Wilmar, the world's largest plantation group owned by Robert Kuok, is now mired with a tax fraud charge from the Indonesian tax authorities.
But it looks like the far-flung corporate empire of the Kuoks may yet be able to withstand the speculative pressure of mass selling of both Wilmar and Perlis Plantation Group (PPB)as it goes under the microscope of the VAT investigations.
Analysts differed on the outlook for plantation giant Wilmar International Ltd following allegations of tax fraud.
Wilmar was alleged to have colluded with Indonesian tax officials to claim tax rebates worth 3.6 trillion rupiahs or RM1.24 billion, but Wilmar has said that its internal records will stand up to scrutiny.
Research house OSK Research said in a report today that shares of Wilmar could be a bargain after the counter fell by nearly 7 per cent yesterday on the Singapore stock exchange and that it was encouraged by Wilmar’s strong stand on the allegations.Knowing the Kuoks, they have an impeccable reputation to protect and it will be a little while before the market rise to adore once more Wilmar and PPB,the heart and soul of Robert Kuok's legacy in life.
“Should the company be able to sort out the issue, the stock will be a bargain even at these levels,” said OSK Research. “While the stock may still weaken somewhat from here, we believe it is now cheap enough for investors to start nibbling on.”. I guess the money from Europe is already here buying into both Wilmar and PPB.
The report also noted that Wilmar has clarified that its COO Martua Sitorus is not personally under investigation for tax fraud allegations.
“We believe the market will be relieved as Martua was the person who spearheaded Wilmar’s expansion in Indonesia,” said OSK Research which maintained its “Buy” call on Wilmar.
A separate report by a local research house said that Wilmar shares will be affected by uncertainties arising from the allegations and said that if the RM1.24 billion in tax rebates were to be charged to Wilmar’s profit and loss account, it would reduce the group’s 2010 profits by 23 per cent.
Robert Kuok is a shrewd businessman par excellence and he will definitely be involved personally to straighten this thing out for the good the company,shareholders and the host country,Indonesia.
“What is more detrimental is the reputational damage to the group,” said the research house. “We wonder if the Chinese government would start scrutinising Wilmar’s tax payments and accounts due to the allegations in Indonesia.” [ I doubt the Chinese authorities will do this.]
The research house maintained a “hold” call on Wilmar due to potential earnings disappointment from lower operating margins, the impact of a potential slowdown in the China market which accounts for 70 per cent of Wilmar’s earnings and uncertainties arising from the tax claim allegations.
PBB Group Berhad holds a 18.4 per cent stake in Wilmar and its shares dropped nearly six per cent yesterday on news on the allegations. Wilmar accounts for about 75 per cent of the PBB Group’s profits.
PBB Group said yesterday that the claims were still uncertain as investigations by Wilmar had yet to be concluded.
Yes, truly there are many who jumped the gun and could have sold short to spook genuine shareholders to let go of their precious holdings of Wilmar and PPB.
Let us see how long Wilmar and PPB will be kept on a temporary even keel before they do a sprightly run up at the bourses on both side of the Causeway. This, we watch.
Another thing just crossed my mind. With Robert Kuok selling almost everything dear to him especially his exit from sugar and selling choice pieces of land in the CBD of KL, hasn't the thought ever crossed your mind that Asia's richest tycoon might just take PBB private as he relocates more of his interest to mainland China?
Food for thought.
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