Wilmar Int’l

BoA-Merrill downgrades Wilmar to Underperform from Neutral on concerns that stock will continue to face pressure until alleged tax fraud case in Indon is resolved. Cuts target price to $5.40 from $6.70 based on 20% valuation discount. Cautions that while plantation group has rejected fraud claims, potential impact on its Indon operation, which accounts for 25% of group profit, could be significant. Future dealings with authorities might come under greater scrutiny and operations could slow down, especially on new oil palm planting approval. Adds growth of Wilmar's rice, flour operations in China remains lacklustre, with mgmt expecting meaningful contributions only in 2-3 years.