: HOLD

Target Price: 7.37

MARKET PULSE: Wilmar, Venture Corp

24 Jun 2013

KEY IDEA Wilmar: Expect more volatility ahead Wilmar international Limited (WIL), with its large exposure to China via its oilseeds crushing and consumer pack businesses, is certainly feeling the impact from the recent slew of sluggish economic data out of the mainland. As such, stock price has been particularly volatile over the past week or so, rising by as much as 7.1% to a recent S$3.31 high before retreating by 6.3%. Going forward, we continue to expect more volatility in share price, especially if market adopts a less "risk on" approach. In view of this, we reduce our valuation peg from 15x to 12.5x, which in turn reduces our fair value from S$3.90 to S$3.25. Downgrade to HOLD for now. (Carey Wong) MORE REPORTS Venture Corp: Good company, uncertain times Our conversation with Venture Corp (VMS) highlighted that sentiment among its customers has largely remained cautious given the still uncertain macroeconomic conditions. This is in line with tepid macro data points which were released recently. We now expect VMS's 2H13 recovery strength to be weaker than our previous expectations. Hence, we pare our FY13/14F revenue forecasts by 5.4/1.6%, even as we take into account the recent appreciation of the USD vis-à-vis the SGD. Our FY13/14F PATMI estimates are lowered by 7.8/6.6%, respectively. While we like VMS's strategy of continuing its acquisition drive for new customers and growing its market share with existing customers by leveraging on its strong design and engineering capabilities, we prefer to wait for clearer signs of a rebound in the global economic conditions before turning more positive on the stock. Maintain HOLD with a lower fair value estimate of S$7.37 (previously S$8.00) due to our reduced forecasts. (Wong Teck Ching Andy)

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