Wilmar

Wilmar: OCBC upgrades to Buy with $3.90 TP. Note that sell-down is likely overdone. Recall Wilmar fell some 3.8% yesterday to $3.30, likely spooked by news that China’s inflation rate has rebounded to a 10-month high; this after consumer prices rose 3.2% YoY in Feb, driven by a 6% increase in food prices due to the Chinese New Year festivities. While the Chinese govt is understandably hawkish about inflation, market watchers do not expect them to take any drastic measures such as tightening monetary policy or introducing price caps on essential food items, especially since the spike could be seasonal in nature. The stock has also corrected somewhat since house downgraded it to Hold, and as there is now a potential 18% upside to our unchanged S$3.90 fair value (still based on 15x FY13F EPS), house upgrade call to BUY.