Few weeks ago, Wilmar announced the plan to go into China property development with Kerry properties and Shangri-la. Wilmar's job will be sourcing the site for development with their connection, the partners will be managing the development.
The market reacted negatively on the deal. The logic is simple. Why diversify into something that is new and unproven? Furthermore, China property sector is under pressure from the cooling measure. However, I have a neutral view on the move.
While moving away from one's core competency is not a good idea, but we have to judge it on case by case basis. The investment and contribution from this property venture will remain small, and they are getting a good deal from the local government. It looks like an opportunistic move rather than purely losing focus.
Investor has to continue monitoring the situation to see whether there is any deviation to the core agri consumer business.
Monday, 17 January 2011
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