Saturday, November 9, 2013

Wilmar International : 9M FY13 results in line (CS)

Wilmar International
Maintain NEUTRAL
Price (07 Nov 13, S$) 3.45
TP (prev. TP S$) 3.73 (3.73)
9M FY13 results in line

● Wilmar’s 9M FY13 core net profit, which rose 24% YoY to US$950 mn, was in line with expectations. Its net profit was boosted by: (1) improved showing in the palm merchandising, oilseed, consumer product and sugar divisions; and (2) lower tax rate.

● Palm merchandising accounted for 52% of Wilmar's pretax profits. Its 9M FY13 pretax profit rose 14% YoY because pretax profit per tonne rose 6% YoY to US$36.7, while volumes rose 7% YoY. Wilmar is likely to be a major beneficiary of Indonesia’s mandatory biodiesel blend as it is the largest producer of palm-biodiesel.


● Plantations profits, which accounted for 14% of group profits, fell 38% YoY, due to weak palm oil prices and a drop in FFB output.

● We maintain our NEUTRAL rating on Wilmar, as the 8% upside to our target price of SG$3.73 is broadly in line with the estimated market upside of 5%. We estimate that Wilmar's FY14 P/E of 13.0x is close to the Singapore agriculture sector average of 13.6x. Wilmar will hold its analyst briefing tomorrow, 8 Nov 2013

All divisions, except plantations, improved YoY
Wilmar’s 9M FY13 core net profit, which rose 24% YoY to US$950 mn, was broadly in line with market expectations, as it was 73% of full-year profit estimates. 9M FY13 net profit was boosted by: (1) improved showing in the palm merchandising, oilseed, consumer product and sugar divisions; and (2) lower tax rate of 21.3% (-2.8 pp).

Palm merchandising: 9M FY13 pretax profit rose 14% YoY because pretax profit per tonne improved to US$36.7 from US$34.6 in 9M FY12, while volumes rose 7% YoY. Despite increased capacity, Wilmar's PBT per tonne rose to US$34.7 in 3Q13 vs US$31.0 in 3Q12. Wilmar is likely to be a major beneficiary of Indonesia’s mandatory biodiesel blend as it is the largest producer of palm-biodiesel in Indonesia.

Oilseed: 3Q FY13 was the fifth consecutive quarter of profits after being loss making in 1H FY12. We believe that the worst could be over for the oilseed crush division in China, but the sector remains difficult, as the overcapacity in China will not be absorbed for another two years. 9M FY13 sales volume rose 4% YoY.

Consumer products: 9M FY13 pretax profit rose 24% YoY, with 9M FY13 pretax profit per tonne improving to US$36.9 from US$34.1 in 9M FY12, as a result of lower feedstock cost. Volumes rose 15% YoY.

Plantations: 9M FY13 pretax profit fell 38% YoY (excluding biological gains). 3Q FY13 pretax profit halved YoY, due to weak palm oil prices and a 10% drop in FFB output.

Sugar: Sugar division showed a strong profit, due to higher volume crushed with favourable weather conditions, and better margins. Wilmar has reportedly initiated talks to buy a majority stake in Indian sugar refiner Shree Renuka Sugars which is cash-strapped. If the deal goes through, Wilmar will enter the sugar markets of Brazil and India.

Maintain NEUTRAL
We maintain our NEUTRAL rating on Wilmar, as the 8% upside to our target price of SG$3.73 is broadly in line with the estimated market upside of 5%. We estimate that Wilmar's FY14 P/E of 13.0x is close to the Singapore agriculture sector average of 13.6x. Wilmar will hold its analyst briefing tomorrow, 8 November 2013.



Source/Extract/Excerpts/来源/转贴/摘录: Credit Suisse
Publish date: 08/11/13

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