Wilmar International

[freedom]

cofco

[cfa]

cofco

This China GLC is a giant in food and non-food, property and many others.. They almost dominate their own domestic market but believe most of their raw materials are from 3rd parties. Since cofco is state owned company, they always have advantages over foreign owned companies.

[CityFarmer]

Wilmar Q2 profit soars 87%

SINGAPORE — Wilmar International, the world’s largest palm oil trader, said yesterday second-quarter net profit jumped 86.5 per cent as its oilseeds unit swung to a profit from a year-earlier loss. Results were also depressed last year by foreign exchange losses and loss on investments.

Net income was US$218.5 million (S$277 million) in the three months ended June, compared with US$117.1 million a year earlier, the company said after markets closed.

Excluding non-operating items, quarterly earnings were 42.4 per cent higher at US$245.4 million from a year earlier.

http://www.todayonline.com/business/wilm...t-soars-87

[hh488]

Why isn't there any positive reaction to its price?

[cmr]

2Q13 results came in well below street estimates even though net profit jumped 87% y/y to US$218.5m

[Stocker]

NP Q on Q downed and expect 2nd half to be difficult also. BBs prefer wait and see.

[yccheok]

I had been following Wilmar (I do not own any Wilmar shares at least for now) quite a long time, since it was $6 till now it was some where $3. Its market price is still pretty stagnant, after its quarter result being released. The reason I had been following this company is that, I owned a Malaysia listed company PPB, which itself is one of the largest shareholder of Wilmar. PPB is owned by Robert Kuok family.

I'm still hesitate to purchase Wilmar is that

1) Its dividend yield is low.
2) Its income is volatile. But, I think this is pretty normal for a company which relies on commodity. For me, I prefer to invest in industry which generate more stable income like banking, consumer products, ...
3) It does produce consumer product. However, the pricing is pretty much controlled by government.
4) Consumer loyalty toward their products brand might not as strong as other product types. For instance, I do have strong preference on the brand of milk, toothbrush, coffee, ... I consume. However, my brand preference toward cooking oil, sugar, ... aren't strong.

However, it does deserved some loves as

1) It is controlled by Robert Kuok, which is one of the richest men in the world. If he become one of the richest men with majority stake in Wilmar, this must be a good business to be owned.
2) Price seems to be all times low. Seems to be a very good entry point.
3) There is always market demand on their products. Cooking oil, sugar, ...

What do you guys think? Do you think $3 is a good entry price to become Wilmar long term shareholder?

[Clement]

I had been following Wilmar (I do not own any Wilmar shares at least for now) quite a long time, since it was $6 till now it was some where $3. Its market price is still pretty stagnant, after its quarter result being released. The reason I had been following this company is that, I owned a Malaysia listed company PPB, which itself is one of the largest shareholder of Wilmar. PPB is owned by Robert Kuok family.

I'm still hesitate to purchase Wilmar is that

1) Its dividend yield is low.
2) Its income is volatile. But, I think this is pretty normal for a company which relies on commodity. For me, I prefer to invest in industry which generate more stable income like banking, consumer products, ...
3) It does produce consumer product. However, the pricing is pretty much controlled by government.
4) Consumer loyalty toward their products brand might not as strong as other product types. For instance, I do have strong preference on the brand of milk, toothbrush, coffee, ... I consume. However, my brand preference toward cooking oil, sugar, ... aren't strong.

However, it does deserved some loves as

1) It is controlled by Robert Kuok, which is one of the richest men in the world. If he become one of the richest men with majority stake in Wilmar, this must be a good business to be owned.
2) Price seems to be all times low. Seems to be a very good entry point.
3) There is always market demand on their products. Cooking oil, sugar, ...

What do you guys think? Do you think $3 is a good entry price to become Wilmar long term shareholder?

Hi,

Based on traditional valuation models, i think it is quite difficult to value Wilmar. I think a real options valuation methodology should be applied in addition to the standard SOTP or DCF methodologies as a large component of value in a vertically integrated model is the options available to management during various market conditions.

Here's my 2 cents about Wilmar.

1) The plantations and FFB processing business is heavily impacted by low CPO prices. This is however not important as historically 94-95% of the sales of this division has been to their own downstream divisions.

2) Despite the lower CPO prices, the palm and laurics division reported lower crude to refined products spread in 2q13 as compared to 1q13. That being said, the refining spread for 1h13 is still better than in the past few years largely due to low CPO prices.

3)The oilseeds and grains division is still suffering from excess soybean crushing capacity in China. Crush spreads improved in 1h13 compared to previous year, however this is largely due to a delay in soybean delivery in China in 1q13 (according to 1q13 results brief) and spreads declined in 2q13.

4)The consumer products division and sugar processing divisions of Wilmar are the true stars in this company. Especially the sugar processing division which is experiencing nice strong growth and increasing economies of scale. However they are currently too small to really make meaningful contributions to the groups results.

[mrEngineer]

Does anyone has a copy of Wilmar China prospectus when it tried to list in Hong Kong in 2009? I cant seem to find it online.. If you have, please pm me. Thanks a lot!

[Stocker]

OCBC upgrade to Buy with $3.33 TP. House note that Wilmar?s share price has taken a bit of a hit after it reported slightly below par 1H13 results on 7 Aug (core earnings met about 40% of our previous full-year forecast), falling 4.5% to a recent low of $3.0x. But as mentioned in house 12 Aug report, house would be buyers at $3.10 or better, as we believe that most of the risks would have been captured in the price. Keeping fair value at $3.33 (still based on 12.5x blended FY13/FY14F EPS), house note that there is now a decent 10% upside from here. Hence upgrading call from Hold to BUY. Note that an appreciating USD against SGD would also have a modest boost to our fair value.