According to Reuters report, Wilmar is interested to invest US$2bn in the planned Merauke food estate in Indonesia's eastern Papua region. Notably, we understand that its Indonesian unit is looking to develop integrated sugar cane plantations, and is confident on realising part of the plan within the next five years.
Previously, Wilmar wanted to expand by investing at least US$1bn in China, Africa and Indonesia, where it had secured land for sugar plantations although this might take some years to start. In the short-term, we believe the RMB appreciation is positive for Wilmar’s consumer product segment. The stock currently trades at about 14.2x FY11 and 12.0x FY12 PER. Our house still has a BUY rating with TP of $7.20.
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