Towards Financial Freedom
Wilmar - Ventures into sugar business in Morocco HOLD
- Wilmar International announced that it has acquired a 27.5% stake in Cosumar SA, which is listed on the Casablanca Stock Exchange, for US$263mil.
- Wilmar, together with a group of Moroccan institutional investors, will hold a strategic 54% controlling block in Cosumar.
- Cosumar is the sole sugar supplier in Morocco. It has one of the largest sugar refineries in the world.
- Cosumar also has seven beet and cane sugar mills situated in five regions in Morocco. Cosumar is the third largest sugar supplier in Africa.
- We are neutral on this development.
- Earnings contribution from Cosumar is not expected to be significant. However in the longer-term, Wilmar will be able to establish its footprint and penetrate further into the African market.
- In Africa, WIlmar has joint ventures with Olam International in SIFCA's palm oil operations.
- Wilmar also owns Benso Oil Palm Plantations in Ghana. Besides this, Wilmar has about 30,000ha of plantations in Nigeria. Out of these, about 10,000ha is already planted.
- Wilmar also has two palm oil refineries and two soybean crushing facilities in Africa.
- Cosumar's contribution to Wilmar will come in the form of share of profits in associate.
- We estimate Wilmar's share of profits in Cosumar at US$17mil in FY14F based on consensus estimates for the latter's earnings.
- Wilmar's purchase consideration for Cosumar is about 15.1x of Cosumar FY14F net profit.
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