On July 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.
Earlier, Wilmar had already been made to place a security deposit equivalent to some US$725 million with the Attorney General’s Office, linked to an ongoing legal appeal concerning alleged corruption in the issuance of palm oil export permits in 2022.
In addition, there's rising volatility of commodity prices from the US tariffs and geopolitical tensions which may cloud its outlook, says Yow.
For the upcoming 2QFY2025 results, Yow expects Wilmar to report earnings of between US$260 million and US$270 million, a decline both q-o-q and y-o-y.
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Besides lower margins, Wilmar's overall sales volume of its food product segment is likely to have remained muted even as promotional costs increased, says Yow.
Having factored in lower crushing and refining margins, Yow has trimmed her core net profit projections for FY2025 and FY2027 by 0.4-12.5%.
In addition, she has applied a lower valuation multiple of 9x FY2026 PE, down from 10x, to account for increased regulatory risk in Indonesia.
Wilmar shares closed at $3.02 on July 21, down 0.98%.
