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CGSI downgrades Wilmar, lowers price target amid heightened regulatory risk from Indonesia
This is due to increasing uncertainties from the country&rsquo s over land confiscation issues and ongoing investigations on alleged cases related to palm oil and rice
[SINGAPORE] CGS International (CGSI) analyst Jacquelyn Yow downgraded Wilmar international : F34 -0.98% from a &ldquo hold&rdquo to a &ldquo reduce&rdquo call in her report on Friday (Jul 18), with a lowered target price of S$2.70 from S$3.15.
This is due to increasing uncertainties from Indonesia over land confiscation issues and ongoing investigations on alleged cases related to palm oil and rice, cited the analyst.
Yow said: &ldquo While the contribution from Indonesia&rsquo s rice business to Wilmar&rsquo s overall operating profit is likely not significant, recent developments in the country &ndash including land confiscations and alleged corruption cases &ndash have introduced increasing uncertainty for the group.&rdquo
Earlier on Jul 15, Indonesia Business Post reported that the Indonesian National Police Food Task Force had launched an investigation into four major rice producers, including Wilmar, over allegations of mislabelling, where lower-grade medium-grain rice was blended with premium rice and sold as higher quality.
Wilmar also separately placed a security deposit of 11.8 trillion Indonesian rupiah (S$929 million) with the Attorney General&rsquo s Office on Jun 17. This was linked to an ongoing legal appeal concerning alleged corruption in the issuance of palm oil export permits in 2022.
&ldquo We estimate that the potential financial impact of this to be nearly 2 per cent of its total net profit for FY2025, with the potential loss from the interest income amounting to US$729 million,&rdquo she said.
These regulatory issues in Indonesia, coupled with the rising volatility of commodity prices from the US tariffs and geopolitical tensions, are likely to continue to cast a shadow over Wilmar&rsquo s near-term outlook, noted the analyst.
&ldquo As such, we cut our FY2025 to FY2027 forward core net profit by 0.4 to 12.5 per cent, factoring in lower margin for the feed and industrial segment due to lower soybean crushing margin, and a lower palm refining margin,&rdquo the analyst said.
Q2 earnings expectations
For the second quarter of 2025, Yow expects the group to report a net profit of US$260 to US$270 million, down from US$343 million in the previous quarter, and year on year from US$278 million in Q2 2024.
&ldquo This is mainly driven by lower margin for its feed and industrial segment, due to a decline in soybean crushing margin despite better demand for soybean meal (in light of cheaper pricing than other animal feedstocks),&rdquo she said.
In addition, the analyst said that the palm oil refining margin is likely to be lower in Q2 to Q4 FY2025, largely due to the revised Indonesian export levy which had resulted in lower refining margin.
She also said the overall sales volume of its food product segment remained muted due to lower demand coupled with high promotional expenses, especially for the consumer product sub-segment, which may result in a lower margin.
Her report in particular cited &ldquo overall soft consumer consumption in China&rdquo as a factor affecting the sales volume in this segment.
Increasing stake in AWL Agri Business
Earlier on Jul 17, Wilmar had announced plans to acquire up to a 20 per cent stake in AWL Agri Business, formerly known as Adani Wilmar, from Adani Commodities, for 275 rupees per share.
The transaction is part of the option agreement signed in December 2024, which had set a maximum price of 305 rupees per share, and came after Adani Commodities said it will exit the venture joint venture.
While the final structure is under negotiation, Wilmar has stated it will acquire no less than 11 per cent and no more than 20 per cent of AWL&rsquo s equity under this agreement.
Yow said that the agreed purchase price of 275 rupees per share reflects an approximate 10 per cent discount to the previously capped price, indicating a more favourable valuation outcome for Wilmar.
&ldquo The deal strategically enhances Wilmar&rsquo s control and long-term growth visibility in India, while also marking Adani Group&rsquo s full exit from the fast-moving consumer goods space as it shifts focus towards infrastructure and energy. We believe the acquisition helps reinforce Wilmar&rsquo s presence in India&rsquo s fast-growing packaged food and edible oil market,&rdquo she wrote.
The analyst added that she view this as a &ldquo prudent move&rdquo by the group to ensure continuity and support Wilmar&rsquo s long-term ambitions in the market, given the difficulty of replicating a local partnership of Adani&rsquo s scale.
Following the transaction, Wilmar&rsquo s effective stake in AWL would increase from 44 per cent to around 55 to 64 per cent, resulting in AWL becoming a subsidiary and enabling full financial consolidation.
&ldquo We remain neutral on the transaction, as the purchase price implies a FY2025 P/E of around 29 times &ndash a premium to global peers &ndash despite a relatively moderate earnings growth profile,&rdquo said the analyst.
&ldquo We reckon that the near-term operating conditions in India&rsquo s consumer staples sector remain soft, which may limit upside in the immediate term,&rdquo she added.
As the deal is still under negotiation, however, Yow does not expect any material impact on Wilmar&rsquo s FY2025 forward financials.
&ldquo That said, based on AWL&rsquo s FY2025 net profit of around US$145 million, full consolidation could potentially increase Wilmar&rsquo s net profit by nearly 10 per cent moving forward,&rdquo she said.
In India the govt decides who wins or loses. Question is are you onside with them?
welcome to the jungle...India is the place to be now..
finjungle ( Date: 18-Jul-2025 14:20) Posted:
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This is worrying ie buying into a business in India.
tongphlp ( Date: 18-Jul-2025 13:33) Posted:
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to the moon!
Joelton ( Date: 18-Jul-2025 08:44) Posted:
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Key takeaways .....
" At the price of 275 rupees per share, Wilmar expects to recognise a gain on deemed disposal of about US$1.23 billion, with a corresponding increase in net assets of US$1.33 billion."
" At the price of 275 rupees per share, Wilmar expects to recognise a gain on deemed disposal of about US$1.23 billion, with a corresponding increase in net assets of US$1.33 billion."
Joelton ( Date: 18-Jul-2025 08:44) Posted:
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Wilmar to acquire up to 20% of Mumbai-listed joint venture with Adani
This comes after Adani Commodities announced its exit last December
[SINGAPORE] Agri-specialist Wilmar International : F34 +0.67% has agreed to acquire up to 20 per cent of the shares held by India&rsquo s Adani Commodities in the two companies&rsquo joint venture (JV), for 275 rupees per share.
Wilmar&rsquo s wholly owned unit Lence will purchase a maximum of 259.9 million shares in the Mumbai-listed JV, AWL Agri Business (which was formerly known as Adani Wilmar).
The move comes after Adani Commodities announced its exit from the JV in December 2024.
Following the announcement, AWL shares rallied 6 per cent to close at 278.30 rupees on Thursday (Jul 17).
Adani Commodities will also sell its remaining 10.42 per cent stake in AWL to &ldquo a set of pre-identified investors&rdquo prior to the transaction with Wilmar.
After the deal, Adani Commodities will have completely divested itself of the JV, while Lence&rsquo s stake in AWL will range from 54.94 per cent to 63.94 per cent.
At the price of 275 rupees per share, Wilmar expects to recognise a gain on deemed disposal of about US$1.23 billion, with a corresponding increase in net assets of US$1.33 billion.
Depending on the final number of shares acquired, the group also foresees goodwill on consolidation that will result in a reduction in net tangible assets.
Assuming that Lence acquires an 11 per cent stake in AWL for 275 rupees a share, Wilmar will record negative net tangible assets attributable to AWL of about US$0.36 billion.
This is based on AWL&rsquo s audited financial statements as at Mar 31, 2025.
yes ... watch for the right moment 🤩
Thank you.
Will watch for a better price to pick
Will watch for a better price to pick
Thanks for sharing.
Analyst reports on Wilmar International suggest a generally positive outlook, with a focus on its integrated and diversified business model and potential for earnings recovery, particularly in China. While some reports highlight potential volatility due to factors like tariffs and the need for continued profitability and ROE expansion to support valuation re-rating, the overall sentiment remains optimistic, with several brokerages maintaining a " Buy" rating.
China is going to overtake USA as the largest consumer in the world. Honestly, Trump is trying play hard ball. 9 July deadline is over and now kicking the can to 1 August 2025.
Analyst reports on Wilmar International suggest a generally positive outlook, with a focus on its integrated and diversified business model and potential for earnings recovery, particularly in China. While some reports highlight potential volatility due to factors like tariffs and the need for continued profitability and ROE expansion to support valuation re-rating, the overall sentiment remains optimistic, with several brokerages maintaining a " Buy" rating.
China is going to overtake USA as the largest consumer in the world. Honestly, Trump is trying play hard ball. 9 July deadline is over and now kicking the can to 1 August 2025.
Wilmar will release it' s 1H results on 12 August after trading
Will the results be good
Will the results be good
Wise move .... to move out and wait on the side of caution
one analyst believe the price will go to 2.8 .....
maybe close to the price will consider
one analyst believe the price will go to 2.8 .....
maybe close to the price will consider
Out yesterday 2.97 win some coffee money only
HuatAh7898 ( Date: 11-Jul-2025 18:02) Posted:
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Closing throw down to day low 295
Watching at the side
Watching at the side
Free cash flow .....
https://links.sgx.com/FileOpen/WIL1Q2025%20Executive%20Financial%20Summary_29.04.2025.ashx?App=Announcement& FileID=843380
https://links.sgx.com/FileOpen/WIL1Q2025%20Executive%20Financial%20Summary_29.04.2025.ashx?App=Announcement& FileID=843380
Wilmar' s legal overhang causes uncertainties
RHB Bank Singapore is keeping a " neutral" call on Wilmar international with a lower target price of $2.80 from $3.00 previously. The firm has an ESG score of 3.3 out of 4 and roll forward valuation target to FY2026.
The Singapore research group says: " We expect 2026 to be a more balanced year fundamentally, with lower y-o-y crude palm oil (CPO) prices, but geopolitical risks will translate to more volatility. We lower our CPO, but raise our palm kernel (PK) price assumptions for FY2025-FY2027."
" With the corruption case hanging over its head, along with tariff uncertainties, volatile raw material prices and economic uncertainties, Wilmar International&rsquo s valuation could remain lower than that of its China-listed peers until earnings undergo a significant turnaround," adds RHB.
Thus far, RHB notes that spot CPO prices have moderated from RM4,600-RM4,800/tonne in 1Q2025 to a low of RM3,780 in May, only to bounce back to RM3,900-RM4,100 currently. The decline was mainly driven by geopolitics in the light of US trade tariffs, wars and crude oil prices falling as a result, all of which pushed CPO prices in the same direction.
im waiting
shk363 ( Date: 26-Jun-2025 23:00) Posted:
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touching $2.50 soon
Selling pressures still there today at 289
the money taken hurts. what' s more damaging is if it is convicted of corruption then many co,cannot buy the shares.
until the high court see no errors in the process the lower court has come to the conclusion the share price difficult to run.
also a timely reminder to their managment to diversify out of single country risk. both in production and market view
until the high court see no errors in the process the lower court has come to the conclusion the share price difficult to run.
also a timely reminder to their managment to diversify out of single country risk. both in production and market view