Wilmar International to see better earnings in H2: analyst
The company would also see better consumer demand due to lower household inventory and SME recovery.
Expect Wilmar International to attain higher earnings in the second half of 2023, with positive profit margins from food products due to eased raw material costs, according to a report by UOB Kay Hian.
Wilmar International would expect higher cost-per-order (CPO) prices and sales volume from its plantation segment.
"Expect CPO prices to recover in 2H23 thanks to supply being lower than market expectations and higher demand from consuming countries after their inventory levels dropped," UOB Kay Hian analysts Leow Huey Chuen and Jacquelyn Yow Hui Liu wrote.
This comes after the company recorded a 24% year-over-year (YoY) loss in its core net profit to US$381.9m (S$507.2m) in Q1, lower than the US$503m (S$668m) in the same quarter of 2022.
Wilmar International would also see better consumer demand due to lower household inventory and the recovery of small and medium-sized enterprises.
However, the analysts expect Wilmar International to report lower sales volume from Yihai Kerry Arawana Holdings due to the slowdown in consumer spending in China, especially during the Chinese New Year season.
"On top of that, the plantation and oleochemical segments may continue to be weak with lower CPO pricing and oleochemical margin due to stiff competition in the market," UOB Kay Hian added.