Thursday, August 8, 2013

Wilmar 2Q13 results: down QoQ, but up YoY (Phillip)

Wilmar International Ltd
Target Price (SGD) 3.61
- Previous Target Price (SGD) 3.70
2Q13 results: down QoQ, but up YoY

 Company Overview Wilmar International Limited is Asia’s leading agribusiness group. Its business activities include oil palm cultivation, oilseeds crushing, edible oils refining, sugar, specialty fats, oleo-chemicals and biodiesel manufacturing and grains processing.

 2Q13 core profit of US$245mn (+42% YoY, -22% QoQ)
 Lower raw material prices to benefit downstream business

  Maintain Accumulate with new TP of S$3.61 What is the news? Wilmar reported core 2Q13 net profit (excl non-operating items) of US$245mn (+42% YoY, -22% QoQ), bringing 1H13 net profit to US$559mn (+48% YoY) or 41%/42% of consensus/PSR full-year estimate, slightly below expectation. Interim dividend was S$0.025/share (S$0.02/share in 1H12).

 How do we view this? The lower QoQ performance was mainly due to lower earnings recorded by Oilseeds & grains, weaker CPO prices and lower margins for Consumer products. For 2Q13, crush margins remain positive for the 4th consecutive month, but down QoQ from US$10/MT to US$3/MT. Palm & laurics remained robust, reported stronger sales volume. Albeit margin fell slightly from US$40/MT in 1Q13 to US$36/MT, it is still above our US$33/MT full-year forecast.

Investment Actions?
 Management highlights that low CPO price and declining refining margins in Indonesia will add to the challenging operating environment, but expects lower raw material prices to benefit its downstream products. We expect 2H13 results to be stronger as sugar milling will turn profitable in 2H and demand in China will rise on festive seasons (mid-autumn and Lunar New Year’s advance purchases in 4Q). We trim our FY13-15E profit forecasts by 1-3%, factoring in the lower crushing and consumer products margins. As such, our target price is revised to S$3.61 (S$3.70 previously), based on blended PE (12.0 FY14E) and DCF valuations. Stock is currently trading near -1 S.D. of 11.4x. Maintain Accumulate.

Source/Extract/Excerpts/来源/转贴/摘录: Phillip-Research,
Publish date: 07/08/13

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