Wilmar International - CGS-CIMB Research 2021-08-03: Adani Wilmar Files Draft Prospectus For IPO

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WILMAR INTERNATIONAL LIMITED (SGX:F34)

Wilmar International - Adani Wilmar Files Draft Prospectus For IPO

• Wilmar International's 50%-owned Adani Wilmar filed a draft herring prospectus for proposed listing.
• Plans to raise up to US$600m funds through new share issuance.
• We are positive on moves for Wilmar International (SGX:F34) to unlock value, which could lift its SOP valuations.

Proposed Initial Public Offering (IPO) of Adani Wilmar Limited

• Wilmar announced on 2 Aug that 50%-owned AWL has filed a draft red herring prospectus with the Securities and Exchange Board of India (SEBI) in relation to a proposed IPO to list on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The proposed listing of AWL will comprise an IPO of new equity shares in AWL worth up to Rs45,000m (US$600m). There will not be any secondary offering.
• The net proceeds from the IPO will be used by AWL to:
  1. fund capex for expansion of its existing manufacturing facilities and develop new manufacturing facilities;
  2. repay/prepay borrowings;
  3. fund strategic acquisitions and investments; and
  4. finance general corporate needs.
• Overall, the listing is intended to further the growth of AWL’s operations by raising its market visibility and awareness among its current and potential customers. Wilmar International cautioned that there is no assurance that the proposed listing will proceed.

Background of Adani Wilmar Limited (AWL)

• Adani Wilmar Limited (AWL) is a joint venture between Adani Group and Wilmar International incorporated in Jan 1999. It is the largest refiner and producer of consumer pack edible oils in India. AWL has expanded into rice and rice milling as well as enhanced consumer product offerings. It has also increased its refining and specialty fats capacities in existing and new sites.
• AWL owns more than 40 manufacturing facilities with a combined refining capacity of over 16,800 tonnes/day, seed crushing capacity of 6,000 tonnes/day, and packaging capacity of 12,900 tonnes/day.

Positive development for Wilmar; could boost target price, if it materialises

• We are positive that Wilmar International has made IPO structure, market valuations, and future plans.
• Overall, we are positive about this news as AWL’s listing will allow Wilmar International to unlock value for shareholders. The group could benefit through higher earnings growth prospects from AWL as it raises funding to accelerate its growth and earnings.
• See
  • Wilmar's Share Price,
  • Wilmar's Target Price,
  • Wilmar's Analyst Reports,
  • Wilmar's Dividend History,
  • Wilmar's Announcements,
  • Wilmar's Latest News.
• There is a potential upside of US$2.6bn (S$0.56/share; at the higher end of our sensitivity analysis on AWL’s market valuation) to our AWL at 1x P/BV.
• Reiterate ADD on Wilmar International with unchanged SOP-based target price..
• Potential re-rating catalyst include listing of AWL.
• Downside risks are lower crushing and consumer products margins.

Ivy NG Lee Fang CFA CGS-CIMB Research | Nagulan RAVI CGS-CIMB Research | https://www.cgs-cimb.com 2021-08-03

SGX Stock Analyst Report ADD MAINTAIN ADD 6.150 SAME 6.150