Wilmar share price to hit $5?

SIGN UP FOR $10 TO UNLOCK ALL ARTICLES! Amid the era of COVID-19, not many SGX companies can boast making US$1 billion profits, much less clocking higher earnings as compared to 2019. Wilmar is one of the exceptional elites which have performed well despite the devastating pandemic. In this regard, will Wilmar share price hit $5 in 2021?

In spite of the good financial performance, Wilmar share price remains the biggest enigma among investors. Year-to-date, there is no change in Wilmar share price despite the robust financial performance. Very strangely, the counter was trading at $4.20 on 2 January and remained at the same bandwidth at the point of writing. In between this period, Wilmar share price has witnessed pretty much volatility as the counter plunged to a low of $2.90 on 23 March to a high of $4.90 on 19 August.

Indeed, Wilmar share price had been a complete let down. Many investors expect the stock to soar following the successful listing of subsidiary Yihai Kerry Arawana (YKA) in the China stock market. In fact, net proceeds of US$2.05 billion were received from the new YKA shares issued. Instead, Wilmar share price collapsed from $4.66 on 14 October (the day of YKA’s IPO) to a low of $4.00 on 30 October.

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One of the conspiracy theories for the unexpected collapse of Wilmar share price is attributed to short-selling activities. On 15 October, short selling activities on Wilmar share price surged to a whopping 10.5 million, nearly 10 times the daily average volume for this counter. While the Chinese investors popped the champagne over the successful YKA IPO, Wilmar share price got thrashed by the short sellers.

Despite attracting attacks from the short sellers, the YKA IPO could be pivotal as Wilmar share price seeks to decouple from the crude palm oil (CPO)’s price movement. In the past, there is a strong correlation between Wilmar share price and CPO movement because the company is one of the world’s largest oil palm plantation owners with a total planted area of 232,940 hectares (ha) as at 31 December 2019, of which about 65% is in Indonesia, 26% in East Malaysia and 9% in Africa.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. As of 13 October, I am vested in 4000 shares of Wilmar. Henceforth, this article may be biased towards Wilmar share price. In view of the volatility of Wilmar share price, investors must exercise caution in trading this counter.

Wilmar share price to show hand?

Question now is: will Wilmar share price rocket to $5.00 when the full-year result for FY2020 is released in February 2021? After all, the crude palm oil (CPO) prices had increased considerably from last year. One of the reasons for the recovery of CPO prices is due to the Indonesia B30 biofuel mandate which helps to fuel demand for palm oil. Against this backdrop, the performance for Wilmar’s Plantation and Sugar Milling segment improved over last year due to higher commodities prices during the quarter.

However, what is puzzling to me is that Wilmar did not [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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