Wilmar International

[tonylim]

Any opinion on this counter at this price level ? Valuation looks cheap .

[BlueKelah]

Any opinion on this counter at this price level ? Valuation looks cheap .

In OCT 2008 crash it was down to ~$2.10, don't know the valuation back then.

After QE1 shot back up to $7 then slow decline from there together with the commodity prices. We all know with china slowing down commodity prices likely to drop further.

Wilmar now has 29 billion in debt which is ~145% ratio to market cap and not much cash. As a blue chip stock the dividend is at a paltry 1.57% today.

So based on these 3 criteria I wouldn't say its "cheap"

[freedom]

Any opinion on this counter at this price level ? Valuation looks cheap .

In OCT 2008 crash it was down to ~$2.10, don't know the valuation back then.

After QE1 shot back up to $7 then slow decline from there together with the commodity prices. We all know with china slowing down commodity prices likely to drop further.

Wilmar now has 29 billion in debt which is ~145% ratio to market cap and not much cash. As a blue chip stock the dividend is at a paltry 1.57% today.

So based on these 3 criteria I wouldn't say its "cheap"

not much cash?

Wilmar has almost 10 billion cash on its balance sheet. In absolute amount, I doubt any other company(other than banks) in SGX can have more cash.

[BlueKelah]

EXTRACT FROM LATEST 31 MARCH 1q2013 report WILMAR

Cash and cash equivalents at the end of the financial period 1,710,481 1,431,288
Represented by:
Total cash and bank balances 9,966,916 6,883,037
Less: Fixed deposits pledged with financial institutions for bank facilities (7,538,452) (5,197,027)
Less: Other deposits with maturity more than 3 months (631,643) (132,392)
Bank overdrafts (86,340) (122,330)

Total cash and cash equivalents 1,710,481 1,431,288

Details of any collateral
A portion of the bank term loans and short term working capital loans is secured by a pledge over
property, plant and equipment, fixed deposits and other deposits with financial institutions, trade
receivables, inventories and corporate guarantees from the Company and certain subsidiaries.
======================================================
As you can see most of that 10 billion is pledged for getting their 8,792,507,000 in secured debt with the other 14,885,508,000 debt unsecured.

So they can only touch the left over 1.7++ billion which is not that much of market cap. They would have to pay down the rest of their debt to get access to the total of 10 billion cash. So in effect if they wanna do some aquisition for example they can only use $1.7billion and not the full 10 billion.

The other thing you often have to consider with cash is whether it will be taxed if the company repatriate it back to country where it is HQ. FOr example APPLE has Billions offshore which technically looks good on the balance sheet but if they wanna bring it back to USA for dividend distribution or to use for aquisition, it will be reduced heavily by taxation, so for wilmar even that 1.7million may be in china or indonesian bank and may not be really accurate CASH IN HAND if WILMAR management decide to do something with it in singapore

For your interest SIA has 5 billion+ cash and cash equivalent (>40% market cap) and 1 billion debt and trading below NAV. One of the few blue chip thats NET NET CASH. Only the unprofitable SIA cargo is dragging them down and making their PE look like crap

[freedom]

then why didn't you subtract the amount from the debt?

talking about double standards.

When calculating debt, every cent counts; but when calculating cash, only available cash counts, but ignoring that the cash is restricted as a pledge for the debt.

[felixleong]

wilmar has a gearing of about 50%, maybe better if you look at some research reports by the local brokerage houses

[BlueKelah]

I did not subtract the pledged cash security from debt as normally I just use debt as taken from the report directly under the secured/unsecured section. Just like I just take the cash and cash equivalent directly (I did not intentionally minus away all that amount from the 10 billion)

I also use debt/market cap as rough guide for most stocks and debt/asset for gearing for the property or REITs.

So back to WILMAR, if we take the 29 billion debt minus 10 billion of cash as per freedom definition, result is 19 billion of debt which is 90+% of market cap, which in my opinion it is still a high amount of debt.

I am just providing my opinion for tonylim as he has asked

Felix : Yah will have many reports for wilmar but maybe tonylim feels VBs opinion is better than analyst opinion hahahaha

[freedom]

so a Wilmar with more than 8 billion restricted cash and a Wilmar without the 8 billion with the rest kept the same do not make any difference to you.

if you agree, we certainly live in a completely different world.

[tonylim]

Thank you all for the valuable advices. It is indeed true I trust my buddies here more than those so-called analysts.

[tonylim]

Personally I strongly feel the worst is over for WILMAR. Enter today at 3.12.

Wilmar Q1 net profit jumps 23%

The palm oil processor also saw higher sales volume in the consumer products segment

SINGAPORE — Wilmar International, the world’s biggest palm oil processor, yesterday reported a 23 per cent gain in first-quarter net profit, driving shares up as much as 4.2 per cent.

Net profit rose to US$315.4 million (S$387.8 million) in the three months ended March, up from US$255.9 million a year earlier, due to a sharp recovery in the oilseeds and grains business, Wilmar said.

The company also saw higher sales volume in the consumer products segment, as demand for edible oils, flour and rice increased. Revenue fell 3 per cent to US$10.2 billion on lower palm oil and sugar prices.

Wilmar’s shares rose as high as S$3.45 after the announcement before closing up 2 per cent at S$3.38.

OCBC Investment Research analyst Carey Wong said the results were in line with expectations and a “decent start to financial year 2013”. OCBC maintained its buy rating and fair value of S$3.90.

Wilmar’s Chairman and Chief Executive Kuok Khoon Hong is “reasonably confident” the company will overcome the challenging operating environment.

“While palm oil price is likely to remain low, affecting plantations’ profitability, the declining price trend is expected to benefit our downstream value-added businesses,” he said.

“In addition, we expect stronger contributions from our new businesses,” Mr Kuok added.

He said that the company is optimistic about its prospects in China.

“The bird flu will affect meal consumption in the short term, but is not expected to have a long-term effect,” said Mr Kuok.

http://www.todayonline.com/business/wil ... t-jumps-23