Thursday, December 30, 2010


Wilmar: announced a 2nd property deal with its JV partners in Liaoning Province, China. To jointly bid for 6 sites in Yingkou city, Liaoning province, designated for residential and commercial purposes. The invmt could cost up to Rmb7.5b (S$1.4b), with Wilmar contributing Rmb2.6b. Wilmar expects to fund the project using internal resources and bank borrowings...

Recall last wk, the JV successfully bid for 3 plots of land, also located in Yingkou city, for mixed residential, commercial, and hotel development expected to cost up to Rmb 2.6b in total. Wilmar will hold a 35% stake in the JV, while partners Kerry Properties and Shangri-La Asia to hold 40% and 25% r’ptively. All 3 cos are linked to the Kuok family...

Investors are unlikely to welcome this deeper foray into property dev, given worries abt loss of focus on its core agri-business at a time when margins are under pressure. Wilmar's shares slumped 5.1% on Dec 22 when it first announced its intention to diversify. Still downside may be limited, as further dev on the property front should not come as too much of a surprise now. Moreover the stock is already down 18% since its Nov high, albeit partly on fears over food price controls in China...

Wilmar to hold an analyst meeting tmrw to provide further updates.
Expect 52-wk low at $5.25 to provide firm support, hence further share price weakness could present a potential buying opportunity.
The majority of Street has Buy/Hold ratings with latest target prices ranging btwn $6.73-8.18.

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