Wilmar Memo

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Equity Report | November 19, 2009 | Ticker WIL

Wilmar International Ltd. (WIL)The Company is involved in the integrated value chain of oil palm cultivation, edible oil refining and packaging, oilseeds crushing, and associated activities TresVista Recommendation BUY CURRENT TARGET SGD 6.32 SGD 7.22

Executive summaryInvestment thesis: We initiate coverage on Wilmar International with a BUY rating. We have arrived at our valuation based on a DCF analysis, public comparable analysis, the current and future outlook for the Group, and the outlook for the edible oil sector, with emphasis on the oil palm and soya bean sectors. Wilmar is an integrated agribusiness player involved in the processing of oil palm and soya bean. The Groups activities comprise mainly of the cultivation, milling, refining of oil palm produce; crushing and refining of soya bean and other oilseeds; and the merchandising and packaging of the refined products that include edible oils, oilseed meal, Specialty fats and Oleochemicals. Wilmar is also involved in associated activities such as fertilizer and biofuel manufacturing, and the milling of rice and flour. It also maintains and operates a fleet of liquid bulk vessels to meet its transportation needs. Wilmar is headquartered in Singapore, and its core business operations are located in Indonesia, Malaysia, and China. Possible triggers for stock price movement: IPO listing of China operations:

Sector Edible Fat/Oil Ticker Market Cap. Enterprise Value Per Share Data Current Price 52 Week High 52 Week Low % of 52 Wk. High Number of Shares Multiples PE LTM 2009E 2010E EV/EBITDA LTM 2009E 2010E WIL SGD 40,357.5 mn SGD 46,528.8 mn

SGD 6.32 SGD 7.00 SGD 2.26 90.3% 6,385.681 mn

16.3x 19.7x 15.5x 13.4x 13.5x 11.8x

Wilmar had postponed the listing of its China business citing a weak IPO environment in China/Hong Kong. Wilmar has until January 2010 to list its China arm, failing which it would have to re-initiate the listing procedure. The Group has confirmed that the listing process is still in progress, though a definite date has not been provided. Wilmar China was expected to be the largest Hong Kong IPO year-to-date, at around USD 3.0-4.0 billion. Any progress in this regard is expected to have a positive impact on the stock. Spike in crude oil prices:

Wilmar International vs. Straits Times Index275.0 250.0 225.0 200.0 175.0 150.0 125.0 100.0 75.0 50.0 25.0 -

The recent upswing in crude oil prices is significant in the context of the palm oil industry. Crude Palm Oil (CPO) prices have historically moved in tandem with crude oil prices. This relation has become more distinct given that refined vegetable oils are a major source of biofuels. An upward movement of crude oil prices is expected to be followed by a similar trend in the price of CPO, encouraging a more positive outlook on the industry as a whole. Occurrence of El Nio:

Nov-08

Jan-09WIL SP

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Straits Times Index (FSSTI Index)

Source: Bloomberg

Wilmar International - 12 Month Forward P/E20.0x 17.5x 15.0x 12.5x 10.0x 7.5x 5.0x 2.5x -

Alerts have been issued by meteorological institutes in Malaysia, and Australia highlighting the possible onset of El Nio conditions late in 2009. The phenomenon leads to unusually warm temperatures and exceptionally dry weather in SouthEast Asia and Australia. Such weather conditions are known to have an adverse effect on oil palm plantations in the region, affecting crop yields and productivity. Although there is still uncertainty regarding the occurrence and severity of the phenomenon, negative news regarding El Nio may not bode well for companies in the Plantation sector, and may affect the outlook on the industry at large.

Nov-08

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May-09WIL SP

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Source: Bloomberg

TresVista Financial Services: All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Bloomberg and other vendors. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES ARE LOCATED IN DISCLOSURE APPENDIX

Confidential

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Equity Report | November 19, 2009 | Ticker WIL

Table of contents

1. 2. 3.

Investment thesis _________________________________________________________ 3 Price performance and correlation __________________________________________ 5 Company overview _______________________________________________________ 6

Background _____________________________________________________ 6 Business operations _____________________________________________ 104. 5. 6. Executives & shareholders ________________________________________________ 17 Key developments _______________________________________________________ 20 Sector overview__________________________________________________________ 21

Oil palm industry _______________________________________________ 22 o Crude palm oil Current scenario ____________________________ 24 o o oSupply and demand for palm oil _____________________________ 25 The relationship between CPO and crude oil ___________________ 28 El Nio and its impact on CPO production ____________________ 29

Soya bean industry ______________________________________________ 31 o Soya bean crushing Current scenario ________________________ 33 o7. 8. 9. Short term outlook _________________________________________ 35

Edible oil sector: Long-term outlook_______________________________ 37Recent financial analysis__________________________________________________ 39 Risk factors _____________________________________________________________ 40 Key investment highlights ________________________________________________ 42

10. Valuation analysis _______________________________________________________ 43 11. Valuation EBITDA exit _________________________________________________ 44 12. Valuation Perpetuity growth_____________________________________________ 45 13. Key financials and ratios__________________________________________________ 46 14. Public comparable trading analysis ________________________________________ 47

Confidential

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Equity Report | November 19, 2009 | Ticker WIL

Investment thesisRelative weakness post delay in China IPO - a good opportunity to buy The Wilmar China IPO was initially expected in mid-October, but has been delayed. According to the Group, weak capital markets have lead to an unstable IPO market at the Hong Kong stock exchange. The delay in listing seems justified as the recent IPO performance at the Hong Kong stock exchange has not been encouraging, with most recent IPOs significantly underperforming since listing. The recent relative weakness in Wilmars share price is judged to be the result of investor perception that the response to Wilmar Chinas listing plans was not encouraging, and caused the IPO to be delayed as a result. Core performance backed by supportive market conditions However this presents a good opportunity to invest in the stock, as the Groups core performance has been solid over the past few quarters, and is backed by strong fundamentals and favorable industry dynamics, thereby limiting the downside. CPO prices are expected to improve and gain further ground from current levels, owing to a combination of factors including robust demand from India and China, rising prices for crude oil - which shares a close correlation with CPO, falling CPO inventories and stockusage ratios in recent quarters, and the looming possibility of a bout of the El Nio phenomenon, which could affect output and exert further upward pressure on prices. On the other hand, announcements of a bumper soya bean harvest in USA and improving growing conditions in South America have lead to a correction in Soya bean prices. This has lent a helping hand to crushing margins in China, where supply is low due to a current shortage in Soya bean supply, driving up prices for products like Soya meal. Crushers of soya bean and oilseeds like Wilmar are price-makers as they artificially control demand, and hence prices, by controlling the amount crushed by them. Hence the combination of rising demand and falling raw material prices have created a situation that players in oilseeds crushing like Wilmar can capitalize on. China and India are major growth drivers Demand from China and India are integral to Wilmars growth. Both countries are major customers, and are among the most populous and fastest growing economies in the world. Demand for refined vegetable oil in China and India has accelerated over the past decade. Major reasons include the rise in per capita income in these nations which have seen people shift from traditional, locally sourced vegetable oils and fats to more refined, branded versions that available in the consumer market. The easing of protectionary tariffs in these nations has lead to a surge in imports of vegetable oils and derivatives. Urbanization has been a major trend in China and India over the past two decades, and has altered the demographic profile of these nations; with more and more people moving from a more traditional, agrarian way of life where food requirements were locally sourced, to an urban culture that is dependent on the large scale production of packaged foods, including edible oils, to meet nutritional needs. The improvement in the quality of life in emerging nations has also lead to a change in dietary habits, where consumers prefer processed foods as well more variety in selection, leading to a rise in the large scale production of processed foods, where vegetable oil and specialty fats find a wide range of applications. Vert