Towards Financial Freedom
Wilmar International - Buoyed by sugar in 3QFY13
- We are keeping our HOLD recommendation on Wilmar International Ltd with a higher fair value of S$3.45/share versus S$3.40/share previously. Our fair value is based on a FY14F PE of 13x. We have tweaked Wilmar's FY14F EPS upwards by 2% for housekeeping reasons.
- Wilmar's 9MFY13 results were within consensus estimates and our forecast.
- As expected, Wilmar's net profit rebounded in 3QFY13 after a dismal performance in 2QFY13. This year, the QoQ improvement in 3QFY13 was driven by the sugar and oilseeds and grains divisions instead of palm and laurics.
- In the past, 3Q was usually Wilmar's best quarter due to consumers' buying of palm oil for the Mooncake Festival in China.
- As such, it was a surprise that sales volume of the palm and laurics division (mainly palm oil refining) eased by 1.5% from 6.2mil tonnes in 2QFY13 to 6.1mil tonnes in 3QFY13. We believe that buyers in China could have stocked up early in 2QFY13.
- Pre-tax profit margin of the palm and laurics division slid from US$36.25/tonne in 2QFY13 to US$34.71/tonne in 3QFY13.
- The division has been recording a decline in pre-tax profit per tonne since 1QFY13.
- We believe that this could be due to softening margins in Indonesia resulting from the build-up of palm refining capacity.
- The oilseeds and grains division (mainly soybean crushing and refining) recorded a pre-tax profit of US$116.1mil in 9MFY13 versus a loss of US$32.2mil in 9MFY12.
- Soybean crushing margins have recovered this year, as reflected in the pre-tax profit of US$7.85/tonne in 9MFY13 versus a negative US$2.26/tonne in 9MFY12.
- After being affected by unfavourable weather in Queensland last year, the sugar division's performance has improved in 9MFY13.
- The division chalked up a pre-tax profit of US$107.3mil in 9MFY13 versus a loss of US$6.8mil in 9MFY12 as sugar milling and refining volume surged more than 50% YoY.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
