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I think that's the problem with well-known companies which are constantly in the spotlight. Their every corporate move is intensely scrutinized and commented on, and expectations are also high for the Company to perform well, year after year, in good times and bad. This also implies a very lofty valuation attached to the Company, and as liquidity is often high, it would also signal that the Company is either fairly valued, or possibly over-valued.
So it is fair to say that there are more downside risks for such an investment. Since preservation of capital is key to any investment, perhaps it will be better to adopt a wait-and-see attitude.
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23-12-2010, 05:28 PM
(This post was last modified: 23-12-2010, 05:33 PM by Risk Adverse.)
There is no announcement of Peter Lim paring off his Wilmar stake.
He spent more than $1bil in acquiring Thomson Medical, yet he's still holding all his Wilmar shares.
Where does he find his funds?
This may be an indication that he still has confidence in Wilmar.
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(23-12-2010, 05:28 PM)Risk Adverse Wrote: There is no announcement of Peter Lim paring off his Wilmar stake.
He spent more than $1bil in acquiring Thomson Medical, yet he's still holding all his Wilmar shares.
Where does he find his funds?
This may be an indication that he still has confidence in Wilmar.
It's hard to say. I have seen insider share transactions reported/announced long after the fact (2 mths if my memory serves me right). The large US based investment companies are generally the worse culprits. SGX seems pretty hopeless in enforcing a fair playing field in this respect.
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(23-12-2010, 05:28 PM)Risk Adverse Wrote: There is no announcement of Peter Lim paring off his Wilmar stake.
He spent more than $1bil in acquiring Thomson Medical, yet he's still holding all his Wilmar shares.
Where does he find his funds?
This may be an indication that he still has confidence in Wilmar.
Haha since Peter Lim has so much money parked in so many investments, I don't think he will be unduly worried if Wilmar falls a little in market price. After all, his entry price is probably obscenely low already. 
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Wilmar Property JV company is bidding for a property site which will have a total investment value exceeding US$1.1 billion.
http://info.sgx.com/webcoranncatth.nsf/V...800284EE5/$file/News_Release_Joint_Bid_with_KPCL_and_SACL_Laobian_Yingkou_29Dec10.pdf?openelement
Analyst are negative about the moves stating that the Management has lost its focus. Ignoring the merits and demerits of the latest deal, I wonder why the very same analysts would praise Keppel, SembCorp and F&N for its diversification while lampoon Wilmar efforts !
(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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You must understand why Wilmar ventured into property business.
1. the low margin of agri-business in China. with tight price control and Yihai-Kerry as a foreign-controlled entity, there are quite some barriers for Wilmar to grow its agri-business in China. recent examples are flour, rice milling
2. the biggest competitor in China for Yihai-Kerry is COFCO, which quite some profit comes from its property subsidiary with much higher margin than agri-business and its GLC background. Remember how HP beat DELL in PC? HP uses its high0-margin printer business to compensate its low-margin PC business and beat DELL completely eventually.
Anyway, it is never good to venture into property in China now no matter who you are JV with.
do you own research.
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it is very dangerous to go into another cyclical sector with low margin earnings. when the market turn, there is no place for you to rest. it is also not easy to be come a multi-sector company. however, one thing to note is that Wilmar has one of the cheapest valuation apart from golden agri in the commodities sector. lets say it can drop by another 60c to $5 which will be around 12PER, it will be comparable with Golden Agri. Prob by then will be a good time to buy.
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(30-12-2010, 07:50 PM)plaktoz Wrote: it is very dangerous to go into another cyclical sector with low margin earnings. when the market turn, there is no place for you to rest. it is also not easy to be come a multi-sector company. however, one thing to note is that Wilmar has one of the cheapest valuation apart from golden agri in the commodities sector. lets say it can drop by another 60c to $5 which will be around 12PER, it will be comparable with Golden Agri. Prob by then will be a good time to buy.
I don't think PER of 12 is accurate.
FY 09 EPS stood at US$0.295 but it included one off gain from the sale of new shares in Wilmar China for US$179 million.
9M 10 EPS currently stands at US$0.157 due to exclusion of the above mentioned one-off disposal and a drop in profitability.
The recent move to property development may be interesting. Currently, the proposed investment is still too small to make a significant impact in Wilmar's bottom-line. If Wilmar invested at least US$2 billion into the property segment, that will be a statement of intent.
(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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(30-12-2010, 04:57 PM)freedom Wrote: Anyway, it is never good to venture into property in China now no matter who you are JV with.
I agree with freedom on this point - China's property market is a little too "red-hot" for my liking, and I feel that it seems to sucking in more and more players to grab a piece of the pie. If and when the crash occurs, many companies will get burnt quite badly...... 
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In my view, a crash would come quite easily, if market participants are highly leveraged and a triggering wave of panic of any reason can then uproot any excessive speculative activity.
However, the fact is that China currently saves more than half its GDP, way more than any other Asian giants like Japan or India. From reports, China's gross national savings has also grown substantially from 39.2% of output in 1990 to 53.2% in 2008, much more than what US is saving, at 12.2% in 2008. The gross national savings rate is also considerably higher than its investment rate currently, resulting in a substantial current account surplus.
With a nation of savers awashed with liquidity, I doubt it will be anytime soon before a substantial crash can take place to cripple the economy. Similarly, China's recent efforts to hike its banks reserve ratio is also aimed at controlling excessive speculation in a meaningful way.
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