Wilmar International Limited (WIL) reported a pretty dismal set of 2Q16 results as expected. While revenue inched up 0.9% YoY (+4.1% QoQ) to US$9367.5m, reported net profit plunged into the red with a loss of US$220.1m, albeit a tad better than US$230m loss that it had warned. Management explained that the loss was largely due to "untimely purchases" of soybean for its manufacturing business within Oilseeds & Grains; its Sugar business also turned in a weaker performance due to unfavourable weather conditions and mark-to-market lossses on sugar hedges.

For 1H16, revenue slipped 1.7% to US$18370.2m, while reported NPAT slipped 95.5% to US$19.3m; core earnings came in at just US$2.2m. Still, WIL has maintained its interim dividend of S$0.025/share, payable on 30 Aug.

Notwithstanding the one-time loss in 2Q16 and barring unforeseen circumstances, WIL believes that its 2H16 performance will be "satisfactory", citing the resilience of its integrated agribusiness model. We will have more after the analyst briefing later; until then, we place our SELL rating and S$3.05 fair value under review.  

Source: OCBC Research - 12 Aug 2016