Wilmar poised for an acquisition spree as cash flow surges

Its expansion areas are consumer products and sugar.

The agribusiness firm finds itself with US$1.1b of cash on hand, and analysts say it’s preparing for possible mergers & acquisitions when good assets are available.

According to an analyst report by UOB Kay Hian, Wilmar is ready to acquire any good assets if prices are right, while its key focus areas for expansion will be consumer products and sugar.

“Management said there are good assets for sale now but the asking prices are still relatively high,” UOB Kay Hian said.

Meanwhile, UOB Kay Hian clarified that its lower interest income from carry trade will not have a significant impact on its earnings.

“As interest rate arbitraging opportunities closed, Wilmar has reduced its carry trade position. This led to a 22% yoy decline in Interest income to US$470.5m for 2015 (2014: US$600.5m). The off balance sheet position was reduced from US$7b in 2014 to US$4.4b in 2015 and this will be fully unwind by end-16,” UOB Kay Hian said.