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Broker's take: Wilmar's sugar mills hit by Cyclone Debbie in Queensland, says DBS
WILMAR International's sugar operation in Queensland, Australia, has been hit by Cyclone Debbie, a DBS Group research report said, citing a media release.
According to Wilmar Sugar Australia's website, the majority of the group's mills are located within Cyclone Debbie's path, leading the brokerage to expect a drop in Wilmar's sugar production in fiscal 2017.
"Wilmar's pre-tax contribution from sugar milling may not be significant", at just under 10 per cent of overall pre-tax profit in fiscal 2016, said DBS. "Still, we suspect there could be some impact on the group's forward sales market-to-market gains (losses) as a result."
DBS is leaving its forecasts unchanged, but warns that Wilmar could take some time to repair any damage to the mills. The brokerage has a "hold" rating and a target price of S$3.90 on the stock.