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Simons Trading Research

Author: simonsg   |   Latest post: Thu, 15 Aug 2019, 4:26 PM

 

Wilmar International - 2Q18 Results Preview ~ Seasonally Weak 2Q Will Not Happen This Year

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  • Wilmar will announce its 2Q18 results on 13 August after market close. We expect Wilmar to deliver a net profit of US$260m-290m.
  • Key trends to look out for are a better contribution from the sugar division due to higher milling sales volume, better oilseeds & grains PBT margins, and the contribution from tropical oil is expected to be better in 2Q18 on the back of higher sales volume and contribution from biodiesel.
  • Maintain BUY. Target price: S$3.90.

What’s New

Expecting good 2Q18 earnings.

2Q18 will be an unusually good quarter for Wilmar and we are expecting a core net profit of around US$260m-290m. This would make 2Q18 the best 2Q for Wilmar.

Note 2Q is usually the seasonally weakest earnings quarter due to a lack of festive demand boost while sugar has yet to start production. The following events are the key supporting factors for 2Q18 earnings.

Exceptionally low earnings in 2Q17 due to sugar losses.

Recall that Wilmar’s sugar division reported pre-tax losses in 2Q17 due to a weaker performance from the merchandising and refining business, which we are not expecting would repeat in 2Q18. We are not expecting negative surprises from this segment for 2Q18.

Source: UOB Kay Hian Research - 31 Jul 2018

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Labels: Wilmar Intl

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