Wilmar International - RHB Invest 2019-11-13: All Stars Are Aligned; Reiterate BUY

WILMAR INTERNATIONAL LIMITED (SGX:F34) | SGinvestors.io WILMAR INTERNATIONAL LIMITED (SGX:F34)

Wilmar International - All Stars Are Aligned; Reiterate BUY

  • Reiterate BUY with a SGD4.75 Target Price, 23% upside with c.3% FY19F yield.
  • WILMAR INTERNATIONAL (SGX:F34)’s 3Q19 core PATMI of USD419m (-3% y-o-y) is in line, while 9M19 PATMI of USD846m is at 75% of the Street’s full-year estimate.
  • We note that the y-o-y decline was due to lower JV & associate contributions. Pre-tax earnings from its three core businesses grew y-o-y. We believe the company’s healthy earnings and China IPO prospects should continue to buoy its share price.



Tropical oils mid-and downstream business continue to helm earnings growth in 3Q19.

  • Pretax profit for the segment surged 24% y-o-y on higher sales volumes and processing margins in the mid-and downstream businesses. This helped to offset the weaker numbers from the plantations unit, which in turn stemmed from lower CPO prices and weaker production yield. See Wilmar Announcements.
  • FFB production declined by 6% y-o-y in 3Q19.


Oilseeds & grains segment turned around.

  • After three consecutive quarters of pretax earnings being on a downtrend, Wilmar’s oilseeds & grains division finally turned around and delivered 1% y-o-y growth in pretax earnings in 3Q19. This was from a strong 8% growth in consumer pack sales volumes, and improved crushing margins.
  • Management noted that crushing margins have improved from 1H19 levels, but sales volume dropped 3% y-o-y as demand continued to be affected by the African swine fever epidemic.


Sugar division also improved.

  • Sugar division also improved with pretax profit up 9% y-o-y, driven by a stronger performance from the sugar refining business. Sales volumes also surged 31% y-o-y, on ramped-up milling activities in Australia and a pick-up in merchandising.


China IPO is still on the plate.






Juliana Cai RHB Securities Research | https://www.rhbinvest.com.sg/ 2019-11-13
SGX Stock Analyst Report BUY MAINTAIN BUY 4.750 SAME 4.750



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