Wilmar

Wilmar: Deutsche and Citi maintains Buy with $3.60 and $4.08 TP respectively. Note that despite reporting poor 2Q results, believe the worst should be over because 1) cost pressure may ease with the possible purchase of soybeans at a subsidized price from the Chinese government 2) weather improvement in the US should cap further increases in the global soybean price and 3) sugar is likely to turn profitable with the pickup in milling activities in 2H. Believe the heavy selldown presents good opportunity to accumulate.1H12 results significantly below expectations but likely to be the worst quarter. Results should improve sequentially as expect sugar milling to turn profitable (weather conditions have improved) and demand in China to rise on festive seasons (mid-autumn and Lunar New Year’s advance purchases in 4Q). Also, the Chinese govt may release soybeans from its national reserve to Wilmar to help ease the cost pressure.