Wilmar - RHB Invest 2018-05-11: Still Set For The Year, Despite A Decline

Wilmar - RHB Invest 2018-05-11: Still Set For The Year, Despite A Decline WILMAR INTERNATIONAL LIMITED SGX: F34

Wilmar - Still Set For The Year, Despite A Decline

  • Wilmar announced its 1Q18 result last night. Currently, we have a BUY call and a Target Price of SGD3.45; pending an analyst briefing to be held later today, we place our recommendation and Target Price under review.
  • Core PATMI came in at USD183m, down 37% y-o-y. All segments were down y-o-y due to a high base effect of 1Q17.
  • Nonetheless, this met 15% of our as well as consensus’ estimates and we deemed this to be largely in line given that 2H is seasonally stronger.

Result highlights for the quarter:

  1. 1Q18 revenue was up by 6% to USD11.2b mainly due to higher crush volumes and consumer pack sales. This was offset by a lower CPO price y-o-y. Core PATMI fell by 37% y-o-y to USD183m on weaker margins across all divisions;
  2. Weak result in the tropical oil segment. Pretax profit for the segment fell by 34% to USD102m. This is in line with our expectation as the plantation business was negatively impacted by the y-o-y decline in CPO prices. Based on our channel checks, refining margins continued to be squeezed in the last quarter. Overall, the downstream business faced weaker margins.
  3. Oilseeds and grains segment had satisfactory results with strong volume growth in both oilseeds crushing and consumer pack in 1Q18 due to the later Lunar New Year festival in 2018. Although the pretax profit for the segment fell by 17%, we think this was due to a high base effect and superlative margin in 1Q17. We estimate the crushing margin was still doing well in 1Q18, holding above USD10/tonne (normalised margin: USD8-10/tonne) while consumer pack margin held stable.
  4. Sugar registered a pretax loss of USD39m (-13% y-o-y) in 1Q18. We expect 2H to be stronger, as is usually the case due to seasonality.

Our recommendation and Target Price are under review at the moment; more details will be unveiled after the analyst briefing today.

Juliana Cai CFA RHB Invest | https://www.rhbinvest.com.sg/ 2018-05-11
SGX Stock Analyst Report BUY Maintain BUY 3.450 Same 3.450