Wilmar’s Analyst briefing

Key Takeaway pts from Wilmar’s Analyst briefing during lunch-time. 1) Key concerns were focused on grp’s crushing margins in China, where Kuok noted that crush margins was the worst in 10 yrs. 2) Tip industry utilization for soy bean crushing at ard 55% 3) Note however that Crush margins have started to improve since 2Q12 this qtr, although its still negative. 4) Tip replacement costs of Soybean crushing plants at approx. 1.5x Book value at least. (1mil ton capacity at 40m USD) 5) Note however that grp continues to increase its production and market share, with no competitor having the kind of scale and integrated models in the countries which grp operates in. 6) Any market consolidation will benefit grp and see grp as key player who will survive in the industry. 7) To mitigate currency risks, grp has started financing some of its raw materials, e.g Oil seeds in USD. 8 ) Expect to see higher contributions from its Consumer Packs division, whose strong earnings were weighed slightly by high cost materials in 2Q. 9) Grp note that its new Indonesian Palm Oil Refineries are nearly completition soon, which could contribute to grp’s earrings positively by leeching on Indo’s preferred export tax structures. 10) Regarding Sugar division, 1H12 typically faces losses due to seasonality patterns. Expect 2H12 to match that of 1H11. 11) Kuok add that grp will need a luck of luck for FY12 performance to exceed that of FY11.