Home > Uncategorized > Wilmar got downgraded by Goldman Sach

Wilmar got downgraded by Goldman Sach

Here’s the news.

JPMorgan downgrades Wilmar International
(F34.SG) to Underweight from Overweight and slashes its target price to S$4.60
from S$7.20. Says the stock is likely to underperform near term due to a
regulatory overhang and competition in China; also cites an overly optimistic
consensus earnings estimates and likely lackluster earnings momentum, while
investors may accord a lower P/E multiple for its intended deviation from the
core business. Reduces FY11/FY12 earnings forecasts by 5.3%/7.3% as the house
lowers oilseeds crushing and consumer products margin assumptions; it also
reduces the target P/E multiple to 14X from 20X. Says Wilmar’s deviation from
its core business may attract a “conglomerate discount.” Adds future property
projects under its JV with Kerry Properties and Shangri-La “could see more
capital reallocated to property investments than reinvested in its core
agri-commodities business in future…this may lead to a lowering of the P/E
that investors are willing to accord the stock.” Stock off 0.2% at S$5.65.

A flag formation breakout with immediate target at 5.3 which I maybe tempted to accumulate. I’ve calculated base on PE comparable with GoldenAgri, it has to drop to $5. However it has a one time cash inflow which had disrupted the earnings pattern. I will calculate the normalized earnings at a later date.

2011Jan-Wilmar-800x600

Downtrend continue after goldman sach issue report. I was lucky not to get into this counter. But definitely one of my long term target.

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