Monday, January 20, 2014

Wilmar International -Well positioned (MKE)

Wilmar International
Share Price: SGD3.27
Target Price: SGD4.30
Well positioned

 Wilmar is our top BUY for 2014.
 We believe it will benefit from stabilising soybean crushing margins, benign CPO price and a strong financial position.
 Our TP of SGD4.30 is based on 14x FY14E P/E.

Top commodity trader pick for 2014
Wilmar continues to be our top pick among the SGX-listed commodity traders. It offers better earnings visibility, clear catalysts and strong financial position. We reiterate our BUY call with a target price of SGD4.30, pegged to 14x FY14E P/E.

Three reasons to BUY
Our positive view of Wilmar is based on three factors: (1) soybean crushing margins in China will continue to stabilise in 2014, (2) CPO price is expected to be benign, boding well for its Palm & Laurics division, and (3) the sting of global liquidity squeeze and rising interest rates will be felt less, given its strong financial position.

Risks to our call
Key downside risks to our call are an unexpected surge in CPO price, lower-than-expected sugar price and unfavourable biodiesel price. Upside surprise could come from sugar, better-than-expected soybean crushing margins and higher-than-expected demand for biodiesel. For sugar, we concur with the consensus view that there is limited upside to sugar price for 2014 given the prevailing glut of raw sugar, albeit a smaller surplus than in 2013. But in our view, current low market expectations leave room for upside surprise as certain other factors (eg, unexpected weather conditions or a more ethanol-weighted production mix from sugarcane) could change the industry’s dynamics and give sugar price a lift.

Source/Extract/Excerpts/来源/转贴/摘录: MKE-Research,
Publish date: 16/01/14

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