Wilmar’s revenue fell 6.2% YoY to US$10.4b but its net profit rose 26.4% to US$257.0m in 1Q19, such that the latter accounted for 21% of ours and the street’s full year expectations.

There was a US$21.7m loss from discontinued operations, mainly due to the operating losses and finance costs incurred by the Brazilian operations under Shree Renuka Sugar. Excluding this, 1Q19 net profit would have met about 23% of our full year forecast.

Pre-tax profit for the Tropical Oils division increased by 80.8% YoY to US$183.8m, boosted by stronger performance from the manufacturing and merchandising business, on the back of better sales volume and margins in the quarter.

In the Oilseeds and Grains division, pre-tax profit was 47.2% YoY lower at US$91.1m, dragged by poor results from the crushing business, which had been impacted by the African swine fever outbreak in China and the sharp drop in basis for Brazilian beans.

Pending more details from management, we maintain our HOLD rating but put our fair value estimate of S$3.44 under review.

Source: OCBC Research - 13 May 2019