Wilmar International - DBS Research 2019-03-12: Building An Asia-Pacific Consumer Food Empire


Wilmar International - Building An Asia-Pacific Consumer Food Empire

  • Acquiring remaining 50% stake in Goodman Fielder Pty Limited.
  • Deal for US$180m cash; also acquiring existing shareholder loans for US$95m, with another US$50m payable by Wilmar subject to performance.
  • Wilmar International continues to build its consumer food business.
  • Maintain BUY, Target Price S$3.60.

What’s New

Acquiring remaining 50% stake in Goodman Fielder for up to U$325m.

  • Wilmar International (SGX:F34) will be acquiring the remaining 50% stake in Goodman Fielder Pty Limited that it doesn’t already own, from Oceanica Developments Limited, an indirect wholly-owned subsidiary of First Pacific Company Limited for a cash consideration of US$180m.
  • Wilmar International will also acquire existing shareholder loans extended by Oceanica for US$95m. Another US$50m may be payable to Oceanica after FY2020, subject to certain earnings targets.

Wilmar’s existing 50% stake acquired in 2015.

  • The acquisition of Goodman Fielder’s entire share capital for c.US$1bn was completed in 2015. Goodman Fielder was subsequently delisted from the Australian and New Zealand Stock Exchanges.
  • Post the acquisitions, Wilmar International went through a major restructuring and, among other initiatives, consolidated production sites. The offer represented approx. 7.5x EV/EBITDA.

Popular consumer brands under Goodman Fielder; Wilmar continues to build a leading consumer foods business.

  • Goodman Fielder is primarily engaged in the manufacturing, marketing and distribution of food ingredients and consumer branded food, beverages and related products; including packaged bread and other related goods, dairy products, flour, edible oils and meal components in Australasia. It owns popular brands including Praise, Olive Grove, Meadow Fresh, Meadow Lea, Flame, Tuckers, Crest, White Wings and Pilot.
  • Wilmar International is of the view that under its full ownership and management, there could be significant improvements in Goodman Fielder’s performance. According to First Pacific, Goodman Fielder posted revenue of US$792m, EBITDA of US$50m, core profit of US$21m for 1H2018, with a total equity of US$613m as of 30 Jun 2018.


Maintain BUY, Target Price S$3.60.

  • We maintain our BUY call on Wilmar International and believe that its full ownership of Goodman Fielder will bode well for Wilmar International as the latter continues to leverage its existing distribution networks to grow export sales of Goodman Fielder’s products and build its presence within Asia.
  • Wilmar International has embarked on a long term strategy of building a consumer products portfolio which provides a more steady recurring income.
  • In the long term, we expect Wilmar International to extend the penetration of its well-established brands via its vast distribution networks in Asia’s growing markets, which will provide upside potential for earnings.

William Simadiputra DBS Group Research | Rui Wen LIM DBS Research | https://www.dbsvickers.com/ 2019-03-12
SGX Stock Analyst Report BUY MAINTAIN BUY 3.600 SAME 3.600