Wilmar set to weather through trade jitters

It is poised to be the largest downstream player in palm oil processing.

Wilmar International’s margins are expected to remain standing amidst global trade tensions following strong YoY sales volumes across its oilseeds & grains, manufacturing and consumer products segments, according to DBS Equity Research.

“Wilmar is able to withstand the trade war tensions and continue to book solid profitability as it maximises crushing capacity and efficiencies,” DBS analysts said.

Wilmar saw its Q3 profits rise 18.2% to $600.18m (US$434.91m) from $507.93m (US$368.06m) on the back of higher sales particularly in its tropical oils segment.

Also read: Wilmar Q3 profits jumped 18.2% to US$434.91m
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Wilmar also reported a 4% increase YoY in revenue to $16.01b (US$11b) in Q3 which according to analysts were well ahead of expectations, with its YTD profit forming approximately 84% of the market’s full-year consensus.

Its tropical oils segment generated good margins as it reported $214.59m (US$155m) profit before tax thanks to better manufacturing and merchandising and downstream business, the report noted.

The firm is set to be the largest downstream player in palm oil processing according to RHB Research.

“Wilmar’s downstream on tropical oil division should also maintain their profitability amidst the low crude palm oil price environment,” DBS analysts said. “At the current price, we believe that the market has fully priced in concerns over earnings fluctuations in its tropical oils, as well as oilseeds & grains segment, on account of lower commodity prices.”

Meanwhile, its sugar segment saw slight improvements following strong performance in merchandising business which analysts noted was offset by Wilmar’s India sugar acquisition.

Analysts also noted that Wilmar’s China operations could boost the firm’s earnings performance following the possibility for an IPO plan that could drive its share price closer to its potential listing date.

“We note that China operations contribute approximately 60% of Wilmar’s pretax profits,” DBS analysts said.

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