SINGAPORE – Shares of the world’s largest listed palm oil firm Wilmar International rose as much as 2.5 per cent 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 0200 GMT, shares of Wilmar were 1.2 per cent higher at S$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. It is the world’s second largest exporter of raw sugar and Australia’s top maker of sugar-based ethanol.
JP Morgan also upgraded Wilmar to overweight from neutral and raised its target price to S$6.50 from S$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 per cent since a year ago, the brokerage noted.