SINGAPORE (Feb 27): CIMB is keeping Wilmar International at "add" with an unchanged target price of $4.10 on attractive valuations, strong crushing margins so far in FY18 and with the anticipated listing of its China unit.
In a Monday report, analyst Ivy Ng Lee Fang says the group is expected to deliver good 1Q18 numbers. This given strong crushing margins in China so far in 2018, consumer products are expected to benefit from seasonal demand during the Chinese Spring Festival in mid-Feb, and improving sugar contribution due to the absence of impairment of US$30.6 million ($40.3 million) in 4Q17 and the sale of carried-over sugar inventories from its mills in Australia from the same quarter.
In addition, Wilmar remains on track to list its China operations in Shanghai in 2019 given the group has competed an internal restructuring for the listing, says Ng. China operations made up around 65% of FY17 earnings and Wilmar is likely to offer 10% new shares during the IPO, with P/E of not more than 23 times.