Wilmar International Limited (WIL) reported a mostly in-line set of 1Q15 results. Although revenue fell 8.3% YoY at US$9411.3m, reported net profit jumped 49.1% to US$241.2m; core earnings rose 22.7% to US$263.3m, meeting 21.4% of our full-year forecast. Going forward, management remains modestly upbeat about its prospects this year, although Tropical Oils segment still faces challenging operating conditions. For the longer term, WIL remains positive on Africa and believes it is a market that has good growth potential, both for plantation as well as consumer products. While Africa remains a medium to long-term prospect for now, we think that near-term valuations are not pricey and hence we maintain our BUY on the stock with an unchanged S$3.50 fair value (based on 13x FY15F EPS).
1Q15 results mostly in line
Wilmar International Limited (WIL) reported a mostly-inline set of 1Q15 results, with revenue down 8.3% YoY at US$9411.3m, mostly reflecting the still-soft commodity prices. Still, topline met about 21% of our full-year forecast. And thanks to a strong 142.4% jump in contribution from associates, reported net profit surged 49.1% to US$241.2m. Core net profit grew at a slightly slower pace of 22.7% to US$263.3m, meeting 21.4% of our FY15 estimate.
Change in business segmental reporting
Meanwhile, WIL also made changes to its business segmental reporting to align the segments in accordance with the core of its strategy - a resilient integrated agribusiness model. Among its segments, Oilseeds and Grains (which now includes consumer products) was the top performer, being both the largest pre-tax profit contributor and also showing the best YoY improvement of 1120.5%; this largely aided by improved crush margins in China. Tropical Oils segment was weaker, weighed by both thinner refining margins and lower CPO prices, resulting in a 44% tumble in PBT. Sugar also saw a 25.9% slide in profitability, which WIL noted was mostly due to weaker performance in Indonesia.
Outlook remains modestly upbeat
Going forward, management remains modestly upbeat about its prospects. It expects crush margins to remain positive going into mid-2015; consumer products to continue to grow globally with reasonable margins; but notes that the operating conditions for Tropical Oils will remain challenging. It adds that it is "cautiously optimistic" that 2Q performance will be "satisfactory".
Long-term fundamentals are positive
Notwithstanding the short-term volatility in CPO prices, management reiterates that the long-term fundamentals are positive, and remain upbeat about its prospects in Africa. Noting that it already has a dominant position in Asia, Africa will be likely market to give it that “quantum leap”. However, it remains a medium to long-term prospect for now. Still, we think that near-term valuations are not pricey and hence we maintain our BUY on the stock with an unchanged S$3.50 fair value (based on 13x FY15F EPS).
Wilmar International Limited (WIL) reported a mostly-inline set of 1Q15 results, with revenue down 8.3% YoY at US$9411.3m, mostly reflecting the still-soft commodity prices. Still, topline met about 21% of our full-year forecast. And thanks to a strong 142.4% jump in contribution from associates, reported net profit surged 49.1% to US$241.2m. Core net profit grew at a slightly slower pace of 22.7% to US$263.3m, meeting 21.4% of our FY15 estimate.
Change in business segmental reporting
Meanwhile, WIL also made changes to its business segmental reporting to align the segments in accordance with the core of its strategy - a resilient integrated agribusiness model. Among its segments, Oilseeds and Grains (which now includes consumer products) was the top performer, being both the largest pre-tax profit contributor and also showing the best YoY improvement of 1120.5%; this largely aided by improved crush margins in China. Tropical Oils segment was weaker, weighed by both thinner refining margins and lower CPO prices, resulting in a 44% tumble in PBT. Sugar also saw a 25.9% slide in profitability, which WIL noted was mostly due to weaker performance in Indonesia.
Outlook remains modestly upbeat
Going forward, management remains modestly upbeat about its prospects. It expects crush margins to remain positive going into mid-2015; consumer products to continue to grow globally with reasonable margins; but notes that the operating conditions for Tropical Oils will remain challenging. It adds that it is "cautiously optimistic" that 2Q performance will be "satisfactory".
Long-term fundamentals are positive
Notwithstanding the short-term volatility in CPO prices, management reiterates that the long-term fundamentals are positive, and remain upbeat about its prospects in Africa. Noting that it already has a dominant position in Asia, Africa will be likely market to give it that “quantum leap”. However, it remains a medium to long-term prospect for now. Still, we think that near-term valuations are not pricey and hence we maintain our BUY on the stock with an unchanged S$3.50 fair value (based on 13x FY15F EPS).
No comments:
Post a Comment