Wilmar's outlook still bright despite looming hiccups

Its planned listing on China could unlock new streams of growth.

Based on historical trends, the second quarter of the year is seasonally the weakest quarter for Wilmar.

According to UOB Kay Hian, Wilmar’s earnings ratio for 1H and 2H is circa 40%:60%.

"1Q17 results accounted for only 23% of full-year estimates, and we are expecting 2Q17 performance to be unexciting, due to the weaker contribution from oilseeds & grains division due seasonally lower sales volume, and the weaker contribution from sugar division as sugar milling activity in Australia should only start contributing from 2H17 onwards," UOB KayHian explained.

However, this should not dampen the long-term outlook for the group, as its potential listing of its China operations could help to unlock group value and also result in stable long-term growth of its key businesses.

"We are expecting net profit growth of 36% yoy for 2017, supported by steady contributions from all three divisions on the back of higher sales volume and steady prices," the brokerage firm said.