According to the South China Morning Post, Wilmar has chosen to list its China subsidiary on the Hong Kong market instead of Shanghai. The offering is expected by 1H 2010, and aims to raise US$3-4 bn. This suggests that Wilmar’s China subsidiary is valued up to US$14 bn. As its China business posted net profits of about US$630 mn in FY08, this suggests that Wilmar is aiming to list its China operations at a historical 2008 P/E of 22x. This is significantly higher than China market P/E averages of 17x in 2008 and 16x in 2009.
We estimate that 55% of Wilmar’s earnings are from China; of which two-thirds of the Chinese profits are derived from oilseed crushing and the remaining one-third from the consumer product division.
We believe that Wilmar’s China business should command a blended P/E of 19x, and its non-China business a P/E of 14x. This puts the new target price at SG$5.04 (revised up from SG$4.54). We maintain our NEUTRAL rating on Wilmar.
Click here for more Commodity Stocks Technical Analysis
Sponsored Links
Related Posts by Categories
Comments
No response to “Wilmar International - Riding on the China euphoria”
Post Comments (Atom)
Post a Comment |
Post a Comment