Wilmar

Wilmar: Poor set of 2Q12 results which were below estimates. Rev at US$11.0b, +4% yoy and +4.8% qoq, while net profit (Excluding non-operating items) at US$172m, -55% yoy and -16.5% qoq. Ebitda margins continue to shrink at 3.0% vs 6.0% yoy. Poor set of results was largely due to losses in Oilseeds & Grains and lower profits from Plantations & Palm Oil Mills. In addition, Sugar posted higher losses while associates recorded lower contributions. However, Palm & Laurics and Consumer Products reported higher profits. (See table below for more comments) Going forward, grp note that its business model is sound and long term prospects remain intact as grp is well positioned to capture the growth in demand for agricultural commodities, especially in Asia and emerging markets like Africa. However, in the near term, the operating environment remains challenging, particularly in China, due to excess capacity in oilseeds crushing. Near-term support could be found at grp’s NAV at $2.60. Ratings as follow: CIMB maintains Neutral with $3.52 TP Citi maintains Buy with $4.80 TP, but put rating on Hold pending mgt briefing. Deutsche maintains Buy with $4.40 TP. Maybank maintains Sell with $2.15 TP