Wilmar

Wilmar: At its 4Q11 results briefing, Wilmar guided that oilseed & grain margins will remain suboptimal as it expects operating conditions in China to remain tough in 2012 from overcapacity.

Grp is more upbeat on its palm & laurics division as it Indonesian refineries to book higher profit margins following recent changes in the country’s export tax for palm products. Refining margins outside Indonesia have also improved in 1Q12 against 4Q11. The group will be raising its Indonesian refining capacity by 50% in 2Q-3Q12, to help boost refining margins. Current refining capacity in Indonesia is around 7m ton, or 30% of the group’s global refining capacity.

Overall, there a growing negative feeling after the briefing as Wilmar flagged that oilseeds & grains may only break even in FY12 if operating conditions do not improve or it is unable to purchase feedstock better than its peers. This division made up 20% of FY11 pretax profit.

The compensating factor could be qoq improvements in refining margins, and grp expect consumer products to fare better with the aid of higher selling prices for cooking oils in China. Sugar earnings should, moreover, improve from higher production.

Ratings as follow:
CIMB downgrade Stock to Neutral from Buy and slashes TP to $5.03 from $6.20
Citi maintains Buy with $6.10 TP.
Deutsche maintains Buy with $5.90 TP
Nomura maintains Reduce Rating and slashes TP to $5.60 from $6.10