Wilmar gets boost from surge in crude palm oil prices

Prices rose above 50% YoY to $992.

Agricultural firm Wilmar experienced strong performance in the tropical oils segment as crude palm oil (CPO) prices have risen above $992 (MYR3,000), a 50% jump YoY, and is expected to balance the weaker midstream refining segment.

According to a RHB report, the price gap between CPO and gasoil (GPO) is now in the negative territory of -$193 (US$143)/tonne. However, utilisation mandate could be maintained due to Indonesia’s B30 mandate and subsidies in the Biodiesel Fund.

Subsidiary Yihai Kerry’s shares is expected to have a positive performance post-listing due to a strong brand name in China, the report noted, as its edible oil, rice and flour products all have leading market shares in the country.

Wilmar is currently waiting for regulatory approval on its China listing, with the key concern on delays in approval which could shift the IPO valuation base year to FY2019, which experienced weaker earnings in the oilseeds and grains segment. But this is not a major concern, RHB said.