Shares of the world’s largest listed palm oil firm Wilmar International (WLIL.SI) rose as much as 2.5% on Tuesday, lifted by expectations it will benefit from higher sugar prices and on hopes that China may remove price limits on edible oils.
At 10:00 a.m., shares of Wilmar were 1.2% higher at $5.72 with over 3.9 million shares changing hands.
At 10:00 a.m., shares of Wilmar were 1.2% higher at $5.72 with over 3.9 million shares changing hands.
“Higher sugar prices are expected to benefit Wilmar in the coming few quarters following its acquisition of Sucrogen,” said a local trader.
Wilmar bought Sucrogen last year for US$1.5 billion ($1.82 billion). It is the world’s second largest exporter of raw sugar and Australia’s top maker of sugar-based ethanol.
JPMorgan also upgraded Wilmar to overweight from neutral and raised its target price to $6.50 from $5.40.
“Rising sugar prices are a positive for Wilmar, as there is a profit-sharing mechanism between Sucrogen and the Australian cane grower, which allows Wilmar to enjoy one third of the profits,” said Credit Suisse in a report.
Sugar prices have risen about 40% since a year ago, the brokerage noted.
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