Wilmar International Limited’s Stock Price Fell 5% Last Week: Here’s Why

Wilmar International Limited (SGX: F34) is a leading agribusiness group in Asia. It operates through three main segments: Tropical Oils; Oilseeds and Grains; and Sugar.

Last week (13 November 2017 to 17 November 2017), the company’s stock price fell by 5%. What may have caused this?

Reasons for a decline

There can be many reasons behind a stock’s price decline. But, the reasons can generally be classified as business-performance-related, or investor-sentiment-related.

The former deals with how a stock’s business has performed or is expected to perform. And in terms of business performance, one of the really important numbers would be the stock’s profits.

Meanwhile, the latter is about the overall mood of market participants – are investors more greedy than fearful, more pessimistic than optimistic et cetera? In general, negative emotions (fear and pessimism) tend to drag down the prices of stocks while positive emotions (greed and optimism) tend to push up stock prices.

The case with Wilmar

In Wilmar’s case, I believe it’s the former at work.

Wilmar announced its 2017 third quarter earnings last Monday evening. Here’s a table showing changes in the company’s revenue and profit numbers in the reporting quarter:

Source: Wilmar International 2017 third quarter financial result

We can see that Wilmar’s revenue in the third quarter of 2017 was flat compared to the third quarter of 2016. Yet, its net profit was down by 5.7% year-on-year, driven primarily by weaker performances in the Tropical Oils and Sugar segments, which were offset partially by growth in the Oilseeds and Grains segment. On a core net profit basis, Wilmar actually declined by 15.9%.

Given the sub-par nature of Wilmar’s third quarter results, it is likely the company’s business performance that was driving its share price lower last week.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.