Wilmar International Limited (WIL) posted FY14 results that were above our expectations – core earnings of US$1219.9m (down 6.4%) was 15% ahead of our forecast, aided by improved margins in its Palm and Laurics business. WIL declared a final dividend of S$0.055/share, unchanged from last year, bringing the total dividend of S$0.075; but below S$0.08 last year. Going forward, WIL expects the lower palm, crude oil and sugar prices to negatively impact its plantation, palm bio-diesel and sugar milling segments, but it believes its processing and downstream businesses should benefit from lower feedstock costs. As a whole, WIL says its integrated business model should enable stable and resilient earnings in 2015. In light of the latest results and weak outlook for commodity prices in general, we see the need to pare our FY15 estimates by 10%. However, we think that WIL’s resilient business model and ability to execute in a difficult environment warrant a higher 13x FY15 PER (versus 12.5x previously); hence our fair value improves from S$3.47 to S$3.50. Maintain BUY.
FY14 core earnings above forecast
Wilmar International Limited (WIL) reported its 4Q14 results last night, with revenue slipping 7.3% YoY (down 6.5% QoQ) to US$10777.7m, after weaker CPO prices resulted in lower Palm & Laurics revenue and Plantations revenue. But aided by lower feedstock cost and stable growth in its downstream business, net profit grew 8.7% YoY (-5.0% QoQ) to US$401.2m. Excluding exceptional items, core net profit jumped 16.9% YoY (-4.0% QoQ) to US$412.5m. For the full year, revenue slipped 2.3% to US$43084.9m, or about 6.6% below our forecast, while net profit fell 12.3% to US$1156.2m; core earnings was down 6.4% to US$1219.9m, but was still 14.8% above our estimate. WIL declared a final dividend of S$0.055/share, unchanged from last year, bringing the total dividend of S$0.075; but below S$0.08 last year.
Expects stable and resilient earnings in 2015
Going forward, WIL expects the lower palm, crude oil and sugar prices to negatively impact its plantation, palm bio-diesel and sugar milling segments, but it believes its processing and downstream businesses should benefit from lower feedstock costs. As a whole, WIL says its integrated business model should enable stable and resilient earnings in 2015. On its markets, WIL expects growth in China to remain slow, but sees Africa as an important market in the foreseeable future. The group added it remains positive on sugar, while crush margins in China should stabilize and remain positive this year.
Maintain BUY with new S$3.50 FV
In light of the latest results and weak outlook for commodity prices in general, we see the need to pare our FY15 estimates by 10%. However, we think that WIL’s resilient business model and ability to execute in a difficult environment warrant a higher 13x FY15 PER (versus 12.5x previously); hence our fair value improves from S$3.47 to S$3.50. Maintain BUY.
Wilmar International Limited (WIL) reported its 4Q14 results last night, with revenue slipping 7.3% YoY (down 6.5% QoQ) to US$10777.7m, after weaker CPO prices resulted in lower Palm & Laurics revenue and Plantations revenue. But aided by lower feedstock cost and stable growth in its downstream business, net profit grew 8.7% YoY (-5.0% QoQ) to US$401.2m. Excluding exceptional items, core net profit jumped 16.9% YoY (-4.0% QoQ) to US$412.5m. For the full year, revenue slipped 2.3% to US$43084.9m, or about 6.6% below our forecast, while net profit fell 12.3% to US$1156.2m; core earnings was down 6.4% to US$1219.9m, but was still 14.8% above our estimate. WIL declared a final dividend of S$0.055/share, unchanged from last year, bringing the total dividend of S$0.075; but below S$0.08 last year.
Expects stable and resilient earnings in 2015
Going forward, WIL expects the lower palm, crude oil and sugar prices to negatively impact its plantation, palm bio-diesel and sugar milling segments, but it believes its processing and downstream businesses should benefit from lower feedstock costs. As a whole, WIL says its integrated business model should enable stable and resilient earnings in 2015. On its markets, WIL expects growth in China to remain slow, but sees Africa as an important market in the foreseeable future. The group added it remains positive on sugar, while crush margins in China should stabilize and remain positive this year.
Maintain BUY with new S$3.50 FV
In light of the latest results and weak outlook for commodity prices in general, we see the need to pare our FY15 estimates by 10%. However, we think that WIL’s resilient business model and ability to execute in a difficult environment warrant a higher 13x FY15 PER (versus 12.5x previously); hence our fair value improves from S$3.47 to S$3.50. Maintain BUY.
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