WILMAR INTERNATIONAL LIMITED (SGX:F34)
Wilmar International - Good Set Of Results
- Highest interim dividend declared since listing.
- Margin pressure to ease in 2H21.
- Resulting in better 2H21 outlook.
Wilmar International's 1H21 results met expectations
- Wilmar International (SGX:F34)’s 1H21 revenue rose 30.4% y-o-y to US$29.5b, due to higher sales volume (+2% y-o-y) and commodity prices. PATMI grew 23.0% y-o-y to US$750.9m, making up 47% of our initial full-year forecast, which we consider to be broadly in-line with our expectations.
- An interim dividend of S$0.05 per share was declared versus S$0.04 in 1H20. This is the highest interim dividend declared since Wilmar International's listing.
Margin pressure set to ease in 2H21
- Sales volume of Food Products grew 9% y-o-y in 1H21, driven by a 22% volume growth from medium pack and bulk as demand from hotels/restaurants/catering (HORECA) recovered. On the other hand, consumer products sales volume fell 13% due to high base effect in 2Q20 when households stocked up on consumer products during the early days of COVID-19.
- Despite higher volume, profit for the Food Products segment was down 13% y-o-y to US$428.3m as higher commodity prices weighed on margins. Management shared that Wilmar International had increased the selling prices of consumer pack products in 1H21 and with higher seasonality demand in 2H21, margin pressure is likely to ease.
Higher CPO and sugar prices benefitted the upstream business
- For the Feed and Industrial Products segment, volume fell marginally by 1% y-o-y while pre-tax profit rose 29% y-o-y to US$478.8m in 1H21, driven by strong performance from the tropical oils business. However, higher raw material costs impacted soybean crushing and sugar merchandising margins.
- Separately, Plantation and Sugar milling benefitted from firmer palm oil and sugar prices with its profit before tax turning from a loss of US$82.9m in 1H20 to a profit of US$164.0m in 1H21.
Likely to see a stronger 2H21
- We expect a stronger 2H21 as margin pressure on Wilmar International’s Food Products segment eases, together with firmer CPO and higher sugar prices, and a recovery in crushing margin.
- The potential listing of its 50% owned India JV Adani Wilmar is likely to be another catalyst.
- We maintain our fair value estimate for Wilmar International at S$6.21.
- See
Chu Peng
OCBC Investment Research
|
https://www.iocbc.com/
2021-08-16
SGX Stock
Analyst Report
6.210
SAME
6.210
