Action: BUY Wilmar International listed on SGX
Wilmar International Ltd. is an agribusiness company. The Company is involved in oil palm cultivation, edible oils refining, oil seeds crushing, consumer pack edible oils processing and merchandising, specialty fats, oleochemicals and biodiesel manufacturing, and grains processing and merchandising. Wilmar also manufactures and distributes fertilizers and owns a fleet of vessels (as per bloomberg).
Market Capital: SGD$22.406B
52-week High: SGD$3.69
52-week Low: SGD$2.97
Current Share Price: SGD$3.54
Target Price: SGD$4.00
Wilmar’s China subsidiary, Yihai Kerry, has successfully completed the guidance process as required by the China Securities Regulatory Commission’s (CSRC) in just three months, when the said process usually takes at least 6 to 9 months. This is well on track with the timeline to list in fourth quarter 2019.
The material correlation between Yihai Kerry’s IPO in China is that the said subsidiary accounted for approximately 60% of Wilmar Group’s 2018 net profit. It is highly likely that the said Company will be the largest listed vegetable oil and food ingredient producer on China’s A-share market in terms of market capitalisation.
Proceeds from the IPO of approximately USD$1.3b will be utilised mainly for expansion in China. We note that there is an increase in capital expenditure, which has mostly been reportedly used for soybean crushing, wheat flour and rice milling capacities in China. As such, with the large capital expenditure being funded by the IPO proceeds, this will create cap space on Wilmar’s cash flow to declare special dividends to it’s shareholders.
Additionally, Wilmar has a strong market share being the top producer of consumer-pack edible oils in China with a 45% market-share. Associate company, Luhua is also the top peanut oil producer in China.
Therefore, with higher earnings base being highly foreseeable, the upside to our target price of SGD$4.00 is highly likely to be achievable.
Bloomberg link: https://www.bloomberg.com/quote/WIL:SP
Connect with us:
Like & Follow us on Facebook here:
*** This report is neither an offer nor the solicitation of an offer to sell or purchase any investment. Comments are based on information obtained from sources believed to be reliable but Fides Assets makes no representation and accepts no responsibility or liability as to its completeness or accuracy.
#Bank #Finance #Stocks #Markets #Bloomberg #Economy #Capital #SET #SGX #NASDAQ #HKSE #Investment #Holding #Fund #Management #Mint #Milk #Cheese #Dough #Allabouthehustle #Newmoney #Oldmoney #Legacy #fidesassets