Looking for a trusted Stock Remisier? Augustine works closely with a small group of clients - providing regular market updates, Bazi & astrology wealth insights, and clear guidance to invest with confidence.
Wilmar International 1Q24 results came in below expectations due to lower-than-expected margins from feed & industrial products. The weakness is attributable to weaker-than-expected margins despite the higher sales volume.
Note that the China food products segment has continued to improve, with stronger sales volume and better margins. We expect earnings to improve from 2Q24 onwards, especially its feed & industrial products segment.
Maintain HOLD. Target Price: S$3.35
Results below expectations
Wilmar International (Wilmar) reported core net profit of US$328m (-51% qoq, -14% yoy) for 1Q24, contributing 18% of our full-year forecast.
This is below our expectations with our 1Q24 core net profit estimates of US$390-420m. The deviation was mainly due to lower-than-expected margins from Feed & Industrial Products.
The weakness is attributable to weaker-than-expected margin despite higher sales volume.
Core net profit margin down yoy despite marginal improvement at EBITDA level.
Lower cost of raw materials led to marginal improvement of EBITDA margin. However, core net profit was down yoy and qoq, likely due to the reduced profit sharing from its joint ventures and associates from its investment in China.
1Q24 earnings lower qoq and yoy
Earnings were lower qoq in 1Q24 mainly due to weaker contributions from the feed and industrial products segment. This was due to:
Challenging palm oil processing margin. Palm downstream processing continues to struggle with low to negative processing margins amid weak demand for refined products.
Low soybean crushing margin, due to weak demand for animal feed. However, Wilmar
managed to increase its sales volume via an extensive marketing network.
Lower sales volume from the sugar merchandising division despite healthy white
sugar premium.
Improvement from China
Sales volume for consumer products segment increasing significantly by 34% qoq and 6% yoy, coupled with better margin with weaker raw material prices.
YKA results snapshot
Yihai Kerry Arawana (YKA) reported a higher net profit of Rmb882m (+3% yoy) despite lower revenue. This was mainly attributable to margin improvement in its Food Ingredients segment, which saw a decrease in raw material costs.
However, poorer performance from its Feeds & Oleochemical segment offset the gains from the Food Ingredients segment.
Food ingredients: Improved yoy
The improvement was primarily driven by its retail segment, which experienced increased sales volume and improved EBITDA margins due to declining raw material costs.
However, this was partly offset by lower margins in the HoReCa segment, where selling prices have a high correlation with raw material prices, despite higher sales volume.
Within the HoReCa subsegment, the flour business incurred losses due to sluggish market demand, intense competition and lower prices of its by products.
Valuation/Recommendation
Maintain HOLD with a target price of S$3.35. Our valuation is based on 2024F EPS and uses the SOTP valuation by pegging PE of 18x, 10x and 11x for food products, feeds & industrial products and plantations & sugar mills respectively.
Its share price catalyst include stronger-than-expected performance of its China operations and surprise margin upside with its strategic procurement activities.
Wilmar International share price chart
You can find the full report hereand the company website here.
Be A Valued Client of Augustine in Lim&Tan Securities
Receive Augustine’s regular stock updates via Telegram plus full access to his private client hub with exclusive research, astrology and Bazi insights.
(Exclusive Readings for Clients Only)
BaZi investment loss prediction is an ancient yet highly practical approach to understanding financial timing using Chinese astrology. In BaZi (八字), also known as the Four Pillars of Destiny, your birth chart reveals how the Five Elements (Wood, Fire, Earth, Metal, Water) interact to shape your personality, opportunities, and wealth potential. Among these, the Wealth
When market sentiment turns upbeat and investors begin looking beyond the large-cap names for fresh drivers of growth, Singapore’s small cap stocks could quietly offer outsized upside. With interest rates stabilising, infrastructure spending picking up, and niche sectors recovering, several overlooked companies may shine in the next market rally. Here are four SGX-listed small-caps worth
You don’t need to be the next Warren Buffett to succeed in investing. But you do need to find your own investing style – so that you compound your wealth that fits your personality, lifestyle, and long-term goals. The truth is, there’s no “one size fits all” approach. Some investors love diving into spreadsheets. Others
Investing in the stock markets can be tricky and you will probably lose hell a lot of money even before making any if you lack the right guidance. Thus, as a beginner, it’s important to avoid making the common mistakes that others have made. In fact, these mistakes offer paramount lessons for you to cut
