Wilmar’s (F34.SG) 20% stake investment in PPB Group’s (4065.KU) unit FFM in bid to expand flour milling business doing little to boost investor interest. Stock +0.8% at $6.06 but volume paltry as underlying concerns over plantation group’s China business still persist given Beijing’s bid to rein in food inflation.

Wilmar will pay MYR378.1 million ($156.8 million) for stake in FFM, which operates 4 flour mills in Malaysia, 1 each in Vietnam, Thailand, Indonesia.

 

Nomura, which has Buy call with $7.60 target, tips modest earnings contribution of just US$5 million($6.54 million)-US$6 million in FY11 for Wilmar, but says acquisition “strategically positive” in long-term as complements company’s existing distribution franchise in China. 

 

Separately, Wilmar plans to sell to FFM 20% stake in some of its China units, which operate in same business as FFM. Selling price yet to be determined. Resistance tipped at this week’s $6.15 peak.