LIFETIME MEMBERSHIP In my last article on Wilmar share price (20 June), I wrote that this counter could face huge turmoil in the short-term. Indeed, Wilmar share price continued to meltdown since 20 June, falling from $4.55 to the current $4.16. At current trading level, Wilmar share price is 25% off the 5-year high of $5.57 seen in February. Should investors run for their lives?
A Lifetime Member has written in to request for an explanation of the downtrend Wilmar share price. If you are keen on coverage of other stocks, do sign up as member! In 2020, I invested in Wilmar and exited at a profit of $2,700 in early 2021. My lowest entry for Wilmar share price was $4.84 and I exited at $5.20. While I did not exit at the highest point of $5.60, I have no regrets selling my Wilmar stocks. In life, you can never sell at the highest price. I am happy as long as I made decent profits. Although I am not vested in this counter any more, I am still bullish about Wilmar share price in the long-run because of the business strategies undertaken by the management.
The current train-wreck for Wilmar share price may be puzzling and gut-wrenching for many retail investors. After all, the Group has just released a set of stellar 1HFY2021 that saw net profits rocketed 23% to US$751 million. It certainly seemed that nothing can go wrong with Wilmar share price. However, I have always cautioned that the big boys call the shots in Singapore stock market. This is especially so for Wilmar share price as the counter is one of the Straits Times Index (STI) components. Due to this, Wilmar share price is very sensitive to the movement of institutional fund flows.
According to data extracted from SGX, for 4 consecutive months (April to July 2021), Wilmar shares had been on the top ten institutional net sell list. The heavy sell-offs by the big boys sent Wilmar share price straight to the bottom of the cliff. In April, $33.8 million of Wilmar shares had been net sold. Then in May, $42.8 million of Wilmar shares been net sold. June saw about $60 million of shares been net sold by the big boys. In July, a whopping $83 million of shares were net sold.
Given that most countries are on the path of recovery from the devastating pandemic, what could have triggered the crisis of confidence among the institutional investors on Wilmar share price? The improving economic climate in the past few months certainly did not gel with the current narrative for Wilmar share price. In this article, I will share my insights on the single key factor behind the devastating meltdown of Wilmar share price. I will also share the plausible reason why Wilmar suddenly halt its aggressive shares buybacks after the release of recent financial result.
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 share price, investors must exercise caution in trading this counter.
Wilmar share price assassinated
Many investors speculated that the bearish Wilmar share price could be attributed to the issues of Wilmar Adani IPO in India. I beg to differ. I do think that Wilmar Adani is a “non-event” for Wilmar share price. In fact, the crash of Wilmar share price started way back in April 2021. Thus, I do not think that the recent IPO issue of Wilmar Adani inflicted any collateral damage on Wilmar share price. The real reason for the collapse of Wilmar share price should be due to the Delta variant. I will use the following data to support my thesis.
Wilmar is one of the largest oil palm plantation owners in Indonesia and Malaysia. As such, Wilmar share price is prone to the volatility of CPO prices. One of the driving factors for the surging CPO prices in 2021 is due to the huge demand for palm oil by India. In fact, India has surpassed China as the biggest importer of crude oil in 2021. From January to July 2021, Malaysia has exported 903,000 tonnes of palm oil to China vis-à-vis 1.8 million tonnes of palm oil to India.
However, due to the second COVID-19 wave in India, palm oil demand has declined sharply due to the lockdowns in the South Asia country. In May 2021, 389,000 tonnes of palm oil were shipped to India but by July, the export dropped to 225,000 tonnes. The rupture of demand had also caused the CPO to crush. From a high of RMB4572 per tonne in May 2021, CPO fell to RMB3830 per tonne in June 2021.
The recent 1HFY2021 results also confirmed my theory as it revealed a stunning [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.]LIFETIME MEMBERSHIP
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