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Wilmar was $7.11 a share and DBS, OCBC and UOB?

Monday, January 18, 2021

This blog is in response to questions by readers, csky and linus.


On Wilmar, DBS, OCBC and UOB:


That price target of $5 for Wilmar which I suggested in November 2019 is outdated as Wilmar's chart pattern was damaged by the price action inflicted by the COVID-19 pandemic.


The chart has morphed since then.


For readers who don't know what we are talking about, see:

Wilmar: Target reacquired.





Wilmar's chart is showing very strong upward momentum right now.


RSI, a momentum oscillator, shows that Wilmar is overbought right now but it could stay overbought for some time.


This is because there isn't any negative divergence in the MACD which is another momentum oscillator.


As the stock price moves higher, the MACD moves higher and this positive momentum suggests price could go higher.





Compared to this, the charts of the three local banks show negative divergence.


Their higher highs in stock prices have been accompanied by lower highs in the MACD.


Softness in the local banks' stock prices is to be expected.


We could see them retreating to test immediate supports.


However, Wilmar's stock price looks like it could go higher.





How much higher?


I don't really do this anymore but I will stick my neck out this time.


You probably remember this blog from 2017:

Accumulating Wilmar on price weakness.


In that blog post, I noted that when Mr. Market was feeling very bullish about Wilmar's prospects (like now), Wilmar's stock traded at a huge premium to its NAV.


It was a really huge premium.





Today, Wilmar's NAV is significantly higher than it was in 2010.


Based on this observation, it is probably not irrational to think that Wilmar's stock price could go higher than $7.11 we saw so many years ago in January 2010.


Having said this, there is nothing wrong with taking profit.


So, selling some to lock in some gains is probably not a bad idea.


Trading around a core position?


Sounds familiar.


Buy more, sell some or hold?


You decide.


I anyhow talking to myself only hor.





16 comments:

Unknown said...

Hi Ak,

Could u pls advice where to learn technical analysis?

I am always amazed and intrigued by the techical jargons like MACD, head and shoulder, golden cross etc.

Thank you.

Sk

AK71 said...

Hi Sk,

I taught myself TA by reading books.

It should be quite easy for most people as TA isn't as demanding as FA.

Here is a link to some books to start with:
Recommended books for FA and TA.

TA is interesting because it provides a window into Mr. Market's feelings.

It is important to remind ourselves that TA is about probability and not certainty. ;)

sugarhoney said...

I bought wilmar during march 2020 after reading your blog. Bought a small position and it was my first time buying stocks in my life. Fast forward today, there is handsome returns (albeit small) should i sell wilmar. But wilmar continues to beat all odds and I added some ystd while waiting for the feb special dividends announcement. Thank you :)

AK71 said...

Hi sugarhoney,

Very happy for you. Congratulations! Huat ah! :D

EX said...

Hi AK,

I missed the opportunity to buy when it was $4+. Is it too late to buy now? Overpriced?

AK71 said...

Hi EX,

It is hard for me to even think of buying at $4+ a share as my entry prices range from under $3.00 to $3.70 a share.

The anchoring effect is a terrible thing, I know.

Is Wilmar overpriced now?

Should we buy more, sell some or hold?

You might want to read the blogs on Wilmar I hyperlinked in this blog post to get a feel.

You might also want to read this blog:
When to BUY, HOLD or SELL?

Yes, AK is doing some side stepping. Safety first. ;p

EX said...

Hi AklK,

Understood. That has always been your disclaimer on the blog. Haha

Anyways, thanks alot reply.

AK71 said...

Hi EX,

LOL. Yeap. :)

I should also say good luck to all of us! :D

csky said...

Hi AK!

Do you think Wilmar is now on a slight sale with the recent price weakness? It's interesting to note that Wilmar recently bought back almost 3 million shares at around $5. The core net profit for the most recent quarter also increased by ~38%.

There is a lot of talk that inflation is making its come-back, this should be good for Wilmar?

Also, you previously mention that Wilmar will be better once the Capex starts to taper. Do you have any further insights on that? The latest financial summary shows that operating cash flows before working capital changes increased by 20% but cash flow from operating activities has dropped by 95%. Does that mean Capex is still not tapering but increasing instead?

Thank you!

AK71 said...

Hi csky,

I believe that Wilmar is worth more than what Mr. Market is selling it for especially when inflation is getting stronger. Inflation has hit food prices. It is in the news and not a myth.

Having said that, Wilmar is still in growth mode but when CAPEX tapers off, dividends will increase. That's the guidance from Mr. Kuok many years ago. When will that happen? Only Mr. Kuok knows.

Technically, the 200 days moving average is rising and should be a strong support. It is now approximating $4.70 and if tested, it should hold. Sentiments would have to be very negative for that to break. It could happen, of course.

csky said...

Thank you, AK!

AK71 said...

Hi csky,

Just talking to myself, as usual. ;p

Good luck to both of us. :)

FellowInvestorForIncome said...

Hi Ak,

OCBC is offering $11.93 scrip per share. Is it too pricey to take part this time?

AK71 said...

Hi FIFI,

I took the scrip dividend when it was offered at $7+ a share the last time. Was too cheap to ignore. This time, I am taking the dividend in cash. Retiree needs passive income. ;p

FellowInvestorForIncome said...

Hi Ak,

Yeah $7+ is too cheap to ignore, I took scrip the previous time too. But it seems like the near future is still uncertain and things may go either way really fast, I guess it’s just better to take dividends and top up the war chest :D. Thanks for your opinion!

AK71 said...

Hi FIFI,

Yeap. I have not bought anything since early January as optimism returned to the stock market.

Slowly filling up my war chest again from dividends generated by my portfolio. :)

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