Wilmar

Wilmar: UBS cuts TP to $3.70 from $5.70, after lowering its 2012-14 earnings forecasts by 29%-39%. Remains concerned about continued controls on the cooking oil price and negative soybean crush margins in China; believes this could result in on-going earnings volatility from trading and hedging. Adds, the stock's underperformance is not yet a buying opportunity, as Chinese cooking oil price controls are here to stay on account of inflation concerns, while soybean crush margins are likely to remain negative for years due to structural overcapacity. With a new challenge emerging in the form of poor Malaysian palm refining margins, UBS notes the stock is unlikely to return to positive territory anytime soon without government intervention. The house keeps a Neutral call, saying it will wait for soybean and crude palm oil price weakness before revisiting its stance. CIMB Technicals offers a different view, says the charts tip Wilmar at Buy after its sharp fall from Feb's $6.01 high. Says the stock price is now forming a bullish wedge pattern, which could potentially signal that a reversal could be forthcoming. Both its indicators are showing bullish divergence signal, which support the view that a rebound might take place here. Tips a rebound could take the stock up to $3.63 and possibly to $3.96. But adds, with the major trend downward, only aggressive traders should go long here, advising placing a stop below $3.34 support.