Observations on Wilmar

As I mentioned about Wilmar earlier, this is another counter that we have a position in as well. Looking at the results it posted recently, profits were down almost by 70% on its 2nd quarter results and it could be seen in the charts below where it dropped from $3.40 to close to around $3.10 on 15 Aug opening. 

Good entry price: $3.17 - $3.20
Target price: $3.8
Cut price for us: $2.92 (close to 10% fall)
Estimated holding time period: 2 months

Company name: Wilmar International Ltd 
Company symbol: WLIL.SI
About: Wilmar International Limited operates in seven segments: palm and laurics, comprising the merchandising and processing of palm oil and laurics; oilseeds and grains segment, comprising the merchandising and processing of edible oils, oilseeds and grains; consumer products, which comprises packaging and sales of consumer pack edible oils, rice, flour and grains; plantation and palm oil mills, which comprises oil palm cultivation and milling, and milling segment, which comprises milling of sugarcane to produce raw sugar and by-products. In May 2012, it established Wilmar Switzerland SARL; increased its interest in Natalie Shipping Co Pte. Ltd. to 100%, and Wilmar Europe Holdings B.V. transferred its interest in Wilmar America Inc. In June 2012, it established Biochim SA Yihai (Lianyungang) Speciality Fats Industries Co., Ltd, PT Wilmar Air Indonesia and Piermont Holdings Limited. In July 2012, it established associated companies.

Chart source: Reuters


However, we also want to look at the sell down that occurred in May after it's 1st quarter results. If we look at the volume that occurred, the sell down in Aug is relatively lower than in May even though profit fall in May was 34% compared to 70% in 2nd quarter! 

Looking at the charts for the past 3 years, Wilmar has hit its 3 years low and alot of negative sentiments have been brewing around them. The last time it was at this lows was in Apr-May 2009 period! 

This is some fundamental analysis here, now back to why we entered a position in this counter. We probably look at 2 resistance point in the charts, one at $3.30 (20d moving average) and one at $3.46 (50d moving average). Looking beyond that, we probably look at some resistance here and there between $3.46 to $3.80 (still below 100d moving average). Based on our model that we derived, we are looking at $3.80 which is around 20% gain and around 10% cut price which has to break below $3 (an imaginary resistance). With much upside and downside that we envisioned, we took the bite and enter this counter! 

That's pretty much on Wilmar but as I always say, trade with caution as markets can swing both ways and we can't wait for things to happen! Let us know your thoughts on this counter!