AIO Finance Analysis

Wilmar International the world's largest listed palm oil trader, reported a five-fold jump in fourth-quarter net profit as palm oil soared to record highs, and said it hopes to expand outside Asia.

Singapore's second-most valuable listed company said despite an expected moderation in global economic growth it was bullish on agricultural commodities, but its shares fell as much as 6.6 percent as traders cashed in on a strong rally this month.
Earnings were boosted by contributions from recent acquisitions and high palm oil prices KPOK8, which hit a record high on Monday having more than doubled since the start of 2007.

"We have consolidated our position in Asia, our home base, and are now planning to expand in similar businesses beyond Asia to countries like Russia, Commonwealth of Independent States and Africa," Chairman and Chief Executive Kuok Khoon Hong said on Thursday.

Palm oil prices have eased from their Monday peak but remain 27 percent up this year. Strong demand from India and China due to a possible supply squeeze in coming months would likely keep the market buoyant, oil traders said.

Wilmar trades at 24.7 times to its 2008 earnings, versus 20 and 25 times for its Malaysian rivals Sime and IOI Its Singapore competitor Golden Agri-Resources trades at 13 times.

Source: Reuters

Energy-related stocks such as rig-builder SembCorp Marine and palm oil firm Wilmar may be in focus on Tuesday as the price of oil closed in on $100 per barrel due to speculation that OPEC will cut supply at a meeting next week.

U.S. stocks rose more than 1 percent on Monday on signs that the two largest U.S. bond insurers would stabilise, bringing a wave of relief to a market dogged by concerns of further bank write-downs.

Stocks and factors to watch:
- Singapore Telecommunications said that it has entered an agreement with five international telecommunications carriers to build a ultra high-speed cable system worth $300 million.
- JPMorgan has upgraded Chartered Semiconductor to "neutral" from "underweight", citing its recent acquisition of Hitachi Semiconductor Singapore wafer plant as a good move for the firm to diversify its client base.
- Commodities trader Noble said the firm has bought a 19.6 percent stake in a unit of Macarthur Coal worth A$48.5 million ($45 million).
- Chinese shipbuilder Yangzijiang said its full-year net profit rose 91 percent for the year ended Dec 31, 2007.
- Cruise operator Star Cruises posted a loss of $123.5 million for the full-year 2007.
- Coal mining firm Straits Asia Resources said its full-year net profit fell by 40.7 percent for year ended Dec 31, 2007

Source: Reuters

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