Charles Spencer

Over 25-yrs in Global Materials & Soft Commodities

Equity Bottom-Up

INVESTMENT VIEW: <a href="https://www.smartkarma.com/entities/172" target="_blank" data-smartkarma-citation="entities:172:1" rel="noopener">Wilmar International (WIL SP)</a> shares have rallied over 20% YTD on optimism that its upcoming A-share listing will unlock value.  Perhaps some optimism is justified as <a href="https://www.smartkarma.com/entities/14405" target="_blank" data-smartkarma-citation="entities:14405:1" rel="noopener">Tongwei Co Ltd A (600438 CH)</a> has rallied as much as 70% YTD.  We had earlier identified Tongwei as Wilmar China's closest A-share comparable in this note: <a href="https://www.smartkarma.com/insights/wilmar-china-listing-at-20x-might-prove-too-optimistic" target="_blank" data-smartkarma-citation="insights:27756" rel="noopener">Wilmar: China Listing at ~20x Might Prove Too Optimistic.</a>  Despite the strong share performance, underlying business conditions for Wilmar in China in fact weak and investors may pay more attention to that when they report 2Q results on August 13th. We recommend being defensively positioning on WIL shares into results.

Wilmar International

Wilmar: China IPO Looks Priced In