Wilmar International Limited (WIL) reported a stronger set of 3Q12 results, with reported net profit jumping 26% YoY to US$405.8m, even though revenue slipped 6% to US$12.3b. 9M12 revenue inched up 2% to US$33.8b, meeting 73% of our full-year estimate, while reported net profit fell 29% to US$778.7m; core net profit fell 41% to US$766.0m, or 80% of our FY12 estimate. We are raising our FY12 earnings forecast by 4%; but we opt to leave our FY13 estimates unchanged as we are already looking at a nice 30% recovery in core earnings. We are also upgrading it from Hold to BUY with a higher S$3.52 fair value, as we push out our 13.5x peg to FY13F EPS from blended previously.
Stronger 3Q12 showing
Wilmar International Limited (WIL) reported a stronger set of 3Q12 results, with reported net profit jumping 26% YoY to US$405.8m, even though revenue slipped 6% to US$12.3b, aided by better performance at most key segments (except for Oilseeds & Grains and Plantations & Palm Oil Mills). Excluding non-operating items, net profit came in around US$388.0m, from US$451.4m a year ago. 9M12 revenue inched up 2% to US$33.8b, meeting 73% of our full-year estimate, while reported net profit fell 29% to US$778.7m; core net profit fell 41% to US$766.0m, or 80% of our FY12 estimate.
Good QoQ recovery in 3Q12
More importantly, we note that WIL has also been able to show decent QoQ improvements, with 3Q12 revenue rebounding 12% and earnings 246% (core net profit +125%), as most of its business segments did better compared to 2Q12. Sugar milling revenue surged 353% QoQ; but this was expected due to seasonality. Otherwise, Consumer products put in a very good showing after revenue increase 50% QoQ, while PBT/MT also improved 84% from the previous quarter. Oilseeds & Grains division was profitable again, after two quarters of losses, despite still challenging crushing environment in China. While Palm & Laurics saw 4% drop in revenue, it managed to score a 9% rise in PBT/MT.
Upbeat on long-term prospects
Nevertheless, WIL notes that near-term challenges remain, although not as bad as before. Management also maintains its positive long-term outlook, citing good economic growth in its key markets like China, India and Indonesia. It also sees growth in new projects it had developed over the years such as oleochemicals, rice and flour milling. We are raising our FY12 earnings forecast by 4%; but we opt to leave our FY13 estimates unchanged as we are already looking at a nice 30% recovery in core earnings. We are also upgrading it from Hold to BUY with a higher S$3.52 fair value, as we push out our 13.5x peg to FY13F EPS from blended previously.
Wilmar International Limited (WIL) reported a stronger set of 3Q12 results, with reported net profit jumping 26% YoY to US$405.8m, even though revenue slipped 6% to US$12.3b, aided by better performance at most key segments (except for Oilseeds & Grains and Plantations & Palm Oil Mills). Excluding non-operating items, net profit came in around US$388.0m, from US$451.4m a year ago. 9M12 revenue inched up 2% to US$33.8b, meeting 73% of our full-year estimate, while reported net profit fell 29% to US$778.7m; core net profit fell 41% to US$766.0m, or 80% of our FY12 estimate.
Good QoQ recovery in 3Q12
More importantly, we note that WIL has also been able to show decent QoQ improvements, with 3Q12 revenue rebounding 12% and earnings 246% (core net profit +125%), as most of its business segments did better compared to 2Q12. Sugar milling revenue surged 353% QoQ; but this was expected due to seasonality. Otherwise, Consumer products put in a very good showing after revenue increase 50% QoQ, while PBT/MT also improved 84% from the previous quarter. Oilseeds & Grains division was profitable again, after two quarters of losses, despite still challenging crushing environment in China. While Palm & Laurics saw 4% drop in revenue, it managed to score a 9% rise in PBT/MT.
Upbeat on long-term prospects
Nevertheless, WIL notes that near-term challenges remain, although not as bad as before. Management also maintains its positive long-term outlook, citing good economic growth in its key markets like China, India and Indonesia. It also sees growth in new projects it had developed over the years such as oleochemicals, rice and flour milling. We are raising our FY12 earnings forecast by 4%; but we opt to leave our FY13 estimates unchanged as we are already looking at a nice 30% recovery in core earnings. We are also upgrading it from Hold to BUY with a higher S$3.52 fair value, as we push out our 13.5x peg to FY13F EPS from blended previously.
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