DJ: Wilmar falls 3.4% at 14:51pm

DJ MARKET TALK: STI +0.6%; Wilmar Falls 3.4%, NOL +3.6%
1/4/2011 2:51:00 PM

0651 GMT [Dow Jones] The STI is +0.6% at 3254.11, off its earlier 3260 high, but is likely to remain in positive territory as sentiment remains upbeat with regional bourses mostly higher, and DJIA futures pointing north amid increased optimism over the health of the U.S. economy. 1.66 billion shares have been traded worth S$1.25 billion, with gainers pipping decliners 263 to 220 on the broad market. With the STI breaking above resistance at 3220 Monday, and trading above psychological 3250, analysts mostly agree that 3300 is the next key level on the upside.

Wilmar (F34.SG) is down 3.4% at S$5.47 in heavy trade after JP Morgan downgrades the stock to Underweight from Overweight and slashes its target price, citing competition in China, overly optimistic consensus earnings, and worries over its intended deviation into property.

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the most active stock today is Top Global (519.SG), flat at S$0.015. (matthew.allen@dowjones.com)

DJ MARKET TALK: JPM Cuts Wilmar To Underweight; Target S$4.60
1/4/2011 10:37:00 AM

0237 GMT [Dow Jones] STOCK CALL: JPMorgan downgrades Wilmar International (F34.SG) to Underweight from Overweight and slashes its target price to S$4.60 from S$7.20. Says the stock is likely to underperform near term due to a regulatory overhang and competition in China; also cites an overly optimistic consensus earnings estimates and likely lackluster earnings momentum, while investors may accord a lower P/E multiple for its intended deviation from the core business. Reduces FY11/FY12 earnings forecasts by 5.3%/7.3% as the house lowers oilseeds crushing and consumer products margin assumptions; it also reduces the target P/E multiple to 14X from 20X. Says Wilmar's deviation from its core business may attract a "conglomerate discount." Adds future property projects under its JV with Kerry Properties and Shangri-La "could see more capital reallocated to property investments than reinvested in its core agri-commodities business in future...this may lead to a lowering of the P/E that investors are willing to accord the stock." Stock off 0.2% at S$5.65. (matthew.allen@dowjones.com)