Wilmar combats short sellers with aggressive share buyback scheme

Its share price has tumbled after sellers swarmed.

Wilmar has come under attack from short sellers last week, with short interest in the stock reaching 50% at its peak. The attack managed to send its share price down to a six-year low, despite an aggressive buyback scheme in which Wilmar snapped up 58.76 million of its own shares.

Despite the share price drop, analysts at UOB Kay Hian believe that the stock’s fundamentals remain intact, particularly in light of its good plantation assets and prime landbanks located mainly at the major ports.

“Shares are oversold on concern of Wilmar losing its net interest income advantage as interest cost normalises. The narrowing interest rate spread is well within expectation and Wilmar has reduced this exposure. Core businesses have been performing well with improving refining and crushing margins, consumer pack has exhibited volume growth and sugar is back in profit,” said UOB Kay Hian.