Wilmar's woes continue

My decision to cut Wilmar off from my portfolio should prove to be right, given that the stock is now off more than 5% from my purchase price - only thing is, I have not managed to dispose of it (at the price I want), and am now "holding the bomb".

Here is what triggers the massive sell-off in its shares: Wilmar (F34.SG) is down 1.5% at a 6-month low of S$5.83 on concerns the group may be losing its focus as it ventures into property development in China with Kerry Properties (0683.HK) and Shangri-la Asia (0069.HK). OSK, which has a Buy call with a S$7.35 target, says while the project in Liaoning''s Yingkou City would be profitable given the expertise of Wilmar's partners, "this could mark the start of Wilmar''s loss of business focus and corporate discipline."

Citigroup, which has a Hold call and a S$6.76 target, expects Wilmar to bid for more sites in China; "we agree that Wilmar can leverage on its existing contacts and network, but we are not entirely comfortable with the fact that they are expanding beyond the consumer food-related business." The companies will jointly develop residential and commercial properties and a hotel in Yingkou. Near-term support is at S$5.60 (June 30 low).

In a separate report, Phillip Securities has highlighted that " most of the negative developments have already been prices in to its share price, and moreover we do not expect price control to be long drawn. Growth story of WIL still intact, and we see buying opportunity in current price and upgrade our recommendation to a Buy while keeping our target price of S$7.08.

I retain my stance of looking for the best opportunity to get rid of this stock from my portfolio. This is more to do with my wishing to lighten my portfolio than about Wilmar's foray into property. Between Wilmar and Olam, Olam is the stock I prefer in my portfolio.

This may not occur over the next few days, but I believe a temporary reversal in the price of Wilmar could result in an opportunity to exit at a more desirable price.