WILMAR INTERNATIONAL LIMITED
F34.SI
Wilmar - A Mixed Set Of Results
- Tropical Oil segment was weaker.
- 2H expected to be better.
- Crush margins to stay positive.
Mixed performance across segments
- Wilmar’s 2Q17 revenue increased 13.2% YoY to US$10.6b, driven by stronger commodity prices as well as higher sales volume from Oilseeds & Grains and Sugar.
- Net profit was US$60.2m vs. a loss of US$220.1m in 2Q16 due to one-off losses, while core net profit was US$37.3m. The key difference was mainly gains from investment securities on improved equity market conditions.
- PBT was mixed across segments — Tropical Oils was down 68% YoY to US$59.5m, Sugar had a higher pretax loss of US$106.8m vs. a loss of US$78.7m last year due to seasonality factors, while Oilseeds & Grains’ PBT was US$61.1m vs. a loss of US$343.8m last year.
- 1H17 revenue rose 15% YoY to US$21.2b and met 48% of our FY17 estimate, while net profit of US$421.8m formed 37% of our full-year estimate, which we deem to be slightly below our forecast.
Weaker 2Q for Tropical Oils; A better 2H expected
- Despite better production volume, Tropical Oils segment’s merchandising and processing businesses faced a challenging environment, which resulted in lower profits and PBT margin at a low.
- On CPO price outlook, OCBC Treasury Research remains bearish and expects palm oil price at MYR2,250/MT for year-end.
- Nonetheless, the group expects this segment to perform better in 2H17, underpinned by improvements in production yields and better margins from downstream operations.
Oilseeds crush margins expected to remain positive
- Oilseeds & Grains segment’s positive PBT was helped by a higher crush volume and positive crush margins. But we note that the segment’s PBT was down 71% QoQ, possibly due to lower crushing margins in the quarter. The group expects crush margins to remain positive for the rest of the year.
- In addition, Consumer Products is also expected to improve with the seasonal peak period ahead.
- Separately, Sugar will still be affected by price volatility – prices are down ~30% YTD.
Higher interim dividend declared
- There will be an analyst briefing today. We trimmed our estimates and keep our HOLD with a slightly lower FV estimate of S$3.66 (previous: S$3.70) as the group’s long term growth story remains intact.
- Separately, a higher interim dividend of S$0.03/share has been declared, vs. S$0.025/share last year.
Jodie Foo
OCBC Investment
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http://www.ocbcresearch.com/
2017-08-11
OCBC Investment
SGX Stock
Analyst Report
3.66
Down
3.700
