Wilmar International - RHB Invest 2016-05-11: Sweetening Up The Numbers

Wilmar International - RHB Invest 2016-05-11: Sweetening Up The Numbers WILMAR INTERNATIONAL LIMITED F34.SI 

Wilmar International - Sweetening Up The Numbers

  • Wilmar’s 1Q16 core profit of USD245m came in at 19% of our full-year estimates despite seasonal weakness.


Our View: 


• Palm up the next few quarters. 

  • Tropical oils’ margin recovered YoY due to improved downstream operations. In the coming quarters, we believe rising CPO prices will further pump up upstream margins. 
  • Higher biodiesel consumption should also help to lend some support to Wilmar’s downstream margins albeit higher feedstock costs. 

• More consistency in oilseeds. 

  • Lower crush margin was offset by higher profitability in Rice and Flour consumer products. 
  • Overall performance for the segment remains in line with our expectation. 

• Sugar rush in merchandising business. 

  • Better margins in sugar merchandising and processing operations have substantially reduced the seasonal losses in the milling business. However, the result was largely generated by stronger merchandising performances. Hence, we prefer to maintain our current forecast than to extrapolate this to future quarters. 

Results broadly in line with our expectations. 

  • Stripping out one-off impairments provisions for impairments of USD22.7m as well as investment and FX gains, core profit of USD245m met 19% of our full-year estimates. 
  • We maintain our forecast and BUY recommendation with TP SGD4.25 based on SOP valuation.




Juliana Cai RHB Invest | http://www.rhbinvest.com.sg/ 2016-05-11
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 4.25 Same 4.25


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