Wilmar International to post stronger H2 results: analysts

The agribusiness giant recorded a 23% increase in its PATMI in the first half. 

Wilmar International posted a strong 23% increase in its PATMI in the first half, at US$750.9m (approximately $1.01b), and analysts expect its second-half results to be higher.

“We expect a stronger H2 2021 as margin pressure on Wilmar’s Food Products segment eases, together with firmer crude palm oil and higher sugar prices, and a recovery in crushing margin. The potential listing of its 50% owned India JV Adani Wilmar is likely to be another catalyst,” said Chu Peng of OCBC Investment Research in a report.

“The initial public offering of its joint venture in India is consistent with the group’s strategy of unlocking the value of its latent assets. It is likely to improve valuation transparency for the parent (although any special dividend is unlikely, we believe). Potential for similar transactions with operations in ASEAN and Africa could be upside catalysts,” said Maybank Kim Eng in a separate report.

OCBC noted as potential upside risks the rise in crude palm oil and sugar prices, better margins from its integrated model, new acquisitions, and the listing of its China operations.

Maybank Kim Eng, meanwhile, cited faster recovery from COVID-19 lockdowns, holding company gap closing between parent and its Chinese listing, and monetisation of a new product under research and development as upside risks.

Downside risks include the fall of crude palm oil prices, sugar prices, impairment of assets, and trading and investment risks, OCBC said.

Maybank Kim Eng noted as downside risks potential revocation of licences, operating bans and activism due to environment, social, and governance-related issues, new COVID-19 strains, and limited credit facilities by lenders.