Wilmar - hits 9-month high; index snaps 3-day rise
Written by Reuters
Tuesday, 19 November 2013 14:51
Wilmar International jumped over 3% to a nine-month high after Bank of America Merrill Lynch upgraded its recommendation on the stock, while Singapore’s benchmark index snapped a three-day winning streak.
BofA Merrill Lynch said a recent call for tender by Indonesia’s state oil company Pertamina to buy three million tonnes of biodiesel in 2014 triggered the upgrade to a “buy” rating and a lift in target price to $5.00 from $3.90.
“The latest biodiesel policy in Indonesia will benefit it greatly,” BofA Merrill Lynch said in a note, but cautioned that quicker-than-expected rise in palm oil prices or a sharp decline in diesel price would pose risks.
Wilmar shares jumped as much as 3.4% to a nine-month high of $3.65, headed for their biggest daily gain in three months. Wilmar was the best performer on the index.
The benchmark Straits Times Index eased 0.3% to 3,195 points by 12:57 p.m., snapping three straight days of gains while the MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.2% higher.
Palm oil company Golden Agri-Resources and warehouse operator Global Logistic Properties (GLP) were the worst performers on the index, falling more than 2% each.
Following the financial crisis of 2007, the Singapore stock market slumped badly, with the Straits Times Index (SGX: ^STI) falling to around 1,500 points. It was a painful moment for investors because it was only two years’ earlier that the benchmark index was toying with 3,700 points.
But time can be a great healer.
Today, the index of Singapore’s 30 largest companies is once again flirting with the low 3,200s. Who knows? With a little nudge from Ben Bernanke, and a crafty wink from Janet Yellen, our Singapore index could be back to where it was six years ago.
But whilst the road to recovery for the Singapore market has been an exciting one for those who stayed the course, the journey for some of our blue chips has been nothing short of awe-inspiring.
Jardine Cycle & Carriage (SGX: C07) has climbed from S$8.85 to $35, though this is some way off its 2013 high of S$54. The mini industrial conglomerate has both benefited from and subsequently been hindered by its heavy exposure to the Indonesian economy. Jardine C&C generates almost nine-tenths of its revenue from the Southeast Asian archipelago. So, it is not entirely surprising that it has been affected by concerns of an economic slowdown there. But we shouldn’t be too quick to write off Indonesia just yet or indeed at all.
You have to know when to hold them and when to fold the. And in the case of Genting Singapore (SGX: G13) holding on has been the best investing decision you could have made. Shares in the casino and resort operator have jumped 240% to $1.45 since 2009. The dividend yield is not much to write home about. But this company is all about growth – it is already eyeing up pastures new.
Who says you can’t make money from air travel? Actually, it was Warren Buffett and Richard Branson. Buffett said we should have done something quite unspeakable to the Wright brothers when they made their first successful flight. Meanwhile, Branson made some quip about how to become a millionaire from airlines by starting off as a billionaire and buying an airline.
But SIA Engineering (SGX: S59) certainly knows how to make money from airplanes. It services planes to make them airworthy and safe. And as a subsidiary of Singapore Airlines (SGX: C6L) it has a ready-made customer in the wings. SIA Engineering flies high on another score. It boasts one of the highest Returns on Equity amongst the large caps. At 20%, the company generates $20 of net profit for every $100 of capital employed in the business.
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