Wilmar International

[CityFarmer]

Wilmar buys 53.7% stake in Noble’s Indonesia palm venture

SINGAPORE — Wilmar International has taken a majority stake in a palm plantation venture in Indonesia’s Papua owned by Noble Group, giving the world’s biggest palm oil supplier a toehold in the province where it also hopes to grow sugar cane.

Wilmar bought a 53.7 per cent stake in a Noble unit that has a majority stake in a company owning 22,953 hectares of land in Papua. Wilmar and Noble will form a joint venture to develop palm plantations there, the two Singapore-listed commodity giants said yesterday. Noble will hold the rest of the equity.

http://www.todayonline.com/business/wilm...lm-venture

[freedom]

the crushing business was getting better and the lower crude palm oil price did not reduce its operating profit, instead, raise its operating profit, though the lower crude palm oil price did have an impact on revaluation of its biological asset which is non-operating and highly criticized.

I am liking it better and better as a beneficiary of China's increasing domestic consumption.

[LikeWise]

Hi all

This is my 1st post and I'd like to ask a question on Wilmar. It is proposing share purchase. In the event they do the share purchase( up to 10%), Net debt* gearing goes up (ratio from .95 to 1.25) which I presume is bad rite, since more debt on each remaining shareholder? Basic EPS** goes up though( from 19.61 to 21.25 USD) which is good I since more earning per shareholder. Sorry abit of a noob here.

My question is, is the net effect good, bad or unclear? :p

*Net gearing is defined as net debt divided by shareholders fund.
**Basic EPS rep profit after tax and minority interest divided by weighted average number of shares

[AlphaQuant]

i think the more pertinent questions to ask are:

1) why the share buyback? is management trying to signal that the shares are undervalued or trading at a significant discount to true value?

2) why is management using cash to buy back shares i/o putting cash to better use?

[LikeWise]

1) why the share buyback? is management trying to signal that the shares are undervalued or trading at a significant discount to true value?

Yes I did think about that, I guess it signals confidence in the future of the business, or do they just want to support the price of the stock? But since it is an option, it means also that they can not exercise it at all. The last buy back was done at $3.00, which I presume is where they feel its undervalued.

I read somewhere that if the owner buys more of his stock in the open market, then he is confident that it is undervalued, but I'm not sure if it applies to this case.

2) why is management using cash to buy back shares i/o putting cash to better use?

Nothing better to buy? No confidence in expanding? or isst they feel the best prospect is in their own company?

BTW thanks for replying AlphaQuant.

[cfa]

Got sold down because of Haze ?

[BlueKelah]

I feel it is to support the share price..

I also notice wilmar debt is now about 50% of assets, becoming almost like a REIT hahaha.... Why buy up shares while putting on more debt?

Maybe because they have decreased tax burden by 5% ? British virgin island tax dodge anyone?

Definitely gonna be further downside to commodity stocks given china's current decline.

But I would say trust the management, after this commodity downturn this will be a good stock to have

[weijian]

Got sold down because of Haze ?

In our quest to try to explain all trends and observations, below might be 1 of the explanations:

http://www.asiaone.com/News/Latest%2BNew...31118.html

Quote from the article:

"Some Indonesian officials have suggested that these errant companies may be linked to Singapore and Malaysia," Lee said. "If any Singapore companies are involved, or companies which are present in Singapore are involved, we will take it up with them."

Wilmar owns plantations in Sumatra and Kalimantan..They have been warned.
http://www.wilmar-international.com/our-...oil-mills/

[BlueKelah]

good blame game

dun forget the indon plantation names like goldenagri, indoagri , first resources, may be implicated too

[etan]

According to its website, Wilmar adheres to a policy of zero burning.

http://www.wilmar-international.com/sust...ship/land/

Environmental Stewardship Land - Zero Burning

Wilmar adheres strictly to a policy of zero burning. We only use mechanical methods in our land development. During land clearing, the wood debris is left to decompose thus releasing nutrients more slowly. These nutrients can be utilised by the new trees. This reduces inorganic fertilisers at the time of planting, which also reduces the costs of planting.

While we are committed to No-Burn practice, we cannot prevent local practices of slash-and-burn for agricultural and other purposes. This may lead to high incidences of uncontrolled fires which inevitably spread over to our plantations. To minimise the impact of fire and haze in our operations and surrounding environment, we have a fire management programme that is based on principles of prevention and suppression.

This includes specific measures like inculcating a state of preparedness and rapid response, via education, training as well as investments in fire-fighting equipment and infrastructure which are aimed at both Group-wide and grassroots levels.

We conduct community awareness campaigns and distribute information materials. We also provide basic fire management training via workshops and fire-fighting hand tools. The community leaders and local government agencies are also involved.