COMPANY PROFILE

Wilmar International Limited, founded in 1991 and headquartered in Singapore, is today Asia's leading agribusiness group. Wilmar is ranked amongst the largest listed companies by market capitalisation on the SGX.

Wilmar's business activities include palm oil cultivation, oilseeds crushing, edible oils refining, sugar milling and refining, specialty fats, oleochemicals, biodiesel and fertilizers manufacturing and grains processing. At the core of Wilmar's strategy is a resilient integrated agribusiness
modeal that encompasses the enture value chain of the agricultural commodity processing business, from origination and processing to branding,
merchandising and distribution of a wide range of agricultural products. It has over 450 manufacturing plants and an extensive distribution
network covering China, India, Indonesia and some 50 other countries. The group is backed by a multinational workforce of over 93,000 people.


For those who are interested in Oil Palm and consumer product, perhaps you can consider this counter.

Some of the Key Brands under Wilmar associates FFM in Malaysia are e.g. Neptune Cooking Oil, Seri Murni, Krystal Cooking Oil, Marina, Massimo, V-soy Milk, Massimo Bread etc...


WILMAR EARNINGS TRACK RECORD



Base on above table, revenue almost 10 folds within 7 years period and same goes for Earning per share. The decline in 2012 earnings was mainly contributed by decline in crushing margin (High Soybean Price) and Overcapacity in China crushing capacity in Oil Seeds segment. However, part of the decline in contribution from Oil Seed segment was being offset by Sugar Segment as shown in table below and i foresee the oil seeds segment will recover soon once soft commodities price soften.




INCOME STATEMENT






PLANTED AREA GROWTH



This post has been edited by darkknight81: May 29 2013, 08:50 PM

Wilmar International

http://www.wilmar-international.com/

plantation

Associates

http://www.kencanaagri.com/ir_analyst_coverage.html

Subsidiary & Associates


Sugar Business

Sucrogen - Australia
http://www.sucrogen.com/

PT JAWA MANIS - Indonesia
http://www.jawamanis.com/

Cosumar - Africa
http://www.cosumar.co.ma/index_en.php


Consumer Products

http://www.yihaikerry.net.cn/en/about/

http://www.goodmanfielder.com.au/

This post has been edited by darkknight81: May 25 2013, 08:05 PM

VERTICALLY INTERGRATED BUSINESS MODEL



This post has been edited by darkknight81: May 25 2013, 08:22 PM

M&A 2012

24-Apr-13
Tereos announces the ramping up of its partnership in china with Wilmar and a new joint venture in a corn
starch facility in Tieling.
Current Annual processing capacity of 700,000 tons of corn will be jointly controlled by (51% Wilmar / 49% Tereos).
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17-Apr-13

Wilmar acquired 27.5% stake in Cosumar SA for USD 263 MILLION.

Background of Cosumar :

Sole sugar supplier in Morocco. It has one of the largest sigar refineries in the world.

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1-Oct-2012
50:50 joint venture with Kellogg Foods (Shangh ai) for the manufacture,
Sale, and distribution of breakfast cereals and savoury snack in China.

Stregth - Globally recognised brands Kellogg's and pringles.

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11-Aug-110



This post has been edited by darkknight81: May 25 2013, 11:11 AM

SWOT ANALYSIS

STRENGTHS

- Dominant position in palm oil supply-chain market
- Advantage over other players through economies of scale. (E.g. purchasing of raw materials in bulk)
- Large area of maturing plantations and still expanding.
- Experienced management with strong track record.
- Strong shareholder base with major shareholders like PPB & ADM.
- Dominant market presence for downstream products in China (>40% cooking oils market share), India (20% market share), Indonesia (20% market share) and vietnam (> 50% market share) & Bangladesh (30% market share).
- Complementary business activities including shipping and fertilizers.
- Significant cost savings through proximity of plantations to refineries and favorable shipping routes.

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WEAKNESSES

- Management maybe divided among shareholders.
- Supernormal profits dependent on success of trading desk. Especially Oil Seeds segment.

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OPPORTUNITIES

- Conversion of large unplanted land bank for productive use.
- Further expansion into China and India.
- Expantion in other regions including Europe and Africa.
- Partnership with international brand due to its strong distribution networks.

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THREATS

- Volatility in CPO and COMMODITIES prices.
- Changes in government regulations and tax policies.
- Onset of crop disease could that damage plantations.
- Possible cap on consumer pack prices, especially in China.
- Logistical breakdown or civil strife.
- Political uncertainties especially between China and Japan.
- Rising refining capacity in Indonesia

This post has been edited by darkknight81: May 29 2013, 06:53 PM

Well done , brother.

Thanks for the valuable info.

BTW, u buy direct in Singapore or through Bursa ?

Buy through cimb itrade. Rate same as local.

Thanks.

In view of local political issue, I intend to put some into Singapore shares.

Some more of yr researches plse

Golden Agri, similar to Wilmar... but today 1Q result out, might be a bit hard to pick up cheap tomorrow...

Thanks

Indofood also similar business, dunno why the Indonesia core planter like sugar, they all moving into sugar cane plantation, Wilmar is the biggest after acquire sugar cane & sugar business in Aussie, the rest all plant in Indonesia. Some other smaller player listed at SGX also, generally cheaper, but their land more cheap than Malaysia I think.

Nice thread bro, .

I will contribute some too if I have time.

Can share some HK n China stocks.

Get bored with bursa stocks.

I shared it in my blog already .
Banks not bad, consumers stock still highly priced but become cheaper.
Retail hypermarket also not bad also.

Sorry for OT TS

This post has been edited by foofoosasa: May 13 2013, 08:27 PM

O I see ,thanks

Golden agri are not so diversify as Wilmar. Golden Agri are more on Oil Palm Cultivation, processing and packaging of cooking oil. Besides, they do involve in Oil Seed.

Whereas for Wilmar, i like their business model. Why?

It is because, they have their own fertilizer plant and brand. They produce their own fertilizer.
Besides, Wilmar have number of fleet to trasport their CPO. In short, they control the whole value chain starting from origination, cultivation,
transportation, packaging and consumer products.

Hence, they have better margins compare with competitors. Wilmar was the largest CPO processor and Oil seeds crushers World Wide and of course
in China. This will enable Wilmar to have a better bargaining power.

Recent partnership with Kellogg is very clear that how strong their distribution network was in China.

Foreign stocks are more volatile. This is what we call efficient market. So trader like me can earn more from this volatility.

To me they are kind of similar, with sizable operation of soy bean crunching in China (but that's not good business, not too profitable, especially Wilmar for last few Q), sugar cane & sugar is very seasonal, but doesn't seems to be contributing much, the majority of profit still come from palm oil. Maybe you are right, Golden Agri might not be as diversify as Wilmar, but I think that's focus .

Anyway, I hold both... plus Indofood...

HK don't have plantation stocks. The other reason is HK too far from us.

Invest in plantation also means invest in land indirectly.

Yup agree with you on the focus thing. Besides, i think Golden Agri has more room to growth. I also have Golden Agri bro I will create another topic for Golden Agri or maybe you should start Golden Agri topic. Besides, don't forgot Wilmar (Robert Kuok) have very good relationships with China. This is very important. Basically they have very strong network worldwide.

However, don't forget the power of Wilmar especially after their oil seed segment start to recover.

Base on today closing price of SGD 3.38. Per is around 13 which is far more cheaper than any listed Plantation stocks in Bursa.

Golden Agri indeed not bad for growth stocks investing. I read the financial report yesterday ( Thanks to many recommendation from many forumer here ), and the price not is not bad too ( I would think is quite fair the price vs value).

But compared Golden agri & Wilmar, Wilmar have more business in downstream level, and I do think they are in progress to unlock the value chain.

Buy both lor. Like me.

Already lo.but amount much more smaller than you. No ammo mah
Maybe I need to sell some of my stock already, buy more of these two.

2nd Opinion :-


Kenanga Investment Bank Bhd

-------------------------------------------------------------------------------

Plantation Companies: High stockpiles in China and India

• Malaysia’s Apr13 palm oil output rose 4% m-o-m to 1.366m MT – or c.4% below our forecast

• End Apr13 palm oil inventory dipped by 11% m-o-m to 1.926m MT on lower imports, better exports

• CPO price may not recover as fast we had expected; as China and India continue to accumulate stocks

• We urge investors to exit low-growth upstream planters. Renewed price pressure seen in 2H13

Output trails expectations. Malaysian palm oil output seasonally recovered by 3% m-o-m to 1.366m MT in Apr13 – 4% below our initial forecast of 1.419m MT. We attribute the slightly lower-than-expected output to the delayed ripening of the fruits. Mar13 rainfall over Peninsular and Sarawak was reportedly below average based on monthly review by Malaysian Meteorological Department (MMD). Apr13 oil yields in Sarawak failed to pick up in line with seasonal trend during the month. Imputing Apr13 number; we now expect May13 output to catch up by 13% m-o-m to 1.542m MT. However, please note that southern Sarawak is still expected to receive 20-40% less rainfall in Apr-May13, according to MMD.

Inventory dropped on better exports, lower imports. Palm oil inventory at the end of Apr13 continued to drop by 11% m-o-m to 1.927m MT – or 7% lower than the 2.072m MT we were looking for. Palm oil exports of 1.449m MT (-5% m-o-m) were 13k MT higher than expected, while imports of 45k MT were 76k MT lower than forecast. For the month, higher exports to India and EU-27 were offset by lower exports to China, Iran and Egypt. We expect Malaysia’s May13 palm oil exports to rise 4% m-o-m to 1.508m MT; while ending inventory should further decline to 1.890m MT (vs. previous expectation of 2.017m MT).

How high can edible oil consumption go? Despite the encouraging data, the palm oil price may still lack near-term catalyst for significant recovery (as we had previously anticipated in our previous report). On page 3 of this report, we highlight the fact that recent spikes in China and India inventories have not reversed; and we continue to see prospects of higher y-o-y output this year (primarily in 2H13). Hence, the transfer of inventory from producing to consuming countries (thanks to low prices) highlights flattish intake. Consumers’ price elasticity of demand has a limit, in our view.

Take opportunity of any share price strength. Pending further data analysis, our CY13F CPO price forecast of RM2,640 now looks aggressive, considering YTD average of RM2,313. In a declining price environment, we recommend investors take cover in diversified or high volume growth/low-cost upstream planters. Our picks for the sector are currently AALI IJ and FR SP.

Don't like either.. for me it's First Resources... super prime land in dumai area & east kalimantan. Both of these places has the most fertile lands....

Consistently good FFB yield, OER, with very good tree profile with lots of reserve land to plant.

Concentrated plantation is better than widespread ones.

This post has been edited by gark: May 14 2013, 01:36 PM

FR SP

Take opportunity of any share price strength. Pending further data analysis, our CY13F CPO price forecast of RM2,640 now looks aggressive, considering YTD average of RM2,313. In a declining price environment, we recommend investors take cover in diversified or high volume growth/low-cost upstream planters. Our picks for the sector are currently AALI IJ and FR SP.

This post has been edited by SKY 1809: May 14 2013, 01:37 PM

FR FFB yield is 22.2 t/ha & CPO OER is averaging at 23.6% which is one of the industry's highest considering that it's tree profile of average 8 years old is still very young.

Current planted is 140k ha, with reserve of 100k ha to be planted for the next 5 years.

This post has been edited by gark: May 14 2013, 01:44 PM

Thanks .

Any PE /EPS , dividend kinda things yo share

Dividend...

2008 - 1.4 cents
2009 - 2.18 cents
2010 - 2.9 cents
2011 - 3.5 cents
2012 - 4 cents

Dividend policy minimum 30% earnings...

PE is currently high about 13

550 mil borrowing, but holding cash of 329 mil... not too bad. Total asset 2 bil.. conservatively geared.

But this one old man stock ha.. hardly got movement.

This post has been edited by gark: May 14 2013, 01:52 PM

Wow Nice

Currently there is a big campaign in China to cut huge wastage in food consumption , ada impact tak

Thanks



This post has been edited by SKY 1809: May 14 2013, 01:53 PM

Not everyone like to eat kfc. Same for investment la bro.
They have their own strength and weaknesses. I don like pure planter.

I prefer those who can plant, process and sell out in consumer pack. To me more sustainable.

Yes, not saying your preference is wrong.. just putting some of my view for benefit of all...

Look at this way.. plantation gross margin 40% to 50%, refinery margin 5% to10%, oil seed crushing margin -5% to 5%, consumer packaging margin 10%-15%

Anyone can enter refinery, oil seed, packaging within 1-2 years, and the investment cost is low. For plantation, you need 3-5 years growing period.

Which business do you prefer?

This post has been edited by gark: May 14 2013, 03:10 PM

te=darkknight81,May 14 2013, 04:03 PM]Not everyone like to eat kfc. Same for investment la bro.
They have their own strength and weaknesses. I don like pure planter.

I prefer those who can plant, process and sell out in consumer pack. To me more sustainable.

Why wilmar planted area are widely spread in indonesia,
Papua, malaysia,africa  ETC? I am not expert. But my view is they have different business model. Wilmar have at least few hundred
Refinery world wide and their business network are wolrd wide. How can you expect them to plant in one area only.
The logistic cost how. Bro, you are comparing chicken with duck le


[/quote]

This post has been edited by darkknight81: May 14 2013, 03:13 PM

Yes you can plant widely and still do business... just like all those plantation companies. But estates planted in groups can have big cost savings & higher efficiency. CPO FFA% and PV, AV deteriorates over time if the fruit is far from a mill and long transport time to refineries. Higher quality CPO commands a premium price above the MPOP price. Best quality CPO is currently from Sabah, West Semenanjung and riau/sumatra area. In these areas, less than 1 day fruit from the tress are milled and delivered to refineries.

Do you know wilmar's plantation is only enough to sustain less than 30% of their refineries? They are buying the other 70% from major planters which includes FR under long term contract. Also wilmar consumes 50% of Indonesia CPO but produces only less than 20% of the amount. So who needs who?

When I look at wilmar's oil seed crushing margins, it is very similar to fertilizer margins... high revenue/turnover but very very little earnings.

Why do you think KLK does not want to go upstream... you can compare KLK to IOI which is heavy in upstream business.

This post has been edited by gark: May 14 2013, 03:25 PM

Doing business we need to look at their business model, market presence, distribution network. Not every also margin.
Do you think tycoon like robert kuok, kuok khoon hong, Wijaja family don't know how to calculate?

If wilmar does not have strong distribution network in china do you think kelogg an international brand willing to
50 : 50 joint venture with them?
Noble group willing to sell of more than 50% of their plantation arm to wilmar?

Do you know how the presence of wilmar in china?

Besides, why do you think both golden agri Wijaja family and wilmar kuoks group are
Involve in the whole value chain?

1. Easier for them to diversify to other sector.

2, A chinese proverb network = wealth

3. What if one day wilmar palm oil are able to self sustain? Will they renew contract with FR?

4. Wilmar have no concern of cpo oversupply. They can pack into consumer pack.

FR have the same advantages?

This post has been edited by darkknight81: May 14 2013, 07:03 PM

Well a diversified bussiness is not necessary a good business. I am familiar with both wilmar indo , kerry group and smart group as i have business relation with them in the past. Sure they are great companies, but over diversification has diluted thier potentials hence becoming a conglomerate

Wilmar and smart group plantation arm is not able to self sustain as indonesia is fast running out of suitable planting lands. Wilmar bought a stake in kencana agri recently to secure their cpo supply. Smart group pt lonsum has already exausted all thier reserve lands.

For the packaged oils, wilmar is selling the sania and arowana brand and smart group filma brand. They only represent like less than 20 pct of thier total refining volume. Most of thier refinery is used for making bulk oil for export, remaining into biodiesel and oleo chem. More often than not the refineries are not able to run at full capacity due to lack of cpo or poor cpo.

Recently mewah oil decided to abandon thier half built refinery in indonesia due to not able to secure enough cpo.

Did you see fr results annouced evening today? They manage to increase profit 20 % y on y, with low cpo price.

This post has been edited by gark: May 14 2013, 09:56 PM

a good counter for long term holding. they going to open a palm-oil refinery in ghana with a investment of around $16 million

Yesterday Noble post some bad result, might worth a look...

I still prefer Wilmar and Golden Agri as Noble are too complicated for me.

darknight81. Seems that Wilmar never goes up even when STI goes up. So are you still vested with Wilmar? When STI drops. Wilmar drops even more. When STI goes up. Wilmar either remains stagnant or goes up.

This post has been edited by sylar111: May 27 2013, 03:45 PM

I'm just wondering, why buy wilmar when one can buy PPB directly (since PPB is the majority shareholder of wilmar)?

Ppb own wilmar for around 18 to 20 percents, but 70 percent s of its profits come from wilmar. It indicates to me that the other asset of ppb not really generate something really valuable to shareholder. Thats the reason why I choose wilmar over ppb. I don't know others here la.

Seriously have you studied the fundamentals of PBB in general. Funny that this can be ask in this forum. Singaporeans will laugh at you for asking this question over at their forum. You are supposed to look at the fundamentals of the company. Like PE ratios, dividend yield, earnings per share, gearing ratio etc. It is not a matter of I own this company so I am more profitable because of that.How ignorant.

This post has been edited by sylar111: May 28 2013, 06:07 AM

Bro u r right. Same view here. Ppb owned wilmar 18.3% . Contributed 70% to ppb. Use simple math u know already

Besides, our myr strengthen recently. Top up somemore last week. Now i am holding 50 lots of wilmar. Totally stop buying wilmar and exploring china stock now.

I buy becos of the company fundamental. Short term share price does not matter to me. Furthermore my average buying price is SGD 3.16

This post has been edited by darkknight81: May 28 2013, 06:45 AM

Sylar we buy stock not becos of ppb went up and wilmar doesn't then ppb is better than wilmar.
At least not for me and foofoosasa.

To me wilmar and ppb is at least 90% alike as they are doing the same businesses except ppb owned golden screen cinema and
Some properties venture and 80% of FFM. I can still memorize as i love ppb .

Wilmar is around RM 8000 whereas PPB is RM 13xxx. No matter how good GOLDEN SCREEN CINEMA and preperties are
Its not worth RM 13XXX. We use to owned ppb but sold off with some profit and went in wilmar.

Frankly speaking i like ppb more as i like GSC. But in investment we are talking about value for money. Not ur emotion.

This post has been edited by darkknight81: May 28 2013, 07:04 AM

My point exactly. It is about value investments. But the strange thing is that. Even with those good fundamentals. The price is not moving at all. Share prices in SGX is rising if you disregard what happen on Thursday. New records are being met. But Wilmar seems to be stagnent. Reason why I went into Wilmar is because fundamentally wise it is good and the price is still low compared to the other shares. The share price for the other stocks are so high. Wilmar is still relatively low. It seems that despite having good fundamentals, it does not rise as sharply as STI and yet it always drop in tandem with STI. The thing is that you do not want to hold any shares long term now as there may be a crash soon.

Bought 2 lots at 3.38. 1 lot at 3.33 yesterday. It was on an uptrend last weak. Suddenly, Nikkei drop by 7%, share price also drop.

Good fundamental doesn't mean it will move up or down. Share price moving can be due thousands of factor within short period.

If you want to buy more movement stocks, you probably can try Golden Agri or First Resources for plantation.

Last Thursday maybe to a lot of people is scary day,but for a lot of people it just another "shopping" day.

Crash or not, I don't have crystal ball to see it. If you want play short term, the best is to guess by doing some analysis whether the next Quarter report will be good result or not . It is either you have

already predict the result correctly before it announce or you try to act faster than any of the big institution or traders during the announcement day ( Which I doubt any ordinary investor can faster than

them, usually the share price already react days before announcement because of insider trading). If not become a trader, learn all sort of technical analysis? it probably may help your timing to sell.

This post has been edited by foofoosasa: May 28 2013, 11:10 AM

Last Thursday was a scary day. Stocks in Singapore and Malaysia fell. Monday is the shopping day.

I am not talking about Wilmar crashing. I am talking about stocks in general crashing.

less than 0.7% called scary in Malaysia ? , I almost fall asleep when see the % drop . In HK, fall around 3% I also never scared .

If you anticipate there is crash soon, then just leave stock market man. What I suggest you just now is one way to play short term in WILMAR, before you leave stock market since you anticipate crash is

coming?

Well my definition of long term is say many years. I am pretty sure in this kind of environment. You do not want to hold your stocks for many years. Every country is still pouring money into the stock market. It is an opportunity to still make money. But when things become funny. Then you should leave the market. I dun think it has reached the point yet. By the way. Wilmar is a singapore stock and the stock market fell by 1.8%. It was kind of scary over there as S-REITS and many other shares experienced record drop in 2years.

Admittedly, PPB has to do a better job to ensure its COGS is being pushed down so that it can bring more value to the company and ultimately, the shareholders. However, do note as well that revenue and profit should not be the only perspective to look at when it comes to what company to buy. Do know that income statement is based on accrual accounting, NOT cash flow. A company may record sky rocketing revenue and profits but if its receivables is bleeding and it has a lousy capability in collecting money, it will go down the drain.

wilmar int (based on Wilmar Int AR 2012)

USD 1 = SGD 1.26

book value @ USD 2.37/SGD3.00
loans and borrowings: USD 22,245,274,000 
total asset: USD 41,920,134,000
trade receivables: USD 3,953,104,000
current asset: USD 23,819,479,000 
current liability: USD 21,413,283,000 


asset/debt = 1.8845 (the higher the better)
working capital/debt = (current asset - current liabilities)/debt = 0.1082 (the higher the better)


PPB Berhad (based on PPB AR 2012)

book value @ MYR12.46
loans and borrowings: MYR373,418,000
total asset: MYR15,579,349,000
trade receivables: MYR415,278,000
current asset: MYR2,198,958,000
current liabilities: MYR657,831,000

asset/debt = 41.7209 (the higher the better)
working capital/debt = (current asset - current liabilities)/debt = 4.1271 (the higher the better)

Looking at the overview of the debt profile, if some unexpected economic downturn were to happen, guess who will be impacted badly.

Really, my whole obj isn't to criticize buyers of Wilmar but to question the rational behind buying company which is owned by another company, when one can purchase the latter. It is like, instead of purchasing Public Bank's share, one purchase Public Mutual instead.

P.S. Yes I have studied PPB's fundamental on the trending basis.

1. Yes i am going to hold for wilmar not for trading purposes.

2. Don try to speculate the market. Buy and hold those counter which u think are cheap.
I don care how much is wilmar today. I am more concern on lianhua supermarket share price.

PPB for me is they are more stable balance sheet, but the earning power arguably is below average.

Wilmar have more aggressive balance sheet with higher gearing, but higher earning capability.

If you want compare both's company cash flow analysis, maybe you can share it here? I failed to see how PPB doing better than Wilmar.

Australia - Wilmar head meets with growers to discuss sugar marketing
Tuesday May 28 2013

The chairman of Wilmar International, Kuok Khoon Hong, and managing director Jean-Luc Bohbot were scheduled to meet with growers on May 23 as the latter seek answers about the company's negotiations with Queensland Sugar Ltd. (QSL) about a new marketing model, local press reports said.

A confidential agreement leaked to the ABC has revealed one option being considered was a plan to contract 100% of Australia's AUD1.7 bln export sugar pool to the Singaporean multinational giant.

Thanks for your valuable info. No doubt Wilmar has higher gearing.

But in term of P/E ratio Wilmar is lower which is around 14 and PPB is near to 17 times.

RM 13.64 - (2012 EPS - 71 CENTS) - P/E (19.2 TIMES)

Wilmar

SGD 3.37 (2012 EPS - 0.24 CENTS) - P/E (14 TIMES ONLY)



This post has been edited by darkknight81: May 28 2013, 06:46 PM

It is usually hard to just view from cash flow alone, but I will just provide my two cents on this.

Looking at the consolidated cash flow statement section for both companies (position year 2012), some highlights are:


On wilmar int:
- Cash flow from operating activities
> Profit before tax: USD 1,654,601,000
> Decreased in inventory level by USD128,826,000 (good news compared to increase of USD530mio in year 2011)
> Increase receivables by USD561 mio, not good on the company's cash flow

- Cash flow from investing activities
> CAPEX: USD1.69 bio spending (higher than its profit before tax even; it is quite confident to spend more than it makes for the particular fiscal year)

- Cash flow from financing activities
> Borrowings: USD 8bio
> Increase in FD pledge for bank facilities: USD4.7bio

Cash and cash eq position at end of fiscal year: USD1.5bio

Overall, this shows Wilmar need to buck up to collect its money faster than it should spend. It's operating activity is definitely a plus point here, with the capability to gain USD1.65bio profit before tax (just that its increase in receivables, means that quite a substantial amount of profit isn't at its hands during the preparation of this AR.
With the increase in FD pledges (whooping 4.7bio), expect it to be more debt-laden. Spending more in CAPEX than it can make with miniscule Cash and cash eq, if things go wrong, it may have to forfeit its FD pledges by withdrawing them and forego its dream of borrowing more. Economic downturns will definitely hurt Wilmar a lot.


On PPB:
- cash flow from operating activities:
> Profit before tax: MYR916,814,000
> Share of net profits less losses of associates: -MYR712,545,000 (although this amount is lower than year 2011, having losses of associates dragging down overall profit is not an attractive thing; this is the main reason for the loss of profit for the group)
> Increase in receivables by MYR127,763,000 (if the associates aren't bleeding cash, this amount of receivable is fine; however, with associates losing so much money, increase in receivables is bad news as this is quite a substantial amt after deducting profit before tax and associate losses)

- Cash flow from investing activities:
> CAPEX: MYR166mio (looks conservative, given the amount of profit before tax it generated, highly probably due to the losses from its associates)
> Dividends from associates: MYR155mio (this helps to compensate a bit for the spending in CAPEX)

- Cash flow from financing activities:
> Dividends paid to owners of the parent: MYR237mio (this cannot be helped, since kuok bros own above 50.81% of the company)

Cash and cash eq position at the end of fiscal year: MYR1.05 bio

As a summary, they really need to get their associates up to speed. Thanks to them, the group as a whole bleeds money and its CAPEX is low. The group seems to take a conservative stance, with having sufficient cash to even offset its entire borrowings if required. Its cash position is superior and if any economic downturn, it definitely can go through it without a sweat.


Conclusion, Wilmar leverages A LOT however, its operations seems to be fine. PPB's operation is alright as well but thanks to its associates, it is bleeding money, causing its overall profit to be low.

Yes, definitely, as Wilmar's EPS is much better than PPB. However, PE ratio alone cannot tell the full-story. One gotta look from the company's cash flow perspective coupled with its financial position (aka Balance sheet) too.

As an investor, we would want to know how much money can be taken out from the business and the business still runs and sustains. Thus, free cash flow is another important yardstick.

Anyway, I understand that it is just different perspective that we are looking at.

Most are earning-geared (# such as revenue, income, etc.) but I look more from the financial capability of the company if it can withstand shocks from the economy. Well, then again, I am a conservative investor myself I would rather try not to lose my money and invest in businesses which has sufficient margin of safety so that if I were to sleep every night, I sleep in peace.

Just my personal opinion =)

Yes. But i am not so agree on the "sleep at night" part. I believe even though Wilmar has higher gearing however i believe it will not end up lose money as you said. Its a big exagerate.

But of course i agree it will be better if Wilmar will able to lower down its gearing. Until then it will not worth SGD 3.37 anymore.


No stocks is perfect anyway.

Put it that way, low gearing means higher growth to me as it will enable PPB to expand its businesses.

Precisely, as you said darkknight81, no stocks is perfect. As shared by Warren Buffet:



That being said, thus, never discount out the possibility of inability to generate sufficient revenue to cover on the borrowings it is bearing at the moment.

Regardless, thanks for your insights.

PLANTED AREA UPDATE

Thanks a lot to you for highlighting this. Especially with those details calculations...


But don't forget when i bought Wilmar that time it was around SGD 3.10 and PPB at that time is around RM 14.XX.


For you i think you will also choose Wilmar le...

This post has been edited by darkknight81: May 29 2013, 08:22 PM

The increase in debt in 2010 was partly contributed by aggressive expansion plan during that year. E.g

Acquisition for sucrogen which has started to contribute now.

This post has been edited by darkknight81: Jun 1 2013, 10:16 AM

darkknight. Do you feel that what happened for this past few days is only a minor correction?

Partly due to sgd strengthen against myr. Last week i bought wilmar at SGD 2.40 and yesterday sgd vs myr is 2.45.

To be frank i don know how low it will go. But always keep some bullets.

Fyi the company bought back a lot of shares during sgd 3.00.

To me plantation go gor sgx, banking and retail go for hkx.

This post has been edited by darkknight81: Jun 1 2013, 10:14 AM

Thanks for your contribution .

Wow , first time I see a company keeps its stocks at us $6.7 B, almost half of shareholders fund.

I guess the palm oil market is rather sluggish with such a high stock level

This should be their inventories under oil seeds segment.

They purchased soil bean in USD.

Inventory has a price and cost .

When commodity prices rise or fall, big impact is always there.

And Bear in mind, interest cost on loans borrowed is on the Up trend.

This post has been edited by SKY 1809: Jun 1 2013, 12:06 PM

Yes. You are right. They already paid for it. Thats y u see the share price drop
From sgd 6.xx

Anyway, thanks for all your updates.

BTW , Robert Kuok used to a good Sugar speculator /trading.

Hope his second and 3 generations are as good as him.

I think the second generation would. Not too sure about the third generation. And i dun care about the third generation also

Agree. It was my concern however i don think i have the chance to see it

This post has been edited by darkknight81: Jun 1 2013, 08:09 PM

Normally they would involve their children in the management like purchasing & commodities .

Means they could be invisible at Director levels but learning or contributing something to the Group.

Don"t u hear of succession plans for big companies

Currently wilmar are being helm by robert kuok nephew kuok khoon hong.

Besides, the other reason i choose wilmar is i don really like a company which was fully controlled by a family.

ADM is the second largest shareholder with 16% stakes.

I read that the high gearing is the reason why people are a little scared. Is it true?

It is pretty strange that despite the financial results last quarter, this stock is not moving at all. People do not seem to have confidence in this stock for some reason. The price drop dramatically once there is a correction. Normally, I try to look at a stock long term. But it is difficult in this kind of environment.

If you compare wilmar gearing with olam it is nothing. Olam debt to rquity ratio is 2.53!!!

The main concern is the oil seed segment which i have keep on emphasizing. To be frank i don like this segment

Few major issues e.g. Overcapacity, low crushing margin, their crushing plants in china only operates 50% of their full
Capacity due to overcapacity...

Increase in soybean price which hurts their margin.

If your refer to this topic summary at first pagr you will realize oil segment
Used to contribute 30% to the group profit.

However, its contribution to the group was only 1% last year. Thats shows how volatile
Is for oil seed segment.

However, my understanding is china government has started to step in to control
Additional build up of crushing plants.soy bean price is going for correction soon.
China crusher has reduce their import for soynbean recently.

Pls refer to soybean price below.

http://www.indexmundi.com/commodities/?com...eans&months=240

This post has been edited by darkknight81: Jun 1 2013, 10:26 PM

Hey would you buy now ar. The price is like 3.20 already

Nope. Enough for me. Futhermore my average buying price is SGD 3.16.

Unless below SGD 2.80 will only consider.

You think it is possible to go under that? By the way it dropped again. Do you think that it only drop due to market sentiments?

A mysterious disease that's causing sugar cane crops in north Queensland to turn yellow has now been found further south.

The industry is still debating what is causing yellow canopy syndrome which is now being reported on farms north of the Pioneer River near Mackay.

Until the recent discovery the disease was only known to affect cane growing regions north of Bowen.

The disease turns cane leaves which would normally be dark green to yellow, preventing the sugarcane from growing and producing sucrose.

Laurence Bugeja, acting manager of Mackay Area Productivity Services, has seen the affected area but doesn't know how yellow canopy syndrome spread to it.

"It started out a year or two [ago] in the Herbert River and then it moved to the Burdekin," he said.

"But whether it will keep moving and if it's climatic we don't know."

The unknown disease has already meant the country's most productive cane growing region, the Burdekin south of Townsville, has had to revise its crop forecast for 2013.

Australia's largest sugar producer, Sucrogen, which owns mills throughout the Burdekin, has downgraded its estimate from 8 million tonnes of cane to 7.4 million.

The estimate for the Herbert River, north of Townsville, has also been revised to 4.4 million tonnes.

Initially it was thought yellow canopy syndrome would not impact the amount of sugar the region produced but Sucrogen manager, Craig Doyle, says that's no longer the case.

"There's not much doubt with some trials that we've done that the poorly affected cane and root system is starting to die," he says.

"We're going to see very low yields and very low sugar low content.



"We're also likely to get higher levels of impurities in the cane which makes it harder to process.

Mr Doyle says it will be up to growers and harvesters to decide if they want to supply affected cane to the mills to crush.

"Hopefully if the [diseased] cane is mixed in with some good fresh cane we can process it normally," he says.

Sucrogen says it can't put an acre figure on how much land throughout Herbert River and the Burdekin is affected, but estimates it could be between ten and 15 per cent.

Despite spreading south, there has been no recorded cases of yellow canopy syndrome in the Proserpine district, which is situated between Mackay and the Burdekin.

Mike Porter, the manager Canegrowers Proserpine, is watching the situation cautiously but says there's nothing he can do if yellow cane does show up.

"We don't know what causes yellow canopy syndrome and we don't know where it emanates from," he says.

"It's just a case of wait and see and we'll take it from there."

Mr Porter says transport restrictions on the movement of cane between districts has helped shield Proserpine from the disease to a degree.

He also says Proserpine growers don't use as many of the varieties of cane that are susceptible to the disease.

However, for the Mackay region it's a different story.

Two out of the three varieties of cane grown in the Burdekin affected by yellow cane are also grown around Mackay.

Mr Bugeja says he will continue conducting field studies but doesn't know where it is headed.

"The boys have been watching it for the last few weeks and if you get a bit of rain it seems to grow out of it," he said.

"Then the minute your crop seems to stress it gets a little bit worse.

"We're even seeing it in the grass that's adjacent to the blocks [of sugar cane].

"So it's a strange one."

http://www.abc.net.au/news/2013-05-15/cane-disease/4691194

This post has been edited by darkknight81: Jun 10 2013, 06:59 PM