Wilmar International Limited (WIL) reported a fairly decent set of FY13 results, with core earnings of S$1303m coming in 4% above our forecast. Going forward, WIL maintains a pretty positive outlook for FY14, saying it is optimistic on the future of China and its long-term prospects there. Separately, WIL also announced that it will be investing US$200m in Shree Renuka Sugars (SRS) Limited – a move that will not only bump up its sugar milling and refining capacity quite a bit, it will also give WIL a significant presence in India and Brazil. We are keeping our FY14 revenue forecast largely unchanged; but bump up earnings by 3%. Still based on 12.5x FY14F EPS, our fair value improves slightly from S$3.55 to S$3.65. As there is still an upside of over 10%, we upgrade our call to BUY.
Decent FY13 showing
Wilmar International Limited (WIL) reported a fairly decent set of FY13 results. Although revenue was down 3% at S$44085.0m, it was spot on our forecast. Reported net profit climbed 5% to S$1318.9m; core earnings jumped 12% to S$1303m, or 4% above our forecast. According to management, this was aided by a stronger-than-expected recovery in the crushing margins in China in 4Q13. WIL declared a final dividend of 5.5c/share (versus 3c last year), bringing the full-year payout to 8c (versus 5c in FY12).
Maintains positive outlook for FY14
Going forward, WIL maintains a pretty positive outlook for FY14, saying it is optimistic on the future of China and its long-term prospects there. However, it did say that it does not expect the oilseed crush margins to be as “fantastic” as those seen in 4Q13; this given that there is still an excess crushing capacity in China. Nevertheless, WIL believes that its integrated business model will help it achieve a lower cost and better cope with its competitors there. WIL has also been heavily promoting its rice and flour business, and it has already started to see good volume improvements.
Investing US$200m in Shree Renuka
Separately, WIL also announced that it will be investing US$200m in Shree Renuka Sugars (SRS) Limited. WIL will take an initial 27.5% stake for US$80m and the funds will be used to pay down SRS’ existing debt. Besides bumping up WIL’s sugar refining and milling capacity, it will also give WIL a significant sugar presence in India and Brazil. Last but not least, WIL expects the move to complement the development of its edible oils and other businesses in India.
Upgrade to BUY with S$3.65 FV
We are keeping our FY14 revenue forecast largely unchanged; but bump up earnings by 3%. Still based on 12.5x FY14F EPS, our fair value improves slightly from S$3.55 to S$3.65. As there is still an upside of over 10%, we upgrade our call to BUY.
Wilmar International Limited (WIL) reported a fairly decent set of FY13 results. Although revenue was down 3% at S$44085.0m, it was spot on our forecast. Reported net profit climbed 5% to S$1318.9m; core earnings jumped 12% to S$1303m, or 4% above our forecast. According to management, this was aided by a stronger-than-expected recovery in the crushing margins in China in 4Q13. WIL declared a final dividend of 5.5c/share (versus 3c last year), bringing the full-year payout to 8c (versus 5c in FY12).
Maintains positive outlook for FY14
Going forward, WIL maintains a pretty positive outlook for FY14, saying it is optimistic on the future of China and its long-term prospects there. However, it did say that it does not expect the oilseed crush margins to be as “fantastic” as those seen in 4Q13; this given that there is still an excess crushing capacity in China. Nevertheless, WIL believes that its integrated business model will help it achieve a lower cost and better cope with its competitors there. WIL has also been heavily promoting its rice and flour business, and it has already started to see good volume improvements.
Investing US$200m in Shree Renuka
Separately, WIL also announced that it will be investing US$200m in Shree Renuka Sugars (SRS) Limited. WIL will take an initial 27.5% stake for US$80m and the funds will be used to pay down SRS’ existing debt. Besides bumping up WIL’s sugar refining and milling capacity, it will also give WIL a significant sugar presence in India and Brazil. Last but not least, WIL expects the move to complement the development of its edible oils and other businesses in India.
Upgrade to BUY with S$3.65 FV
We are keeping our FY14 revenue forecast largely unchanged; but bump up earnings by 3%. Still based on 12.5x FY14F EPS, our fair value improves slightly from S$3.55 to S$3.65. As there is still an upside of over 10%, we upgrade our call to BUY.
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