Wilmar announced its 2QFY19 results which were below ours and the street’s expectations. 2QFY19 revenue fell 9% YoY US$9.8b, dragged by lower commodity prices, partially offset by a 4% increase in sales volume.

Net profit decreased by 52% to US$150.9m, mainly due to bigger than expected impact of African swine fever outbreak on soybean meal demand which dragged the crush margin.

For 1HFY19, revenue was down 8% YoY to US$20.2b while net profit fell 22% to US$407.9m, which formed 33% of our full-year forecast.

Strong performances in Tropical Oils (Manufacturing & Merchandising) and Consumer Products were offset by weaker performance from Associates and Sugar. Rice and flour milling continued to make good progress in 2QFY19.

Pending further details from the analyst briefing, we place our Buy rating and fair value estimate of S$4.26 under review.

Source: OCBC Research - 14 Aug 2019