Wilmar

Wilmar: Sucrogen, the Australia-based sugar unit of Wilmar, announced that it has entered into an agreement to purchase the assets of Proserpine Co-operative Sugar Milling, which comprises a headline price of A$120m, plus a working capital adjustment, normal settlement adjustments, as well as provisions whereby Sucrogen will absorb all of the mill’s normal operating costs and certain critical capex incurred from 31 Oct11 until completion of the transaction.

CIMB note that the acquisition of Porsepine mill will raise Wilmar’s raw sugar production by 10% and boost its mkt share in Aus. House like the deal, but do not expect significant earnings impact in the near term. Believe the acquisition price is fair at below P/NTA of other recent sugar assets transactions in Australia possibly due to its weaker earnings against peers. Expect Wilmar to improve the efficiency and profitability of the mill over time. House Maintain O/p and $5.60 TP.