Optimistic times ahead for Wilmar: analyst

Consumer products and its HORECA operations are tipped to improve in Q2.

China’s recovery after the events of the African Swine Fever outbreak and the COVID-19 pandemic is expected to boost Wilmar’s earnings in Q2, according to an analyst note by CGS-SIMB.

“Wilmar is cautiously optimistic that its Q2 operations will not be significantly impacted by COVID-19, if China’s economy recovers as expected,” said Ivy Ng Lee Fang, analyst at CGS-CIMB.

Wilmar’s consumer products business is projected to grow in Q2, whilst its hotel/restaurant/catering (HORECA) businesses are likely to start recovering and feed demand to increase with swine production in China.

The firm’s downstream palm oil and sugar refining business is also slated to perform well in Q2, but it could be countered by weaker sugar milling and plantation earnings due to lower sugar and crude palm oil (CPO) prices.

The group also said its China listing is on track and expects the listing to be approved in
H2.

Wilmar recently reported its Q1 earnings where its core net profit jumped 22.5% YoY to $435.19m (US$306.54m) in Q1 from $355.38m (US$250.32m) in 2019. 

This came on the back of strong performances from consumer products, especially in China, and tropical oils downstream operations. However, this was partially offset by lower demand from the hotel/restaurant/catering (HORECA) businesses, which was negatively impacted by lockdowns in all major markets.