Wilmar

Wilmar: Citi maintains Buy with $6.10 TP. House happy with ‘Less in property ventures, More in Soybean Vol’.

Recall that Wilmar has reduced its exposure to Chinese property at Yingkou city by ¾. Together with JV partners Kerry Ppty and Shangri-La China, the trio has collectively terminated the acquisition of land use rights for its larger project in Laobian District, where Wilmar was initially tipped to potentially invest US$396m in this venture.

Wilmar is still engaged with its other Bayuquan,Yingkou city project which would see Wilmar invest up to US$134m for its 35% share in the project. Meanhile, higher import vol of soybeans into China for Nov indicate that a +50% MoM (+4% YoY) increase in imports of soybeans into China. However, even with this spike in Nov, 2011 looks likely to end as a weaker ar from the perspective of soybean imports.

Overall, house view is that there has been destocking activity across the industry due to tight credit conditions across much of 2011 and this will eventually lead to better vol and margins for stronger firms such as Wilmar in 2012 as the industry reverts to being driven by end demand trends rather than ebbs and flows in speculative stockpiles.