SINGAPORE (Feb 21): Credit Suisse is maintaining its “neutral” call on Wilmar International despite expecting strong 1Q17 results as there appears to be little earnings visibility going forward.
Credit Suisse is revising up its FY17/18 earnings estimates by 3-4% and also upgrading its target price to $3.73 from $3.10 to take into account the more vibrant China and Singapore markets.
In a Monday report, analyst Tan Ting Min says Wilmar should do even better in 1Q17 for a few reasons. Palm oil prices in USD are up 28% y-o-y; Fresh Fruit Bunch (FFB) output should rise as the impact of El Nino fades and Wilmar has secured 0.5 million kilolitres in the third biodiesel tender from Pertamina. Meantime, the sugar unit should gain from the upward trend in sugar prices while the “oilseeds and grains” market in China appears to have become more rational.