Wilmar International - CGS-CIMB Research 2021-08-23: Regulator Puts Adani Wilmar’s IPO On Hold

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WILMAR INTERNATIONAL LIMITED (SGX:F34)

Wilmar International - Regulator Puts Adani Wilmar’s IPO On Hold

• According to Securities and Exchange Board of India (SEBI)’s website, Adani Wilmar’s IPO is currently in abeyance.
• Adani Enterprises Ltd (AEL) has not received any formal communication from SEBI on this issue.
• This is negative as it could delay the listing of Adani Wilmar, one of the two catalysts for Wilmar International we projected for 2H21F.

Adani Wilmar Ltd (AWL) IPO kept in abeyance by SEBI

• Wilmar announced that market regulator Securities and Exchange Board of India (SEBI) posted on its website on 20 Aug that the current processing status of the draft herring prospectus in relation to the proposed Adani Wilmar Ltd (AWL) IPO is “issuance of observation kept in abeyance”.
• According to SEBI, it is obligated to keep issuance of observations in abeyance for a period of 30 days or 45 days or 90 days or more, as the case may be. Wilmar International (SGX:F34) holds a 50% stake in AWL.

Clarification on potential reasons for this development

• Certain media outlets have speculated that the processing of the AWL IPO has investigating a company, a related entity that has filed for an IPO may not obtain approval for 90 days. This delay can be extended by another 45 days. The processing status of draft offer documents is updated on a weekly basis, according to the SEBI website. Adani Wilmar is aiming to be the seventh company from the Adani Group to be listed on exchanges.

Potential impact on Wilmar

• This could delay the listing of AWL (targeted for 4Q21F), which we had viewed as a catalyst for Wilmar International. See previous report: Wilmar International - CGS-CIMB Research 2021-08-16: Emerging Catalysts For 2H21.
• To recap, the AWL IPO gain of US$1.6bn to US$2.5bn (or S$0.33 to S$0.52 per Wilmar International share).
• See
  • Wilmar's Share Price,
  • Wilmar's Target Price,
  • Wilmar's Analyst Reports,
  • Wilmar's Dividend History,
  • Wilmar's Announcements,
  • Wilmar's Latest News.
• Reiterate ADD on Wilmar International and our SOP-based target price as the stock is undervalued and offers a cheaper and more liquid entry into its 90%-owned YKA.
• Downside risks are inability to pass on higher commodity prices to consumers and the listing of AWL falling through.

Ivy NG Lee Fang CFA CGS-CIMB Research | Nagulan RAVI CGS-CIMB Research | https://www.cgs-cimb.com 2021-08-23

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