Wilmar

Wilmar: started its first ever share buyback program with purchase of 7.388m shares on Thur (13 Sep) at $3.00 (equivalent to $22m or 0.115% of shares out). Wilmar can buyback up to 10% of shares out. In terms of financing, Wilmar had cash of US$1.1b at end 2Q12 as well as credit lines for US$750m with its net adjusted gearing at 0.38x. Citi believes Wilmar’s equity value will improve as battered margins in Chinese oilseed processing slowly recover post two quarters of weakness, given the industry’s response to losses has started to kick-in reducing some cyclical pressures on Wilmar. Longer term, the house believes that Wilmar’s scale as the leader in oilseeds processing and in consumer packs remains best-in-class and it should eventually benefit from scale and logistical advantages to consolidate the industry. Citi values Wilmar at $4.08, which translates to 14x P/E, based on its avg earnings for the past 5 yrs. Keeps Buy rating. Deutsche maintains Buy with TP $3.60, says share buyback reflects mgt’s confidence in WIlmar’s long term fundamentals.