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Wilmar: Touched a new low.

Sunday, August 5, 2012

In the last session, Wilmar's share price touched a new low of $3.18. Many market participants are wondering if they should go long here. Of course, conventional wisdom would say wait for the sellers to be done selling.



So, are the sellers done selling? The OBV shows that distribution activity has not ceased. However, both MFI and MACD have not formed lower lows as compared to May 2012 when share price was higher but declining. Together, the technicals tell me that there are still sellers around but demand has picked up if only barely so.

Technically very weak, we could see lower prices for Wilmar's shares if the current floor fails to hold. Immediate support is at $3.18 while immediate resistance is at $3.54.

Although we could hope for a gap fill at $4.65 which is also where we find the declining 200dMA, that is a long shot and unlikely to happen in the near future.

After such a massive selling down, market participants are likely to take whatever gains they can and run for the hills if there should be any run up in share price. So, adopting a trading mentality could be fruitful for anyone interested in going long here.

Related post:
Wilmar: Not a time to sell.

5 comments:

Invest Apprentice said...

Hi there,

Glad to see you back! :)

Just wondering if you have any thoughts on the 2Q results released by Wilmar today, about the 70% drop in net profit.

Do you think it is in line with the already-lowered market expectations, or has this crossed your personal threshold?

Personally I am seriously considering cutting loss at a previous entry price of $4.05. Although I am prepared to go for the long haul, the recent earning reports seem to suggest to me that the fair value of Wilmar is wayyy below what I've valued.

Any thoughts on Wilmar's valuation? Do you think this lacklustre performance is priced in?

Thanks...

AK71 said...

Hi Invest Apprentice,

By coincidence, I just replied to a comment by another reader on Wilmar. Not to repeat myself, please see the following link for this:

Wilmar.

Good luck to us all. :)

Invest Apprentice said...

Thanks! Saw it, appreciate the thoughts. :)

Mulling over it as the price plunges...

AK71 said...

Hi Invest Apprentice,

Whatever you do, you must be comfortable with the decision. I believe that peace of mind is priceless. :)

AK71 said...

Wilmar International fell 10% to more than a three-year low after the world's largest listed palm oil firm reported quarterly earnings that missed expectations and warned of a tough outlook. By 0106 GMT, Wilmar was at S$3.04, its lowest level since March 2009. Its shares have plunged about 38% so far this year, making them the worst performer on Singapore's benchmark Straits Times Index. Wilmar said on Tuesday its second quarter net profit slumped 70% to
US$117.1 million from a year earlier. This was far below the average forecast of S$328 million, based on a poll of five analysts.
Chairman and CEO Kuok Khoon Hong said short-term prospects were difficult even though Wilmar was well positioned to benefit from growth in demand for agricultural commodities, especially in Asia and emerging markets like Africa. (closing S$3.15, -7.08%)

Phillip Capital, 16 August 2012.

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