Will Wilmar International share price soar on the back of its impending IPO of its China unit? Being the largest listed agribusiness group by market capitalization on the Singapore Exchange, it is certainly a fascinating journey for Wilmar. From a start-up, Wilmar has overcome various challenges through the years to become one of the elites in the prestigious Straits Times Index (STI).
Many analysts have debated the need for Wilmar to list its Chinese unit in Shanghai while others had wondered the merits of announcing the plan at its infancy stage. In my point of view, the purpose of the initiative is more of business scaling rather than raising capital.
In recent years, Wilmar has struggled to meet great expectations due to the collapse of palm oil price, which was largely caused by overcapacity in the market. FY2017 results revealed that net cash flow from operating activities dropped significantly to USD 386 million, as compared to USD 1.1 billion in 2016. The terrible net cash flow was due to the huge increase in inventories (USD 1.2 billion in FY2017 as compared to USD 727 million).
Against the backdrop of ailing market demand, can Wilmar fight gravity? Ultimately, is this counter a value trap or potential multi-bagger? In this article, the investment merits of Wilmar International are examined.
The journey of Wilmar
Founded only in 1991, Wilmar International started life with backing from tycoon Kuok Khoon Hong (nephew of Malaysia’s richest man, Robert Kuok) and Singapore’s Peter Lim. Notably, Peter Lim is known as the “Remisier King” who became billionaire through investing $10 million in Wilmar when it was a relatively unknown start-up.
For the next 27 years, the management [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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