Commodity Traders

Commodity Traders: Maybank-KE remains Neutral on the sector, given the lack of near-term catalysts. The house previews upcoming 3QCY14 results: 1) Wilmar (Buy, TP: 4.08): Expects net profit of US$350m (-16% y/y, double q/q). The sequential strength could be traced to the start of the sugar-crushing session. Maybank-KE also expects some improvements in China’s soybean-crushing margins as feedstock cost dropping during the quarter. Palm & Laurics remains challenged by CPO refining overcapacity, but margins are expected to improve q/q. 2) Noble (Hold, TP $1.47): Strong results expected from low base last year (est net profit of US$150m, vs 3Q13: US$23m, 2Q14: US$66m). Agri may deliver strong growth with the aid of sugar and soybean crushing while Energy & Metal margins could have been bruised by lower hard-commodity prices. 3) Olam (Hold, TP $2.52): Net profit of US$60m expected. 1Q of its financial year is typically its through, contributing ~10% to full-year core net profit. 1QFY6/15 should be no different. Wilmar is Maybank-KE’s top sector Buy as the house bets on its soybean-crushing margins and sugar prices. Meanwhile, the house is not so sanguine on Noble’s big exposure to hard commodities and Olam’s still-weak balance sheet and cash flows.