Following the listing of subsidiary Yihai Kerry Arawana (YKA), Wilmar share price surged to a high of $4.70 before plunging to a low of $4.00 in October. The fall of Wilmar share price confounded plenty of investors as the market capitalization of Wilmar represented half of its value of holding in YKA at the point of the IPO. This is indeed a very strange phenomenon!
Wilmar share price is prone to movement of the big boys because in FY2019 annual report, the number of shares held by public constituted just only 28%. This means that the major shareholders have a major influence on the share price movement. Indeed, Wilmar share price took a beating in August 2020 when major shareholder, Archer Daniels Midland (ADM), sold 170.5 million Wilmar at $4.40. In addition to that, ADM had entered into a stock-borrow arrangement in respect of its Wilmar shares in connection with its offering of US$300,000,000 zero coupon exchangeable bonds.
To halt the rapid slump of Wilmar share price, the management went on the offensive to rescue the stock – ranging from shares buybacks, announcement of special dividend, insider buying and reporting a stellar 3rd quarter financial result. Yet all these efforts did not reverse the bearish form of Wilmar share price in October.
One of the conspiracy theories for the unexpected collapse of Wilmar share price is attributed to short-selling activities. On 15 October, short selling activities on Wilmar share price surged to a whopping 10.5 million, nearly 10 times the daily average volume for this counter. So while the Chinese investors popped the champagne over the successful YKA IPO, Wilmar share price got stung by the short sellers.
To rescue Wilmar share price, the management bought back 20 million of shares from 2 to 3 November. And then from 5 to 7 November, CEO Kuok Khoon Hong purchased 7.1 million of shares. The insider purchases and shares buybacks helped to provide support for Wilmar share price.
Indeed, Wilmar share price has rocketed from a low of $2.90 in March 2020 to a high of $4.90 on 19 August. The YKA IPO had turbocharged Wilmar price. Question now is: will Wilmar price be given another boost with a potential listing of its Indian subsidiary – Adani Wilmar? In this article, I will share my thoughts on the outlook for Wilmar share price and discuss the likelihood of Wilmar unlocking value through listing of Adani Wilmar.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. As of 13 October, I am vested 4000 shares in Wilmar. So this article may be biased towards Wilmar share price. In view of the volatility of Wilmar share price, investors must exercise caution in trading this counter.
Wilmar share price primed for second wave?
Despite the massive hype of YKA IPO, it took more than two years for the listing to materialize. So investors should not expect further IPO listings of Wilmar assets within the next few months and any immediate impact on Wilmar share price. Following YKA listing, the next asset that could be monetized should be Adani Wilmar (AWL), which the management highlighted [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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