PETALING JAYA: Wilmar International Ltd’s first half net profit of US$559mil (23% jump year-on-year) was within expectations, and accounted for close to half of analysts’ consensus estimates, according to a Kenanga Research report.
Headquartered in Singapore and known as Asia’s leading agribusiness group, Wilmar’s first half fresh fruit bunches (FFB) output of 1.91 million tonnes (0.5% increase year-on-year) and dividend per share of four Singapore cents were also within analysts’ expectations.
The report noted that the improvement in profit was mainly driven by feed and industrial products, as well as food products segments.
Profit before tax from its feed and industrial products jumped 105% due to a 10% higher sales volume and better soybean crush margins (post African swine fever).
This resulted in a 1.3 percentage point improvement in profit before tax margin.
For its food products segment, the 29% increase in sales volume in its consumer products (due to higher virus-led household demand) outstripped the decline in sales volume of its medium pack and bulk (7% lower), due to weaker Horeca (hotel/restaurants/catering) demand as a result of lockdowns.
This resulted in a 21% improvement in segmental profit before tax for food products.
The report said moving forward, second half earnings should be anchored by the start of the sugar crushing season in Australia (June to November), and stable soybean crush margins as China ramps up its soybean imports.
However, an expected decline in crude palm oil prices due to rising inventory in the second half, could be a drag on its palm plantation division.
PPB Group Bhd has a 18.5% stake in Wilmar, and the research house maintained its “market perform” call on PPB Group, with an unchanged target price of RM18.50.
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