OVERVIEW:
Founded in 1991 and headquartered in Singapore, the counter is today Asia's leading agribusiness group. Its business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, biodiesel and fertilizer manufacturing. The core strategy is a resilient integrated agribusiness model that encompasses the entire value chain of the agricultural commodity processing business, from origination and processing to branding, merchandising and distribution.
HIGHLIGHTS:
(1) Last month, Indonesia released export tax levy for various palm products. The bulk of the levy collection will be channeled to subsidize biodiesel, which would incentivize biodiesel production. Shall the new policy being executed successfully, Wilmar is set to be one clear beneficiary for its downstream operation and biodiesel segment.
(2) Latest financial results for 1Q15 saw net profit with a leap of 49% year on year which was spearheaded by soybean crushing margin. Low soybean prices due to oversupply of global soybean benefit China as it is the largest soybean importer and Wilmar is the largest soybean crusher in China (~22% of market share). The management is confident that the crushing margin remains positive going to mid-2015.
(3) African has been the world's second fastest growing economy over last two decades, according to the World Bank. Over the next decade, GDP is projected to rise by an average of 6% per year. The counter has been expanding its footprint in the continent since entering about 15 years ago. The revenue from African operation have increased by 29% over last five years.
INVESTMENT THEMES:
(1) Growth is the key to ensure profitability of business thus raising return to its shareholders. As one of the leader in agribusiness of Asia, investor could ride with the group's aggressive plan in expanding business footprint worldwide. Africa could be the bright spot of its business in future. The group has disclosed its ambition in the annual report of 2014.
(2) Agriculture is one of the key economy activities to human. Limited land and growing population shall lead to ascending prices on food in long term. Investor should position during current downtrend of plantation related companies due to lower commodity prices.
(3) From the chart, the counter has been trading between rising channel since end of 2014. Current trade price is near to the lower bound of the channel. Trader could take this as entry point for potential price gain. The counter used to issue dividend ~0.02 on August.
ENTRY PRICE:
BUY ~$3.3
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