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.
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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.
Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
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