(BUY/S$4.89/Target: S$6.00)
FY11 PE (x): 15.5
FY12F PE (x): 14.2
Wilmar International (Wilmar) is one of our preferred picks for its exposure to plantation sector. We have upgraded the Regional Plantation Sector to OVERWEIGHT and upgraded Wilmar to BUY in our recent sector upgrade report dated 19 Mar 12. We have a target price of S$6.00 based on the sum-of-the-parts (SOTP) valuation. After the disappointing 4Q11 results, there was a sharp share price correction, and we believe that the bulk of the bad news has now been factored into the price. We should look beyond this and focus on its good assets.
Second largest plantation landbank owner. Wilmar will be one of the beneficiaries of rising plantation landbank prices in Malaysia and Indonesia as it is the second largest plantation landbank owner with 610,000ha of land worth about US$4.2b ($0.81/share) based on the current market price in Malaysia and Indonesia. As the largest listed oil palm plantation company, Wilmar will also benefit from the expected rise in crude palm oil (CPO) prices on softening production growth and firm soybean oil prices.
Maintain BUY with target price of S$6.00. Our target price is based on the SOTP valuation by assigning 15x 2013 PE for palm oil and sugar refining, 18x PE for upstream operations and China consumer packs, and 13x PE for the competitive oilseed and grain business.
2012 Dividend of SGD 0.031
Record Date: 04/05/2012
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