AIO Finance Analysis

Wilmar falls on China price intervention

Shares of Wilmar International tumbled as much as 8.4 percent to S$4.45 with 5.9 million shares traded on news that Chinese regulators would limit the plantation firm's ability to raise prices on their edible oil products.

"There is increasing pressure on Wilmar to subsidise the Chinese consumers and absorb part of the higher raw material cost," Merrill Lynch analyst Han Lim Chong said.

Merrill Lynch said in a client note that while there was continuing upside potential to the stock given high crude palm oil prices, the risks to the firm's downstream margins have "risen significantly".

China on Wednesday issued a list of producers of daily necessities that must apply for government permission to raise prices, fleshing out a cabinet decision last week to begin direct market intervention to curb inflation.

Source: Reuters