WILMAR

WILMAR | BUY

TARGET PRICE: $3.45

APRIL 5 CLOSE: $3.10

RHB, April 5

China has retaliated against the US imposing tariffs on its exports, by imposing a 25 per cent tariff on soybeans imported from the US. China is the world's largest soybean importer, while Wilmar is the second-largest soybean crusher in China.

If the tariff takes effect, we think the long-term impact on Wilmar would be negative-to-neutral. Currently, there is strong demand for soybean meal from the livestock industry, but there is no certainty on whether Wilmar would be able to pass on any additional cost to customers.

Following the news of the soybean tariff, Wilmar's share price declined by 3 per cent to a fairly attractive level. Soybean prices also fell by 4 per cent. It remains unclear when the tariffs would be effected.

We maintain our buy call and target price of $3.45 on Wilmar, as the group could benefit from the short-term decline in soybean prices following the news.

Educator Index

Archive

2018
September
August
July
June
May
April
March
February
January