In addition, Wilmar remains on track to list its China operations in Shanghai in 2019 given the group has competed an internal restructuring for the listing, says Ng. China operations made up around 65% of FY17 earnings and Wilmar is likely to offer 10% new shares during the IPO, with P/E of not more than 23 times.
"Given our estimate for the business’s FY17 net profit of US$680 million, Wilmar China could be worth US$15.7 billion, based on 23 times P/E, 5% higher than its current market cap of US$15 billion," says Ng.
Wilmar says it does not anticipate any major stumbling block to the listing. The group has also submitted a preliminary expression of interest to acquire the assets of Indian vegetable oil refiner Ruchi Soya.
To recap, contribution by associates soared to a record US$228 million in FY17 as the group started to reap the fruit of its investments in these joint ventures.
Stripping out the one-off deferred tax gain in 4Q16, Wilmar's core net profit grew 2.1% y-o-y to US$374 million. The sugar division would have performed better in 4Q if not for the timing of the new Australian sugar marketing programme, which will result in a certain portion of sugar produced by the mill being sold in 1H18. This led to a 60%/42% y-o-y drop in sugar sales volumes from its mill in 4Q17/FY17.
Its final dividend of 7 cents per share translates into a near-term dividend yield of 2.2%.
As at 11.39am, shares in Wilmar are trading 1 cent lower at $3.21 or 14.4 times FY18 core earnings.
