Investors of Wilmar (F34) must have that deja vu feeling. In October 2020, Wilmar (F34) share price suffered an explosive meltdown following the hugely successful listing of Yihai Kerry Arawana Holdings Co., Ltd (YKA) on the Shenzhen Stock Exchange ChiNext Board. Fast forward to 22 February 2021, Wilmar (F34) share price fell again following the release of a set of stellar financial result which saw the Group announcing a record total dividend of $0.13.
The form of Wilmar (F34) share price is truly frustrating. We are talking about an organization which recorded a net profit of US$1.54 billion in FY2020. Amid the backdrop of COVID-19 pandemic, how many Singapore companies out there are able to achieve such impressive result (apart from the local banks)? In view of this, I would say that the form of Wilmar (F34) share price does not do justice to its business fundamentals.
To put things into context, the trigger for the recent correction of Wilmar (F34) share price is quite different from that of October 2020. The collapse in October 2020 was largely attributed to the work of short-sellers. On 15 October, short selling activities on Wilmar share price surged to 10.5 million, nearly 10 times the daily average volume for this counter. This time round, the bearish form of Wilmar (F34) share price is largely due to the broad market sentiments.
Whilst it is too premature to claim that Wilmar (F34) share price will continue to spiral out of control like what it did in last year, the management is taking no chances. From 23 February, the management launched a series of shares buybacks, with a whopping 5 million shares being repurchased on 26 February.
During last year’s rout, the management also went on the offensive to defend Wilmar (F34) share price. Till date, a stunning 50.4 million shares had been repurchased from the market. This indicates that the management will fight to the very end to preserve Wilmar (F34) share price.
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 now, I am not vested in this counter. In view of the volatility of Wilmar (F34) share price, investors must exercise caution in trading this counter.
Wilmar (F34) share price now or never?
Being one of the world’s largest oil palm plantation owners, Wilmar (F34) share price has always shared a close link with the movements of crude palm oil (CPO) prices. Based on data extracted from MPOB, the current CPO price of RM4013 is at a decade record high. Profit for the Plantation and Sugar Milling tripled during the period, from US$62.2 million in 2H2019 to US$187.8 million in 2H2020.
The robust CPO prices should provide temporary support for the Wilmar (F34) share price. However, there is no guarantee that the high CPO prices will be sustainable in the coming months as a lot will depend on the weather conditions and supply and demand dynamics.
With EPS of $0.32, the Price/Earning ratio is 16.5. This means that Wilmar (F34) share price is [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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