Wilmar International Limited (WIL) reported its 1Q16 results last night. Revenue slipped 4% YoY to US$9002.7m, while it met 22% of our FY16 forecast, core net profit fell 12% to US$224.0m, or 18% of our full-year estimate.

But management notes that the key difference comes from the S$17m non-operating gain (post-tax impact) in 1Q16; this relating to the net gain from investment securities. Otherwise, we note that PBT margins have actually improved across its all business segments YoY.

However, management expects the operating conditions in 2Q16 to be challenging, citing higher feedstock prices, weaker crush margins and continued volatility in sugar prices. We will be speaking with management to get more details later. For now, we maintain our HOLD rating but place our S$3.34 fair value under review.

Source: OCBC Research - 11 May 2016