Wilmar

Wilmar: may see renewed interest, as its subsidiary Yihai Kerry, and peer COFCO, are both seeking approval from the NDRC to raise prices for their Xilinmen and Jinlongyu brand cooking oils by ~5%. This adds credence to news earlier in the week, that the NDRC has lifted price caps on domestic vegetable cooking oil, despite Wilmar yday saying it was not aware of any price cap removal.

Recall, this wk, JPM upgraded Wilmar to Overweight from Neutral and raised TP to $6.50 from $5.40, on potential price hikes of its pdts. UOBK also raised TP to $6.25 from $5.70.

Deutsche today upgrades to Buy from Hold, ups TP to $6.40 from $5.20, expects Wilmar to benefit from the decline in commodities prices and the easing of inflationary pressure in China.

Sees higher processing margins due to
i) lower feedstock cost with CPO price down 20% since Mar,
ii) increased demand for its refined palm oil pdts given the widening of palm oil price discount to soy oil,
iii) increase demand for its feedmeal as the sharp increase in China’s pork prices should elad to expansion of the domestic hog industry,
iv) easing of price control in China, as inflation has likely peaks and expectations for the current policy tightening cycle to end soon.