Wilmar

Wilmar: The Edge highlights that as a result of corporate actions, Noble and Olam share price were up 23% and 45% respectively ytd, in comparison to Wilmar at 2%. That said, the article emphasizes that rather than being a buyout target, Wilmar would more likely be an acquirer in the ongoing consolidation taking place in the commodities space. In fact, WIlmar has been aggressively diversifying from palm oil-related products into sugar, for example, the announcement of Shree Renuka Sugars in February. On the Shree Renuka Sugars deal, MKE thinks 1x P/B is fair despite it being loss making, as Brazil drought and rising ethanol demand could create a deficit for next year, and the deal could turn out to be a good bargain eventually. Barclays expects the returns profile of Wilmar to improve from 2014, after a 5-year decline in ROE. MKE remains sanguine on Wilmar, as latest results reflected better soybean crushing margin in China, and a recovery in sugar business. Oilseeds and grains sector recover is also likely to persist in FY2014.