Tuesday, November 23, 2010


Wilmar: Deutsche downgrade to Hold from buy, lowers target to $6.50 from $7.50. While positive on Wilmar's future prospects, house believes there are challenges in relation to policy risk from China's threat of price controls and high feedstock costs so crushing margins might not recover strongly in near term...

To cut FY10-11E earnings by 8-18%. Preferred exposures in the sector are the upstream plantation stocks that are more leveraged to high CPO price. Wilmar is now trading at 20.32x fwd P/E compared to plantation stocks Indofood Agri 21.53x and Golden Agri 17.76x.

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