Wilmar International share price: a sneak peek of Q4 earnings

Consistently among the most traded Singapore stocks, how will food producer Wilmar International fare in its final fiscal quarter of 2019?

When will Wilmar International’s Q4 FY2019 results be released?

Singapore-headquartered food processing giant Wilmar International Limited is expected to release its full-year and Q4 financial results for 2019 after market close on 20 February.

The conglomerate, whose business activities include oil palm cultivation, oilseed crushing, sugar milling and refining, and food manufacturing, employs 90,000 people globally.

Some of its achievements include being the world’s largest edible oils refiner, as well as being one of the largest oil palm plantation owners and the largest palm oil refiner in Indonesia and Malaysia.

Trophies aside, with an annual revenue of S$44.5 billion in FY2018, Wilmar is the largest company in Singapore today. A market capitalisation of over S$25 billion also places it among the most valuable Singapore-listed companies.

What are some things investors and traders should know ahead of results day?

1. It continues to be one of Singapore’s most popular stocks

The listing, which made its debut on the Singapore bourse in August 2006, continues to be one of Singapore’s favourite blue-chip stocks based on daily trading volume.

Wilmar International is consistently among the top ten most traded stocks by volume of securities traded. Currently, it has a three-month average trading volume of 103.04 million, putting it among the top 20 of all listings.

The company saw trading volume hit a 52-week daily high of 14.45 million on 28 June 2019. That number would put the stock among the top three most traded today.

Its single day-low of 1.23 million shares bought and sold in the past 52 weeks still keeps it well-entrenched within the top 50 of most traded equities today.

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2. Analysts are cautiously optimistic about Wilmar International

It is worth noting, however, that share price was down as much as 12.84% earlier this month. The current share price of S$4.01 (as of 19 February) represents a year-to-date drop of 3.37%.

Researchers at DBS gave Wilmar stock a ‘buy’ rating at the start of February, a 12-month price target of S$4.60 per share, and an upside of 15.3%. The price recommendation represents an 12.83% increase from the current share price.

RHB Invest analyst Juliana Cai also rated the stock a ‘buy’. However, she lowered her price target to S$4.43 from S$4.75, citing delays in the China initial public offering of its Chinese subsidiary Yihai Kerry and potential negative impact from the coronavirus as factors for the weaker revision.

‘We expect margins to face some pressure as the groups sees rising logistics costs from disruptions in sea cargo flow caused by the virus outbreak,’ she noted.

Wilmar International operates 350 plants in 65 locations in China, of which nine are located in Wuhan – the epicentre of the coronavirus epidemic. Additionally, 60% of the group’s total revenue were attributed to China for the first nine months of FY2019.

Although the company had earlier stated that there has been no significant impact so far on the operations there, a new update on the situation in the upcoming Q4 report remains crucial.

3. It has strong fundamentals: Higher net profit for 9M19

As noted earlier, the company recorded gross earnings of S$44.5 billion in FY2018, making it the most revenue-generating company in Singapore in 2018.

With a net profit of S$1.13 billion in FY2018, it is also among the most profitable companies in Singapore today.

Net profit for the first nine months of fiscal 2019 is also up 10% from the same tracking period the year before. Compared to FY2018, gross revenue is down slightly by 2% for the first three quarters of 2019.

Debt/equity ratio (pre-adjustment) was also healthy for this period of 2019 at 0.73, below 2018’s 0.84.

Finally, net cash flow for the nine months ended September 2019 also increased by 18.4% year-on-year to S$457 million.

Barring any unforeseen circumstances, the company expects to ‘do reasonably well’ in its final fiscal quarter of FY2019.

‘Despite the challenging operating environment, we performed well because of our integrated and diversified business model. Our operations in most countries also did well in 3Q2019,’ the group said in its Q3 earnings report.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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