“Although Wilmar should not be tarred by the same brush, given its good ESG credentials and partial palm oil exposure, valuation has been unfairly punished.”
RHB maintains a “buy” rating on Wilmar International, but with lowered target price of $5.05 from $5.60 previously, after paring down plantation sector’s price-to-earnings (P/E) to 10 times from 12 times, which gives a potential 21% upside and yield of around 3%.
“While we have raised crude palm oil (CPO) price assumptions across the sector, we believe valuations will remain held back by ESG concerns, resulting in plantation stocks trading below historical valuations,” says RHB, which has raised its FY2021-23 earnings estimate by 1-2%.
