- BUY Entry – 4.38 Target – 4.80 Stop Loss – 4.16
- Wilmar is Asia’s leading agribusiness group that encompasses the entire value chain of the agricultural commodity business, from cultivation and milling of palm oil and sugarcane, to processing, branding and distribution of a wide range of edible food products in consumer, medium and bulk packaging, animal feeds and industrial agri-products such as oleochemicals and biodiesel.
- Supply constraints. Palm oil prices hit another record high last week due to supply constraints. Indonesia, the world’s largest producer and exporter of palm oil, has imposed a new rule that made it mandatory for producers to sell 20% of their output to domestic consumers at a fixed price.
- Resilient palm oil prices expected in 2022. Palm oil prices are likely to remain above MYR 4,700 (US$1,124) per ton over the next six months, according to LMC International. In addition, it will still take another 12 months for Southeast Asia’s palm oil production to recover to end-2019 levels, after supply from Indonesia and Malaysia declined in 2020 and 2021.
- Aggressive share buy-backs. The company bought back S$57mn worth of shares in 4Q2021, bringing total share buybacks for the full-year 2021 to around S$131mn.
- Positive consensus estimates. Wilmar currently has 13 BUY recommendations and an average 12M TP of S$6.05, implying a 38% upside potential from the last closing price.
Crude Palm Oil Futures – 5 years historical chart. Still trading near all-time highs due to supply constraints.
