Highlights

Simons Trading Research

Author: simonsg   |   Latest post: Thu, 13 Jun 2019, 11:39 PM

 

Wilmar International - Trade War Jitters

Author:   |    Publish date:


  • Maintain BUY with lower SOP-based Target Price of SGD3.51 from SGD3.59, 12% upside. 
  • We believe CPO prices have overreacted negatively to the trade war and expect to see some respite in 4Q18, post seasonal peak. However, given the larger-than-expected price reaction, we are cutting our CPO price assumptions for 2018-2019 to MYR2,400-2,500. 
  • Our earnings have been cut by 6-8% for 2018F-2020F. On soybean, we note that Brazilian soybean prices have risen and are now at a 20% premium to US soybean prices. However, we believe Wilmar can still generate positive crush margins even at these price levels.

Trade War Still Affecting Sentiment for CPO

Negative sentiment surrounding the trade war and the recent strength of the MYR have resulted in CPO prices falling to low levels of MYR2,100-2,200/tonne. While we think the negative reaction is overdone, we do not expect much price recovery over the next few months, as we head towards the seasonal peak output period. 

We expect some price recovery in 4Q18 once the peak production period is over, and once the real impact of the trade war starts coming through.

Source: RHB Invest Research - 02 Aug 2018

Share this
Labels: Wilmar Intl

Related Stocks

Chart Stock Name Last Change Volume 
Wilmar Intl 3.48 -0.01 (0.29%) 5,547 

  Be the first to like this.
 


 

147  119  159  676 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 Genting Sing 0.885+0.005 
 SingTel 3.33-0.02 
 Jasper Inv 0.0040.00 
 ThaiBev 0.8350.00 
 Synagie 0.128+0.001 
 Rex Intl 0.069-0.002 
 Thomson Medical 0.063+0.002 
 NetLink NBN Tr 0.85+0.005 
 AEM 0.995-0.005 
 LionGold 0.0010.00 
Partners & Brokers