Shares of Wilmar International (WLIL.SI), the world’s largest listed palm oil firm, rose as much as 1.8% on Monday after analysts said the negative market reaction to its property venture may have been overdone.

At 0247 GMT, Wilmar shares were up 0.9% at $5.75 on a volume of 6.1 million shares.

 

OCBC said Wilmar’s share price had tumbled 16% to a recent low of $5.50 in reaction to the firm’s property venture as there were concerns that it was losing its core business focus.

 

But the brokerage said these concerns, while valid, were overdone given Wilmar’s prudent management style and good  execution track record. It upgraded its rating to “buy” from “hold” and maintained its target price of $6.48. 

DMG & Partners Research said the recent decline in Wilmar’s stock price would have factored in the uncertainty relating to the property venture, adding that the real estate development business will ride on China’s urbanisation and rising wealth.

 

The brokerage maintained its “buy” call and target price of $7.88 on Wilmar.

 

“The property business most likely will make them some money, even though it’s not their core business. Their joint venture partners are quite strong,” said a local trader.

 

Wilmar had won the bidding for six land sites in Laobian  District in China’s Liaoning province for a total of US$204.4  million ($264.5 million) in partnership with two Hong Kong firms. The joint venture had also won a bid for three sites worth US$36 million in Bayuquan.