Wilmar International - Record High Profit & Dividend In 1H22
- Wilmar International (SGX:F34) posted a 34% y-o-y rise in its 1H22 core net profit (excluding gains from non-operating items of US$12.6m and gain from the dilution of interest in Adani Wilmar Ltd, AWL, worth US$175.6m) to US$980m, due to better performances from all divisions except food products. We consider Wilmar's 1H22 core net profit above expectation, as it makes up 55% and 52% of our and consensus’ full-year projections. (Over the past 10 years, 1H core net profit had on average made up 33% of the full-year core net profit).
- An interim dividend of S$0.06 was declared in 1H22 (vs. S$0.05 in 1H21), representing a dividend payout ratio of 24%, the highest interim dividend since Wilmar's listing.
- The plantation and sugar milling segment was the key earnings driver in 1H22, thanks to higher CPO price and better performances from sugar milling operations in India. Wilmar said its tropical oils business performed satisfactorily, despite the three-week export ban on CPO and refined palm oil products as well as multiple changes in palm oil export measures by Indonesia, which led to a 9% y-o-y drop in sales volumes for tropical oils in 1H22.
- Wilmar’s joint ventures and associates contribution rose 10% to US$153m in 1H22, due to better results from its investments in Europe and Southeast Asia.
- The record 1H22 profit achievement, amid a period of record-high and volatile commodity prices, is another testament to Wilmar’s strong integrated business and diversified business model. We expect 2H22F earnings to be driven by higher tropical oils sales volumes and better food product margins, though this could be partly offset by weaker plantation earnings.
- We maintain our SOP-based target price of S$5.69 and ADD rating for Wilmar, due to its low FY22F P/E valuation of 10.6x and dividend yield of 4.2%.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
Ivy NG Lee Fang CFA CGS-CIMB Research | Nagulan RAVI CGS-CIMB Research | https://www.cgs-cimb.com 2022-08-05 2022-08-05
Previous report by CGS-CIMB:
2022-04-29 Wilmar International - Reported Net Profit Lifted By One-Time Gain
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