Wilmar to Benefit from Strong China Appetite, Climate Change
Soft commodity plays like Wilmar International, the world's largest palm oil producer, are poised to benefit from changing climatic conditions and China's growing appetite for commodities, said Nirgunan Tiruchelvam, equities analyst at RBS.
"The environment, or climatic conditions, is causing a shortage in a number of soft commodities -- sugar is one of them, palm oil is expected to be the next one, (and) soy beans are suffering a shortage of supply," Tiruchelvam said CNBC's Cash Flow.
This is taking place at a time when China is consuming more of these commodities, he added,
The Singapore-listed company posted a 35 percent rise in quarterly profit on Thursday, earning $653 million in the July to September period and beating analysts estimates for a profit of $500 million.
Tiruchelvam noted that Wilmar has traditionally been a very strong way of playing the whole commodity theme.
"(It is) a very interesting opportunity if anybody wants to pick up soft commodity exposure given its dominance of the whole industry," Tiruchelvam added, given that Wilmar is a producer and processor in soy bean and palm oil.
The company is also seeking a Hong Kong listing for its China unit, a move that has drawn some brokerage downgrades after Wilmar delayed those plans due to market volatility.
But Tiruchelvam believes this IPO is an interesting opportunity.
"The IPO is expected to cover some of the soy bean processing assets they have in China, as well as the consumer packaging opportunities. So it would be an interesting way of playing the whole agriculture theme," he explained.