Palm Players

Kim Eng on 22 Feb 2012

Wilmar International released its FY11 results this morning and the numbers were broadly in line with our forecasts as well as consensus estimates. However, its share price has taken a beating (-$0.50, -8.5%) in the aftermath, possibly due to contracted margins reported in 4Q11 for its palm and laurics merchandising and processing segment. The decline was caused by a variety of factors: unfavourable market conditions in China and India, ongoing European financial crisis and the disadvantaged position of Malaysia given new Indonesian export duty structure. There was also a significant drop in the 4Q11 contribution from other income (-US$36m, -60% YoY), arising from a decrease in gains from investment securities, lower fertiliser profits and lower shipping profits. As for future prospects, Wilmar is exploring closer collaborations to meet the growing demand for agricultural products.

Noble Group’s share price appears to have been dragged down the same way on high volume, perhaps due to the perception that it has some businesses similar to Wilmar’s. Nevertheless, it should be noted that the group does not have exposure to palm oil (though it has a 51% stake in an Indonesia-based palm plantation under development). Wilmar’s soybean crushing operations in China, where Noble is similarly exposed to, did stage a sharp turnaround to profitability against the same quarter last year, but profit was marginal and margins remained challenging.


Wilmar International (WIL SP, $5.35)
Key levels
Resistance 2: $6.00
Resistance 1: $5.50
Support 1: $5.25
Support 2: $4.80
The stock has unexpectedly staged a negative gap-down on huge volume today. This is often a negative indication that selling pressure is on the rise. With no sign of relief, the retracement could continue to trade towards the $5.25 support level. RSI is below the neutral level and heading towards the oversold region.


Noble Group (NOBL SP, $1.455)
Key levels
Resistance 2: $1.68
Resistance 1: $1.55
Support 1: $1.40
Support 2: $1.285
The stock price looks positive on both an intermediate and short-term time frame. It is currently trying to breach above the 200-day EMA. A pullback towards $1.40 seems likely if the stock fails to trade above the $1.55 level.


Golden Agri-Resources (GGR SP, $0.775)
Key levels
Resistance 2: $0.83
Resistance 1: $0.80
Support 1: $0.75
Support 2: $0.70
The broad overall trend in the medium term is still positive as defined by the key moving averages. Candlesticks are trading within the ascending channel, suggesting that the bullish trend is intact. Trading above the $0.80 level would indicate more buying ahead.