• Maintain NEUTRAL, TP drops to SGD3.00 from SGD3.10, 3% downside with 5% FY25F yield. Wilmar International's FY24 results are in line with our estimates, but below the consensus forecast. While operating conditions are improving in China, Wilmar's sugar and palm refining units continue to face challenges. Its valuation will likely be lower than that of its China-listed peers until earnings undergo a significant turnaround.
• FY24 core profit (-12.8% YoY) accounted for 102% of our and 92% of Street forecasts. Wilmar declared a higher-than-expected final DPS of SGD0.10, bringing FY24 DPS to SGD0.16, or a core dividend payout ratio of 64% (vs 40-50% in previous years). This implies a dividend yield of 5.2% for 2024.
• In 4Q24, food product sales volumes dipped 0.2% QoQ but grew 11.4% YoY. This brought FY24 volume growth to 7.6% YoY, driven by the medium-pack and bulk (+8.6%) and consumer product (+4.5% YoY) segments. PBT in 2H24 surged 68% HoH, mainly on the inclusion of a USD101.5m gain from the share swap exercise of its China associate, Luhua. Excluding this, the PBT margin of this division would have improved in 2H24 to 1.7% (1H24:1.1%), bringing the FY24 margin to 1.4% (FY23: 1%), as operating conditions in China improved. Management expects volume growth to continue in 2025, but margins would be determined by trading strategies.
• Feed and industrial division's sales volume rose 10.8% QoQ or 20.8% YoY in 4Q24. The YoY rise was driven by the oilseeds and grains (+39.2% YoY) segment as crushing volumes improved, and sugar merchandising volumes rose (+17.9% YoY). The division's PBT margin dropped YoY in 2H24 to 1.3% (from 2.8% in 1H24), bringing the FY24 PBT margin to 2%. This was due to losses at its sugar merchandising activities, and weak refining margins (albeit positive). As sugar prices have recovered slightly, the sugar segment should see some improvements in 2025, while refining margins are expected to remain flattish YoY. Crushing margins are also expected to rise as soybean prices have moderated due to record soybean supplies in Brazil.
• PBT in the plantation and sugar milling division quadrupled HoH in 2H24. YoY, 2H24 PBT rose 4.4% (ex-EI Nino-related gain of USD231m). FFB output rose 11% HoH but fell 8.8% YoY due to the El Nino impact in Indonesia) while sugar milling volumes tripled HoH (-51% YoY, due to the sugar strike delays in Australia). As a result, PBT margin rose to 10.5% in 2H24 (1H24: 4.1%), bringing the full-year figure to 8% (vs 6.8% in FY23) - due to higher ASP's. Plantation margins should remain elevated in 2025, while sugar milling margins may likely improve if sugar prices continue to rise.
• NEUTRAL, with a slightly lower TP of SGD3.00. Our TP includes a 4% ESG premium, based on Wilmar's 3.3 ESG score. Post adjusting for FY24 earnings, we trim our FY25-26F earnings by 10% and 12%, after paring down margin assumptions for the feed and industrial division.

Source: RHB Research - 24 Feb 2025