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UOB Kay Hian keeps Wilmar at 'hold', shrugs off damage in Ukraine terminal

The Edge Singapore
The Edge Singapore  • 2 min read
UOB Kay Hian keeps Wilmar at 'hold', shrugs off damage in Ukraine terminal
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Wilmar International is likely to see merely "minimal" damage and impact on its operations after its tank terminal in Ukraine was hit by a Russian missile. 

According to UOB Kay Hian's Leow Huey Chuen and Jacquelyn Yow Hui Li in their April 22 note, Europe as a whole made up 3.5% and 2.% of Wilmar's FY2023 total revenue and assets respectively, with Ukraine's contribution at less than 1%.

For the coming 1QFY2024 results announcement on April 29, Wilmar is seen to report "flattish" to "marginal growth" y-o-y, the UOB Kay Hian analysts say, as they keep their "hold" call and $3.35 target price.

However, the company will report uneven performance across its various business segments. 

"The food products and plantation & sugar mill divisions are likely to perform better yoy, but these gains are likely to be offset by persistent weaknesses in palm downstream processing and narrower soybean crushing margins compared to 1QFY2023," state Leow and Yow.

They project Wilmar to report a core net profit of between US$390 million and US$420 million for 1QFY2024, versus US$382 million recorded in 1QFY23 and US$665 million reported for 4QFY2023.

See also: UOB Kay Hian sees Civmec's bid to shift domicile to Australia a positive move

"Traditionally, Wilmar tends to see a lower performance in the first half of the year, with sales volumes typically bolstered by festive demand in the second half," the analysts state.

They have maintained their FY2024 and FY2025 earnings forecast at US$1.78 billion and US$2.1 billion respectively.

Their target price of $3.35 is based on FY2024 EPS and sum-of-the-parts valuation for its various product segments.

See also: UOBKH keeps ‘buy’ and TP unchanged on BRC Asia, sees bullish medium-term outlook

According to Leow and Yow, a possible share price catalyst includes a pick up in its recovery in China, which is key, as Wilmar's local unit, YKA, is still its largest profit contributor and thus a surprise recovery would be positive to earnings and market sentiment towards Wilmar’s performance.

Wilmar shares changed hands at $3.45 as at 4.52 pm, up 1.17%.







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