Wilmar International

UOBKayhian on 30 Jan 2015

FY14F PE (x): 14.3
FY15F PE (x): 11.9

Wilmar will announce its 4Q14 results on 12 Feb 15 after the market close. Wilmar’s 2014 earnings are expected to be in line with our and market expectation of US$1,050m- 1,150m with 4Q14 net profit expected to come in around US$300m-350m (vs 4Q13: US$369.1m, 3Q14: US$422.4m). Any surprise in earnings is likely to come in the form of a positive surprise from oilseed & grains and sugar processing & merchandising divisions largely on the back of its improved PBT margins. 2015 outlook. The palm-related business will continue to be under pressure from huge soybean supply and low refining margins due to overcapacity. Soybean crushing in China should see stability due to less market disruption from traders after: a) banks tightened the financing for traders, and also b) declining prices deterred them from market. The sugar division is an increasingly important earnings contributor and should see continued growth in sales volume in Processing & Merchandising division. Contribution from the sugar division is expected to hit 11% of total PBT in 2014F vs only 6% two years ago. Maintain HOLD and target price of S$3.55. This translates into a blended 2015F PE of 13.7x. Entry price is S$3.05.