- We downgrade Wilmar to HOLD and cut our Wilmar's target price by 18% to S$3.00. Following cooking oil related penalties, we reduce our 2025 dividend estimate by 44% to S$0.07 and cut forward dividends by 31% to S$0.13- 0.14.
- - Read this at SGinvestors.io -
- Operationally, momentum is intact with 7%/13% FY24–27E revenue/NPAT CAGR, driven by resilient China demand and stable crush margins. Downside is further cushioned by attractive 10x FY1 P/E and 6% yield, with healthy balance sheet metrics.
Regulatory concerns cap Wilmar's share price upside.
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- Along with other growers, Jakarta is reviewing ~2,000–3,000 ha of Wilmar’s oil palm plantations for missing forestry permits or potential land-use violations. Management estimates its exposure is limited.
- Media reports also suggest potential scrutiny of biodiesel subsidy allocations in Indonesia, with Wilmar among several large groups named. Overall, we see near-term effects as largely reputational in nature while direct operational and financial exposure should be relatively modest.
Operationally on track with macro support from China.
- Read more at SGinvestors.io.
