Form is temporary, class is permanent. In this regard, will Wilmar share price stage a “return of the King”? The counter has been in mighty form lately due to the resurgent crude palm oil (CPO) prices. The monsoon season has caused floods in many areas of the oil palm plantations and caused tight supply. According to Malaysian Palm Oil Board (MPOB), CPO prices are expected to be trading above RM3,000 per tonne mark until the first quarter of 2021.
As Wilmar is one of the world’s largest oil palm plantation owners, CPO prices have always been proxy for Wilmar share price. In fact, the recent explosive form of Wilmar share price should be attributed to the robust CPO prices. To put things into perspective, the current CPO price of RM3836 was nearly a decade record high.
Based on data extracted from MPOB, the last time that CPO prices were trading at RM3800 to RM3900 levels was in February 2011. Back then, Wilmar share price was trading at around the $5.25 bandwidth. Of course, many investors would argue that over the past decade, Wilmar’s businesses had evolved significantly and that it will not be fair to judge Wilmar share price in 2011 against its current levels. However, a look at the financial result of Wilmar actually showed that the performance of 2QFY2011 was comparable to 2QFY2020.
In 2QFY2011, the revenue was US$20 billion while net profit amounted to US$780 million. Fast forward to 2QFY2020, the revenue was US$22 billion while net profit amounted to US$610 million. The key difference between the two periods is the peaking of the CPO prices. In February 2011, CPO prices had peaked while current prices have not reached the peak. Against this backdrop, there is …Read more