Can Wilmar shares reverse recent losses in light of 1H profits?
Analysts foresee a potential 38% price upside on the food producer’s stocks in the next twelve months.
- Wilmar International (SGX: F34) share price rallied 2% on Thursday (12 August 2021)
- The group’s net profit improved by 23% year-on-year in the first half of 2021
- Its group CEO expects its performance for the rest of the year ‘to be satisfactory’
- The stock has fallen 8.5% in the last three months
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Wilmar stock price: what’s the latest?
Wilmar shares rose over 2% on Thursday, after the group released its financial results for the first half of 2021.
The group saw its net profit jump up 23% to US$750.9 million for the six months ended 30 June 2021, up from US$610.5 million in the same period a year ago.
This came on the back of better performance in both the Feed & Industrial Products and Plantation & Sugar Milling segments, as well as higher contributions from its associates and joint ventures.
Excluding gains from non-operating items, core net profit for 1H 2021 improved 15% to US$732.2 million, against 1H 2020’s US$635.5 million.
Meanwhile, revenue for the six months grew by 30% to US$29.53 billion, mainly due to higher commodity prices during the period, as well as an overall increase in sales volume, especially from medium pack and bulk products in the Food Products segment.
In lieu of the results, the group’s board has proposed a higher interim tax exempt (one-tier) dividend of S$0.05 per share for 1H 2021. It paid out a dividend amount of S$0.04 for the first six months of 2020.
The proposed dividend for 1H 2021 will be payable on 27 August 2021.
What’s your view on Wilmar? Take a long or short position on the stock today
Wilmar shares are down by 8.5% in the last three months. The stock has a consensus rating of ‘outperform’ and price target of S$6.23, based on the latest SGX analyst data. This equates to a potential 37.8% upside.
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What’s the outlook for the rest of 2021?
Mr Kuok Khoon Hong, Chairman and CEO of Wilmar said that the Covid-19 pandemic ‘continues to bring about disruptions and market volatility in the countries where the group operates’.
He added that the company’s 1H2021 results ‘have been satisfactory’, considering the challenging operating conditions created by both Covid-19 and increasing commodity prices.
Looking ahead, he expects the Feed & Industrial Products segment to keep performing well on the back of positive downstream margins and sustained strong demand from the tropical oils businesses.
Additionally, the Plantation and Sugar Milling segment is also expected to benefit from higher palm oil and sugar prices.
Crush margins in China, which have improved slightly from the depressed levels in the second quarter, is also expected to improve further in the third quarter.
‘The strength of our diversified operations is that it enables the group to continue to perform well as weakness in one business is often offset by good performance in other segments,’ said Mr Kuok.
‘Barring unforeseen circumstances, the group’s performance for the rest of the year is expected to be satisfactory.’
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