Wilmar

Wilmar: 3Q11 results below expectations.
Revenue rose 69% to US$13.1b bcs of higher sales volume and prices of agri-commodities, as well as contribution from the new Sugar segment.

Net profit came in at US$321m, +24% yoy, -21% qoq, vs consensus of US$443m.
The results were impacted by an exceptional item on a FX loss from intercompany loans to subsidiaries due to the strengthening of the USD, as well as net loss on invmt securities following the market weakness, and fair value loss on embedded derivatives. Excluding exceptional items, the Group’s net profit of US$442.4m would have been in line with expectations.

Nevertheless, all key business segments posted higher profits with the exception of Consumer Products.
Oilseeds and Grains, the biggest growth contributor, gained from a sharp recovery in margins. Plantations and Palm Oil Mills benefited from higher realised CPO prices and pdtn yield.
Palm and Laurics enjoyed higher volume for the quarter and margin expansion for the nine months.
Profit from the new Sugar segment and better performance by associates further boosted the Group’s results.
However, Consumer Products registered lower profit from higher feedstock cost and a price increase restriction which was only lifted during the quarter.

On outlook, mgt said it “remains positive of its prospects, despite uncertainties in the global economy, due to the resilience in the demand for agri commodities and the continued growth of Asian economies.”
Adds, Plantations and Palm Oil Mills and Sugar will gain from firm palm oil and sugar
prices.
Palm and Laurics will benefit from the recent changes in the Indonesian export duty structure for palm products, which is highly advantageous for downstream processing margins.
Consumer Products will also enjoy improving margins from the lifting of the price increase restriction and lower feedstock costs.
Nevertheless, the operating environment for Oilseeds and Grains will continue to be challenging as crush margins remain under pressure.

Stock last closed at $5.59; trades at 20.1x P/E, ~2.2x P/B.