Wilmar

Wilmar: CS maintains Neutral with $3.81 TP. House believe 2Q13 will be challenging for Wilmar and expect all divisions to be under pressure. The birdflu scare has resulted in crush volumes falling by 10-20% YoY. Palm refining margins are deteriorating with new capacities coming on stream. While in sugar, the Yellow Canopy syndrome has resulted in less sugar content and 2Q is a seasonally weak qtr for its Consumer pack division. There is good support at $3.00 for Wilmar given: (1) top management—Kuok Khoon Hong and Martua—bought Wilmar stocks at $3.17-3.18/share; (2) share buybacks at $3.00; and (3) Wilmar’s forward P/B of 0.9x is very close to the GFC low of 0.8x. Although house believe in the long-term prospects of Wilmar, it lacks positive catalysts in the short term.