Wednesday, November 12, 2008

Wilmar - Taboo subject at Investor Briefing

At the Wilmar Investment Briefing today, a CLSA analyst asked Mr Kuok which banks were pulling the credit lines from Wilmar. Mr Kuok "Tai-Chi-ed" to his CFO who said that one bank had withdrawn its credit line because its top management had decided to stop commodities financing.So why did Mr Kuok mention first about some banks pulling the plug in his presentation?Isn't it taboo to mention it in such a briefing, like how the "retrenchment" word is taboo in the workplace now? A Straits Times Market Correspondence praised Mr Kuok for his candourness in nipping any suspicion in the bud and Mr Kuok being a role model for others to follow. Definitely, we agree this is admirable.( Just to side-track a bit, the above clearly shows how serious this credit mess is...)

But then again,we, being ones who are highly imaginative and bizarre in thought at times, thought of another possible reason for this candourness..... maybe he wanted to highlight about this so that people would scrutinise extra careful the debt profile of his competitors, and possibly punishing those companies who are weak.( low share price then acquire??) So we, being the curious type, decided to take a look at the current assets(CA) vs the current liabilities(CL) of their competitors. OK, all of them seem to have CA larger than CL. So maybe we really have a bizarre brain.We will leave it at that.

Anyway, the new kid on the block, Kencana Agri Ltd who just IPO-ed this year don't seem to have a good cash flow compared with its more established peers.Don't even mention about Free Cash Flow..just look at cash flow from operations which is already negative.

(just added)And, DBS Vickers just released a report and it shows Wilmar having a higher Net Gearing compared with her peers. (Wonder why they didn't include Golden Agri, like, huh....don't they know Golden Agri is an important competitor??).

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