SGX Stocks and Warrants
Wilmar - Underpriced Relative to Peers?
Warrants Highlight
Wilmar - Underpriced Relative to Peers?
| Code | Name | Type | Expiry | Exercise Price |
| QP2W | Wilmar MBeCW121203 | Call | 03-Dec-12 | 4.00 |
| QF1W | Wilmar MBeCW121102 | Call | 02-Nov-12 | 4.60 |
| M8MW | Wilmar MBeCW130603 | Long Dated Call | 03-Jun-13 | 6.50 |
Yesterday, Wilmar International made its biggest climb in almost two and a half years after it rose as much as 7% to an intra-day high of $3.80. Nevertheless, its close at $3.70 yesterday is still 39% away from its peak on Feb 15 this year.
Reasons for recent tumble
Prior to this week, Wilmar has been under heavy selling pressure following the release of a disappointing first quarter result on May 9. The world’s largest palm oil processor had posted net income that missed analyst estimates for two consecutive quarters, this time by 40%. Macquarie Equities Research (MER) subsequently commented in a report on May 11 that they were trimming their 12-month target price on Wilmar to $4.57.
Sell-off overdone?
The impact of yet another dismal quarterly result has led to Wilmar’s share price tumbling 27% to $3.41 last Thursday, its lowest since April 2009.
Wilmar currently trades at 12.2 times estimated earnings, compared to the average multiple of 17 times for its 60 closest peers in the global agricultural product industry, according to data compiled by Bloomberg.
Palm oil prices rebound
Looking at the trends in the palm oil sector, palm oil prices have retreated 20% based on last Friday’s close from their peak on April 10. Yesterday however, prices climbed for a fourth consecutive day on concern that dry weather in the main soybean growing regions in the U.S may damage the oilseed crop, lowering global supplies and boosting demand for the tropical vegetable oil. This bounce has coincided with the rebound in Wilmar’s share price over the last four days.
Singapore Market Wrap
STI on 4-day winning streak
STI rose for the fourth day yesterday, rising 0.5% day-on-day (dod) to 2,855.68. Investors were encouraged by the strong housing data in the US on Tuesday night and the expectations of further stimulus by the Fed.
Call STI 2750MBeCW120831 (QP9W) exercise level 2,750.*
Put STI 2850MBePW120831 (QE9W) exercise level 2,850.*
Palm oil players surged
Malaysian palm oil futures Sep contract crossed the psychological level of RM3,000/t yesterday, rising 3.2% to RM3,014/t. Palm oil names Wilmar (+4.2% dod, $3.70) and Indofood Agri (+3.2% dod, $1.31) saw strong buying orders. Wilmar had its biggest gain in 8 months.
Call warrant Wilmar MBeCW121203 (QP2W) exercise price $4.00.*
Call warrant IndoAgriMBeCW121203 (QR7W) exercise price $1.30.*
Call warrant IndoAgriMBeCW121101 (QD6W) exercise price $1.50.*
Ezion rallies
Ezion has rallied 25.3% from its recent lows of $0.71 on 4th June. Earlier this month, the offshore marine services company secured a contract worth approximately US$86.3mn over a 4 year period to provide a service rig to a Central American national oil major.
Call warrant EzionHldMBeCW121002 (P9CW) exercise price $1.10.*
Overnight Market Wrap
Bernanke decides to "Twist" again
Some investors were disappointed that the Fed did not announce another large scale asset purchasing program (QE3) but decided to extend the "Operation Twist" for another six months. The Fed also revised down 2012 growth projections to between 1.9% and 2.4%. US indices ended mixed, with S&P500 falling 0.2% to 1,355.69.
Similarly, meeting minutes showed that the Bank of England policymakers voted 5-4 against a Quantitative Easing programme to boost Britain's economy. However, the members suggested more stimuli is just around the corner.
Overnight Markets
| Indices | Last | Change |
|---|---|---|
| STI | 2855.68 |
0.5%  |
| HSI | 19518.85 |
0.5% |
| DJIA | 12824.39 |
-0.1%  |
| S&P 500 | 1355.69 |
-0.2% |
| Nasdaq | 2930.45 |
0.0% |
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
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