Wednesday, February 23, 2011


Wilmar: may see weakness following dismal 4Q10 results. Reported net profit of US$319m below consensus US$392m. Stripping out exceptional gains from revaluation of biological assets and FX, Wilmar would have swung into a net loss of US$57.6m. Market disappointment may be exacerbated by recent Daiwa, Goldman 4Q preview calls for Wilmar’s earnings to surprise on the upside…

Despite 4Q10 revenue rising 31% yoy to US$9.1b, COGS rose at a faster pace (+39%), resulting in gross margins declining to 6%, vs 11% a yr ago. Still, this was an improvement over the 5.5% GPM in 3Q.
Final div of 2.3cts, bringing total FY10 div to 5.5cts (1% yield), down from 8cts last yr.
Wilmar’s balance sheet also starting to look weaker. Inventory +43% qoq to US$6.7b, while total borrowings swelled 37% qoq to US$17.4b, raising nt debt/equity to +85% vs 54% in 3Q…

Despite the weaker performance for the year, mgt remains optimistic for 2011, reiterates China, India and Indon to underpin growth, and commodity prices to remain firm. Plans to continue to invest in existing and new businesses as part of its growth strategy. Acknowledges pressure to remain on margins for crushing and consumer products due to competition, high feedstock prices, and Govt restriction on price increase of consumer products,…

but notes refining and oleochemicals should benefit from expanded capacities while plantations and fertilisers will benefit from higher palm oil prices.
Mgt to hold a briefing at noon. Expect further analyst updates to come only after that.

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