SINGAPORE (Feb 1): Wilmar International is likely to post its strongest quarter in terms of core net profit when it announces its 4Q16 results on Feb 20, says UOB Kay Hian in a Wednesday report.

According to UOB, Wilmar is expected to report stronger 4Q core net profit of US$430-460 million ($609-651 million).

This is on the back of higher margins and sales volumes from tropical oils as well as the oilseeds and grains divisions; and profit recognition from the sugar division which had been delayed.

“We raise 2017-18 net profit forecasts by 11% and 9% respectively to factor in higher margins for the tropical oils and sugar divisions,” says UOB’s Singapore Research Team.

As a result, UOB is raising its target price for Wilmar to $3.50, from $3.05 previously. However, it is keeping its “sell” call on Wilmar.

“We think current share price should have factored in the earnings recovery and good commodity prices,” says UOB.

Meanwhile, UOB says investors’ confidence should improve after Archer Daniels Midland Company (ADM) in Jan acquired an additional 50 million shares from Wilmar to increase its stake in the agri-business giant to 23.94%.

As at 12.30pm, Wilmar International is trading 4 cents higher at $3.92.