Wilmar International - DBS Research 2023-10-30: Banking On Food Product Recovery Trend

• Wilmar's share price is trading below its 5-year average P/E multiple of FY24F 9.1x, close to palm oil stock territory.
• We believe Wilmar (SGX:F34)’s FY24F earnings could recover from the low level expected this year in 2023, mainly on the trend of improving sales volume seen in tropical oil and food products. The recovering sales volumes for consumer products will also propel higher profitability ahead.

Earnings revision to capture lower palm oil refining margin in 2024

• - Read this at SGinvestors.io -
• - Read this at SGinvestors.io -

Wilmar will still post positive y-o-y earnings growth.

• Given the low base effect in 2023 and profitability improvement in 2024-2025, we forecast Wilmar’s earnings would have a 19% CAGR in FY23-25F. Meanwhile, the y-o-y earnings improvement in 2024 will be driven by recovering sales volumes of food products and tropical oils.
• Higher food product sales volumes is projected to propel a further recovery in profitability in 2024. Meanwhile, we assume the palm oil refining margin to recover by 2025.
• We believe feed and industrial products will rebound on improving soymeal demand and refined palm oil products, even though the palm oil refining margin is likely to stay below the 2022 record-high level.

3Q23 earnings started to show improvement in food products division.

• Read more at SGinvestors.io.

William Simadiputra DBS Group Research | https://www.dbs.com/insightsdirect/ 2023-10-30 SGinvestors.io

---