- 1Q15 net up 49% YoY, in line.
- Soybean-crushing margins recovered, along with better associate contributions & reversal of huge FX losses last year. Tropical Oils the only weak spot.
- Maintain BUY & top sector pick. SGD4.04 TP still at 15x FY15 P/E.
1Q15 PATMI accounted for 17% of our FY15E. We deem this in line as 1Q is traditionally its weakest quarter. Revenue dropped 8% YoY on lower commodity prices. But net profit leapt 49% YoY from last year’s USD241m low. Growth was spearheaded by strong soybeancrushing margins, better associate contributions and a reversal from huge FX losses last year. Part of this was negated by Tropical Oils weakness. Wilmar changed its segmental reporting format. Palm & Laurics and Plantations have been combined into Tropical Oils. Oilseeds & Grains now includes Consumer Products. Tropical Oils underperformed in 1Q15, from lower upstream yields in Malaysia owing to harsh weather, lower CPO prices and depressed refining margins. Oilseeds & Grains made 11x more PBT as soybeancrushing margins improved in China. Sugar is seasonally insignificant in 1H.
Remains our top pick
We expect crushing margins to remain decent in 1H15. Operating conditions for CPO plantations and refining could remain difficult in the near term but we expect margins to improve as Indonesia implements its biodiesel policies. We believe Wilmar’s integrated business can better withstand commodity-price volatility. It remains our top sector pick. We leave EPS and TP unchanged, at 15x FY15 P/E, its 5-year average.
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