SINGAPORE (Aug 13): Shares in commodity giant Wilmar International crashed last month from as high as $3.29 in June to just $3 on July 17. The counter was probably affected by trade war concerns. In July, China imposed a 25% duty on soybeans imported from the US. Wilmar has an oilseed crushing business that uses soybeans as a feedstock, and higher soybean prices would affect the utilisation and operating margin of its crushing plants.

Analysts, however, saw the sharp dip as a buying opportunity. Juliana Cai at RHB Research Institute Singapore has a “buy” call on Wilmar and a price target of $3.51. In a July 4 report, Cai points out that US soybean prices have plummeted significantly since the 25% tariff recommendation. “This should help mitigate pressure on [Wilmar’s] raw material costs,” Cai says. “As such, we think the recent retracement in share price offers a good opportunity to accumulate the stock.”

Investors appear to agree. Wilmar’s stock has since rebounded to close at $3.20 on Aug 7.

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