10-05-2014, 06:09 PM
Too many drivers for so many divisions... how to sort things out for confused investors let alone analysts that got literally most of their forecasts wrong...
PUBLISHED MAY 10, 2014
Wilmar sees better China soya bean crushing margins
BYANDREA SOH
sandrea@sph.com.sg @AndreaSohBT
EVEN as its shares closed 3.9 per cent lower at $3.21 yesterday, in response to a lacklustre set of first-quarter results, Wilmar International said the soya bean processing situation in China will not stay as severe.
"(The) first quarter of 2014 is the worst I've ever experienced (since Wilmar got into the crushing business in 1995)," said CEO Kuok Khoon Hong at its results briefing yesterday. "Second quarter should not be as bad."
Negative soya bean crush margins in China led to the group's earnings tumbling 48.7 per cent to US$161.8 million, missing analysts' expectations. Its oilseeds and grains division recorded a pre-tax loss of US$57.4 million, compared with a profit of US$47.2 million a year ago.
Shares in the world's largest palm oil processor fell to as low as $3.15 yesterday. With 28.7 million shares traded, it was the fifth most actively traded stock.
Financial traders - who since a few years ago have been importing soya beans and metals such as copper as a roundabout way to secure cheap financing - had imported more soya beans as a result of good crush margins in Q4 last year, explained Mr Kuok.
China's soya bean imports jumped a record 33.5 per cent in the first quarter, Reuters earlier reported.
The excess supply of soya beans was compounded by reduced demand because of the bird flu and a slower Chinese economy - a reversal from Q4 last year when shipments were delayed and consumption was high.
The resultant collapse in crush margins has caused some of these financial traders to have problems in obtaining letters of credit from banks, said Mr Kuok.
The poor Q1 results led at least two brokerages, OCBC and CIMB, to downgrade their call on Wilmar to "hold".
Maybank Kim Eng analyst Wei Bin, who lowered his target price from $4.29 to $3.94 but maintained a "buy" call, was slightly more optimistic. "We maintain that Wilmar stands to benefit from a structural recovery in soya bean crushing margin and sugar price," he said. "Current valuation looks cheap."
Wilmar, which is making a takeover offer with Hong Kong-listed First Pacific for Australia's largest baking firm, Goodman Fielder, also said it may not continue with the bid if news reports of the firm selling its New Zealand dairy business are true.
PUBLISHED MAY 10, 2014
Wilmar sees better China soya bean crushing margins
BYANDREA SOH
sandrea@sph.com.sg @AndreaSohBT
EVEN as its shares closed 3.9 per cent lower at $3.21 yesterday, in response to a lacklustre set of first-quarter results, Wilmar International said the soya bean processing situation in China will not stay as severe.
"(The) first quarter of 2014 is the worst I've ever experienced (since Wilmar got into the crushing business in 1995)," said CEO Kuok Khoon Hong at its results briefing yesterday. "Second quarter should not be as bad."
Negative soya bean crush margins in China led to the group's earnings tumbling 48.7 per cent to US$161.8 million, missing analysts' expectations. Its oilseeds and grains division recorded a pre-tax loss of US$57.4 million, compared with a profit of US$47.2 million a year ago.
Shares in the world's largest palm oil processor fell to as low as $3.15 yesterday. With 28.7 million shares traded, it was the fifth most actively traded stock.
Financial traders - who since a few years ago have been importing soya beans and metals such as copper as a roundabout way to secure cheap financing - had imported more soya beans as a result of good crush margins in Q4 last year, explained Mr Kuok.
China's soya bean imports jumped a record 33.5 per cent in the first quarter, Reuters earlier reported.
The excess supply of soya beans was compounded by reduced demand because of the bird flu and a slower Chinese economy - a reversal from Q4 last year when shipments were delayed and consumption was high.
The resultant collapse in crush margins has caused some of these financial traders to have problems in obtaining letters of credit from banks, said Mr Kuok.
The poor Q1 results led at least two brokerages, OCBC and CIMB, to downgrade their call on Wilmar to "hold".
Maybank Kim Eng analyst Wei Bin, who lowered his target price from $4.29 to $3.94 but maintained a "buy" call, was slightly more optimistic. "We maintain that Wilmar stands to benefit from a structural recovery in soya bean crushing margin and sugar price," he said. "Current valuation looks cheap."
Wilmar, which is making a takeover offer with Hong Kong-listed First Pacific for Australia's largest baking firm, Goodman Fielder, also said it may not continue with the bid if news reports of the firm selling its New Zealand dairy business are true.