Kuok Khoon Hong, chairman and CEO of Wilmar International F34 , has again bought more shares in the open market after the company reported lower 1QFY2024 ended March earnings.
On May 8, four entities, in which Kuok was deemed to have an interest, were used to acquire 54,175 shares each on the open market, at an average price of $3.18 each.
The four entities are HPRY Holdings, Longhlin Asia, Hong Lee Holdings and Jaygar Holdings. The purchase of 216,700 shares in total brings Kuok’s deemed interest in Wilmar to more than 861.4 million shares, equivalent to 13.8%. Together with Kuok’s direct stake of 2.995 million shares, he has a total stake of 13.85% in the agribusiness group.
The acquisitions were more intensive a few days earlier. On April 30, a total of 6.23 million shares were acquired using the same four entities at $3.234 each; on May 2 just over 1.02 million shares were acquired at $3.210 each. On May 6 and May 7, 700,100 shares at $3.209 each and nearly 1.35 million shares at $3.187 each were acquired respectively.
Kuok is known to have regularly added to his stake in Wilmar, whose share price is down by around a tenth so far this year. Before the most recent buying spree, the previous round of buying was in early March, including the acquisition of over 1.55 million shares at $3.326 each on March 5.
Besides Kuok, another company insider bought shares on the open market recently too. Teo La-Mei, Wilmar’s group general counsel and a member of the board, acquired 30,500 shares at $3.19 each on May 7. This brings her direct stake in Wilmar to 1.173 million shares or 0.028%.
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On April 29, Wilmar reported earnings of US$302.9 million ($409.7 million) in 1QFY2024, down 22.6% y-o-y. Core net profit, which excludes non-operating losses recognised from its investment securities, was down 14% y-o-y to US$328.4 million. Revenue in the same period was down 7.3% y-o-y to US$15.68 billion.
“Despite the challenges faced across most of our businesses during the quarter, results for 1QFY2024 are satisfactory. The global economic outlook is expected to remain uncertain throughout 2024 and we foresee the difficult operating conditions continuing into the year,” states the company in its earnings commentary. “Nevertheless, with our diversified and integrated business model, we expect results for the rest of the year to remain satisfactory,” Wilmar adds.
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Separately, on April 19, Wilmar appointed George Yeo, Singapore’s previous foreign minister, as one of its independent directors. Yeo is no stranger to Wilmar. He was formerly a non-executive and non-independent director of Wilmar from November 2014 to December 2017 when he was chairman of Kerry Logistics, a Hong Kong-listed company similarly controlled by the Kuok family.
Analysts have maintained their relatively muted view of Wilmar following the 1QFY2024 earnings. In his May 6 note, Thilan Wickramasinghe of Maybank Securities kept his “hold” call on the stock. However, with expectations of weaker growth, he has lowered his target price from $3.99 to $3.44.
“Wilmar’s recent 1QFY2024 shows bright spots in consumer and wholesale recovery, especially in China. However, its industrial segments remain under pressure from tightening margins amidst falling commodity prices and weak demand,” says Thilan.
“Until there is better clarity on China’s growth trajectory, we think the prospects of a turnaround could see headwinds,” the analyst adds.
UOB Kay Hian analysts Leow Huey Chuen and Jacquelyn Yow Hui Li sound more bullish, although they have a lower target price of $3.35.
In their May 7 note, Leow and Yow say they expect the group to report higher q-o-q and y-o-y 2QFY2024 earnings from previous years. The analysts attribute this to “enhanced operating margin and good sales volume across all segments”.
The analysts also expect Wilmar’s China-based subsidiary YKA to perform better, thanks to stronger consumer sentiment, margin improvement and a higher utilisation rate for soybean crushing. With their “hold” call, they recommend investors to “buy on weakness”.
