Wilmar International - UOB Kay Hian 2023-10-27: 3Q23 Results Within Expectations

• Wilmar’s 3Q23 results came in well within our expectations, but lower than the market’s forecast. The q-o-q improvement was mainly due to:
  1. higher sales volume of the feed & industrial products segment, and
  2. - Read this at SGinvestors.io -
• However, the y-o-y decline in earnings was mainly due to the normalisation of tropical oil refining margins in 3Q23.
• Maintain HOLD on Wilmar with a target price of S$3.80.

Wilmar's 3Q23 results within expectations

• Wilmar International (SGX:F34) reported 3Q23 core net profit of US$324m (+85% q-o-q, -59% y-o-y), accounting for 79% of our full-year forecast. This is within our expectation, but lower than market’s forecast.

3Q23 earnings higher q-o-q.

• - Read this at SGinvestors.io -

3Q23 and 9M23 earnings declined y-o-y

• 3Q23 and 9M23 earnings declined y-o-y largely due to the weaker performance from the tropical oils and fertilisers subsegments.
• Recall that Wilmar achieved record-breaking earnings in 3Q22, primarily due to significant contribution from the tropical oils sub-segment. This exceptional performance was driven by a record-high processing margin, which was the result of crude palm product prices decreasing more than refined palm products. This drop in prices was influenced by Indonesia's palm oil policies.
• Since 1Q23, palm downstream processing margins have returned to normal. We thus expect tropical oil refining margins to normalise and lead to weaker performance in 3Q23-4Q23.

Wilmar's results highlights

• Read more at SGinvestors.io.

Leow Huey Chuen UOB Kay Hian Research | Jacquelyn Yow Hui Li UOB Kay Hian | https://research.uobkayhian.com/ 2023-10-27 SGinvestors.io

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