Wilmar

Wilmar: Grp has acquired a strategic 27.5% stake in Cosumar SA, a Morocco-based sugar producer – for MAD2.3b (US$263m), funded by internal funds and bank borrowings. Wilmar believes that Cosumar provides the group with the opportunity to service a large and growing structural deficit in sugar in Morocco and the surrounding regions of Southern Europe, Northern and Western Africa. OCBC note that the latest acquisition dovetailing nicely with Wilmar’s strategy of becoming a global sugar player, and the near-term impact is likely going to be muted by still-weak sugar prices. Weaker sugar prices notwithstanding, house believe that Wilmar’s large distribution network in China puts the group in a good position to capitalize on the expected increase in sugar consumption there. Overall, house maintain BUY with an unchanged S$3.90 fair value (based on 15x FY13F EPS)