RHB Group Research and UOB Kay Hian have maintained “buy” on Wilmar following the agriculture group’s results for the 1HFY2021 ended June.
The Singapore research team at RHB has, however, lowered its target price estimate on Wilmar to $5.45 from $5.75 despite its expectations of a stronger 2HFY2021 ahead.
“We expect a stronger 2HFY2021, as the food products segment and feed and industrial units should perform better,” writes the team in an Aug 12 report.
To the team, Wilmar’s earnings of US$750.9 million ($1.02 billion), which was up 23% y-o-y in the 1HFY2021, stood in line with its expectations.
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That said, it has lowered its net profit estimates for the FY2021 to FY2023 by 4% to 5% after lowering its sales volume assumptions for the consumer pack and oilseed crushing business.
“As Wilmar’s China operations account for a hefty over 90% of earnings, its valuation is very inexpensive at present. This counter is trading at 12.8 times FY2022 price-to-earnings (P/E) vs China-listed peers’ 32-37 times.”
UOB Kay Hian analysts Leow Huey Choon and Jacquelyn Yow have kept their target price at $6.40 as the group’s 1HFY2021 results stood slightly above their expectations.
In addition, they expect the group’s plantation and sugar milling segments to deliver higher margins in the 2HFY2021 on the back of higher selling prices.
On this, Leow and Yow have kept their earnings forecasts for the FY2021 to FY2023 with core net profit predictions of US$1.66 billion (FY2021), US$1.78 billion (FY2022) and US$1.95 billion (FY2023).
“Our target price is based on FY2021 earnings per share (EPS) and reflects a blended 26 times FY2021 P/E for China operations and blended 11 times P/E for non-China operations,” they write on Aug 12.
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As at 4.37pm, shares in Wilmar are trading 3 cents higher or 0.7% up at $4.52, or 1.1 times P/B, with a dividend yield of 3.1% for the FY2021, according to UOB Kay Hian’s estimates.
