OCBC cuts Wilmar’s (F34.SG) target price to $6.48 from $7.04, based on 18X FY11 P/E, after lowering FY11 earnings forecast by 8.0% to reflect the risk of a prolonged squeeze on the plantation group’s margins. 

Says margins for its edible oil and oil seeds crushing business could remain under pressure due to the persistent rise in raw material prices; “because its consumer products are typically deemed to be essential food items, it could also face difficulties in passing on the higher raw material prices to consumers” due to price caps imposed by governments to control inflation. OCBC keeps its Hold call. 

 

The shares are flat at $5.98.