Daiwa upgrades Wilmar (F34.SG) to Buy from Outperform after its 17% share-price fall since November 9. “While we believe the company’s poor 3Q10 results, its foray into property development in China, and the threat of PRC food-price controls are negative developments, we think its share price has overreacted and see distinct value in Wilmar now.” 

Notes on the day after Wilmar announced its China property JV, Wilmar’s market cap fell 13.3X the amount of money that it had targeted toward investing in two property projects. 

 

“This ratio was far worse than those for companies that had actual provisions related to what we consider were more serious issues.” 

 

Expects 4Q10 and 1Q11 results to act as a catalyst and validate its view that net profit could surprise positively. “The key drivers for the upside surprise could be a recovery in soy-crush margins in China.” Keeps $6.73 target. The shares are down 0.5% at $5.68.