Wilmar by JPM 28 May 2012

7/31/2019 Wilmar by JPM 28 May 2012

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Asia Pacific Equity Research28 May 2012

Wilmar International Limited Neutral

Previous: Overweight

WLIL.SI, WIL SP

Early April oilseeds crush margin recovery appearsshort-lived - downgrade to Neutral

Price: S$3.76

Price Target: S$4.30Previous: S$5.20

Singapore

Plantations

Ying-Jian Chan, CFAAC

(65) 6882-2378

[email protected]

J.P. Morgan Securities Singapore PrivateLimited

Simone Yeoh

(60-3) 2270-4710

[email protected]

JPMorgan Securities (Malaysia) Sdn. Bhd.(18146-X)

YTD 1m 3m 12mAbs -24.8% -22.6% -26.1% -29.7%Rel -30.1% -16.1% -20.0% -18.4%

Wilmar International Limited (Reuters: WLIL.SI, Bloomberg: WIL SP)

$ in mn, year-end Dec FY10A FY11A FY12E FY13E FY14ERevenue ($ mn) 30,378 44,710 51,384 58,227 67,153Net Profit ($ mn) 1,324 1,601 1,334 1,642 1,694Net Profit (Recurring) ($ mn) 1,052 1,517 1,334 1,642 1,694EPS ($) 0.21 0.25 0.21 0.26 0.26EPS (Recurring) ($) 0.16 0.24 0.21 0.26 0.26DPS ($) 0.04 0.05 0.04 0.05 0.05Revenue growth (%) 27% 47% 15% 13% 15%EPS growth (%) (28%) 21% (17%) 23% 3%EPS (Recurring) Growth (33%) 44% (12%) 23% 3%ROE 12% 13% 10% 11% 10%P/E (x) 14.2 11.8 14.1 11.5 11.1P/BV (x) 1.6 1.4 1.3 1.2 1.1Dividend Yield 1.4% 1.7% 1.4% 1.7% 1.8%Source: Company data, Bloomberg, J.P. Morgan estimates.

Company Data52-week Range (S$) 6.05 - 3.7Mkt Cap (S$ mn) 24,071.9Mkt Cap ($ bn) 18.8Price (S$) 3.7Date Of Price 28 May 1Free float (%) 24.03-mth trading volume 9.93-mth trading value (S$ mn) 43.33-mth trading value ($ mn) 33.8FTSTI 2,77Exchange Rate 1.2Fiscal Year End De

See page 12 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware ththe firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singfactor in making their investment decision.

3.5

4.0

4.5

5.0

5.5

6.0

S$

May-11 Aug-11 Nov-11 Feb-12 May-12

Price Performance

WLIL.SI share price (S$)

FTSTI (rebased)

Oilseeds crush margin recovery in April appears short-lived,

downgrade to Neutral: Based on our calculations as well as on industrysources such as the China National Grains & Oils Information Center, thestrong recovery in China soybean crush margin was short-lived, withdowntrend continuing through May. We now see little likelihood of theoilseeds & grains segment reversing its losses in 1Q12.

Consensus forecast may still have downside - heightened probability ofa 2Q12 miss: Following the weak 1Q12 results, consensus revised FY12earnings down by c.9% while we have revised down by 17%, leaving us 9%below consensus. With the tough crush margin environment, it now appearslikely that 2Q12 may see flat to weaker earnings Q/Q. Assuming flat Q/Q

earnings for 2Q12, Wilmar will need to deliver c.US$572 million of corenet profit each for 3Q12 and 4Q12. However, Wilmar's best quarter was in3Q09 with core net profit of US$486 million, when the oilseeds & grainssegment reported a US$50/MT margin. We therefore believe consensusearnings estimate has further downside of c.20-30%, if oilseeds crushmargin remains under pressure into 2H12.

Limited sugar growth with lower price outlook and long plantations

gestation: Sugar price has corrected c.14% YTD. Even if Wilmar hashedged most of its sugar prices for FY12E, the bearish price outlook mayimply little to no growth in the segment in FY13E since the Papuaplantations are still in the gestation phase. JPM Global Commodities teamsees sugar trending down to 18cts/lb as it expects global surplus through

2013 - the last time there was a global surplus was between 2002 and 2004when futures price fell to an intraday low of 5.27cts/lb (12-Feb-04).

Downgrade to N, Jun-13 SOTP PT S$4.30: We forecast -US$5/MTmargin for FY12E oilseeds & grains, trimming earnings by a further 6%. Wenow value both the oilseeds & grains and the sugar segments at book valuein our SOTP, given the lack of oilseeds margin recovery and the slow pacein sugar plantations ramp-up. Our new PT implies 16x/13x FY12E/FY13EP/E, implying a de-rating from the mean of 19x on which it has been trading.
https://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-849572-0.pdfhttps://mm.jpmorgan.com/PubServlet?action=open&doc=GPS-849572-0.pdf


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Ying-Jian Chan, CFA(65) [email protected]

Company Description P&L sensitivity metrics EBITDA EPimpact (%) impact (%

Wilmar International is engaged in the businessesof oil palm cultivation, oilseeds crushing, edibleoils refining, consumer pack edible oils processingand merchandising, specialty fats, oleochemicals,biodiesel, fertilisers and soy proteinmanufacturing, rice and flour milling, and grainsmerchandising. Its strategy involves building anintegrated business model to capture the entirevalue chain of the agricultural commodityprocessing business, from origination, processingand transportation to the branding, merchandisingand distribution of a wide range of products.

Palm & laurics margin assumption FY12E: 35.Impact of each US$10 increase 9.0 13.

Oilseeds & grains margin assumption FY12E: -5.Impact of each US$10 increase 8.8 13.

Consumer products margin assumption FY12E: 35.Impact of each US$10 increase 1.9 2.

Source: J.P. Morgan estimates.

Price target and valuation analysisOur Jun-2013 PT of S$4.30 is based on sum-of-the-parts as shown below:

Revenue breakdown (FY12E) P/E (x) Per shareMerchandising & processing- Palm and laurics 12.0 1.2- Oilseeds and grains 0.0 0.5Consumer products 12.0 0.2Plantation and palm oil mills 15.0 1.1Sugar 0.0

Associates 9.0 0.1RNAV for property investments 0.0

Fair value of Wilmar International (US$) 3.3Fair value of Wilmar International (S$) 4.3Price target (S$) 4.3

Source: J.P. Morgan estimates

Core net income: J.P. Morgan vs consensusUS$ MM J. P. Morgan Consensus Our Jun-2013 PT implies 16x/13x FY12E/FY13E P/E. Key downside risks: (1)

losses from palm oil and/or oilseeds arising from wrong directional trades; (2)margin compression from competition. Key upside risks include (1) strong recoverin oilseeds crush margin, and (2) delay in Malaysian countermeasures to favorablIndonesia palm oil export tax structure sustaining high Indonesian refining margin.

FY12E 1,334 1,555FY13E 1,642 1,803FY14E 1,694 1,989

Source: J.P. Morgan estimates, Bloomberg.

Peer valuation comparison

Ticker Price Rating Mkt cap P/E EV/ha (US$) 2yr EPS CAGR P/B ROE Div Yld Target

(LC) (US$mn) CY12E CY13E FY12E 2012 - 2013E FY12E FY12E FY12E (LC)First Resources FR SP 1.60 OW 1,975 11.3 9.8 25,735 9.7% 2.0 17.7 2.2% 2.20Golden Agri GGR SP 0.65 N 6,138 10.7 10.0 20,574 1.4% 0.7 6.9 2.8% 0.75Indofood Agri IFAR SP 1.20 OW 1,354 8.1 7.4 12,977 12.1% 0.9 11.4 0.3% 1.90Kencana Agri KAGR SP 0.33 NR 297 14.4 9.2 NA 18.3% 1.1 8.3 1.5% NRMewah International MII SP 0.41 N 484 9.7 7.9 NA 35.8% 0.8 9.0 2.6% 0.52Wilmar International WIL SP 3.76 N 18,872 14.1 11.5 NA 4.0% 70.7 2.2 1.3% 4.30Weighted average 9,951 10.4 9.5 19,564 6.2% 1.0 9.7 2.4%

Source: J.P. Morgan estimates, Bloomberg, Bloomberg consensus for Kencana. Prices as of 28 May 2012 market close.

46%

27%

14%

4%3% 6%

Palm and laurics Oilseeds & grains

Consumer Plantation & PO mills

Sugar Others


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Oilseeds weakness may extend to 2Q

Recovery in April appears short-lived

Based on our calculations as well as from industry sources such as the China

National Grains & Oils Information Center, the strong recovery in China soybean

crush margin was short-lived, with downtrend continuing through May. According to

a recent Bloomberg article, Chinese buyers have cancelled one to two soybean

cargoes and deferred two to three shipments China may default or defer on more

cargoes going forward as the losses at crushers may widen... The government is

selling its soybean stockpiles to increase supply while theres no sign of recovery in

the downstream markets such as soybean meal and soybean oil, according to the

report.

We therefore believe the likelihood of the oilseeds & grains segment reversing its

losses in 1Q12 is now quite low, as the weakness in the segment extends into 2Q,unless Wilmar is able to generate trading profits to boost its per MT margin.

Figure 1: China back-to-back oilseeds crush marginUS$/MT

Source: J.P. Morgan estimates, Bloomberg.

Further downside to consensus forecast -2Q12 may miss again

Following the weak 1Q12 results, consensus revised FY12 earnings down by c.9%

while we have revised down by 17%, leaving us 9% below consensus. With thetough crush margin environment, it now appears likely that 2Q12 may see flat to

weaker earnings Q/Q.

Assuming flat Q/Q earnings for 2Q12, Wilmar will need to deliver c.US$572 million

of core net profit each for 3Q12 and 4Q12. However, Wilmar's best quarter was in

3Q09 with core net profit of US$486 million, and oilseeds & grains segment

reporting US$50/MT of margin then. We therefore believe consensus earnings

estimates have further downside of c.20-30%, if oilseeds crush margin remains under

pressure into 2H12.

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Figure 2: Quarterly profit trend and estimates (assuming 2Q12 to be flat Q/Q)

Source: J.P. Morgan estimates, Company data.

Bearish sugar price outlook

Sugar price has corrected c.14% YTD. Even if Wilmar has hedged most of its sugar

prices for FY12E, the bearish price outlook may imply little to no growth in the

segment in FY13E since the Papua plantations are still in the gestation phase.

Figure 3: Sugar price trendUS cts/lb

Source: Bloomberg.

JPM Global Commodities team sees sugar trending down to 18cts/lb as it expects

global surplus through 2013 - the last time there was a global surplus was between

2002 and 2004 when futures price fell to an intraday low of 5.27cts/lb (12-Feb-04).

486

206 206

572 572

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Core net profit (US$ in millions) (L) Oilseeds & grains margin (US$/MT) (R)

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Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12


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Figure 4: Largest global stock-building period since 2002 to 2004

Million MT

Source: ISO, J.P. Morgan Commodities Research.

Figure 5: J.P. Morgan Agricultural Commodity Price Forecasts

Source: J.P. Morgan Commodities Research.

Changes to earnings estimates and PT

Downgrade to Neutral, Jun-13 SOTP PT of S$4.30We now forecast -US$5/MT margin for FY12E oilseeds & grains, trimming earnings

by a further 6%. We also now value both the oilseeds & grains and the sugar

segments at book value in our SOTP, given the lack of oilseeds margin recovery and

the slow pace in sugar plantations ramp-up. Our new PT implies 16x/13x

FY12E/FY13E P/E, signifying a de-rating from the mean of 19x that it has been

trading.


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Table 1: Key assumptions

US$ in millions, unless otherwise stated

FY08 FY09 FY10 FY11 FY12E FY13E FY14EVol by seg ('000 MT)Merchandising & proc'ing 32,721 34,678 39,101 40,245 48,195 53,305 60,787- Palm and laurics 19,433 19,070 20,820 20,306 24,367 26,804 29,484- Oilseeds and grains(total)

13,288 15,608 18,281 19,939 23,828 26,501 31,303

- Oilseeds 13,288 15,608 18,281 19,939 21,933 24,126 26,539- Rice 401 671 1,079 1,355 2,724- Flour 510 510 816 1,020 2,040Consumer products 3,062 3,191 3,679 4,397 5,057 5,815 6,687Plantation and palm oilmills- FFB production 2,960 3,213 3,349 4,073 4,191 4,316 4,446- CPO production 1,505 1,576 1,598 1,779 2,106 2,169 2,234- Palm kernel product ion 350 368 372 414 491 505 520Sugar- Milling 2,669 2,168 2,295 2,550

- Merchandising & proc'ing 2,458 1,348 1,348 1,348Vol growth by segMerchandising & proc'ing 31.8% 6.0% 12.8% 2.9% 19.8% 10.6% 14.0%- Palm and laurics 38.9% -1.9% 9.2% -2.5% 20.0% 10.0% 10.0%- Oilseeds and grains(total)

22.7% 17.5% 17.1% 9.1% 19.5% 11.2% 18.1%

Consumer products 71.7% 4.2% 15.3% 19.5% 15.0% 15.0% 15.0%Plantation and palm oilmills- FFB production 30.6% 8.5% 4.2% 21.6% 2.9% 3.0% 3.0%- CPO production 26.1% 4.7% 1.4% 11.3% 18.4% 3.0% 3.0%- Palm kernel production 25.1% 5.0% 1.0% 11.3% 18.6% 3.0% 3.0%Sugar -18.8% 5.9% 11.1%- Milling -45.2% 0.0% 0.0%- Merchandising & proc'ingPBT by segment 1,789 2,294 1,644 2,079 1,727 2,126 2,193Merchandising & proc'ing 1,235 1,300 705 1,009 734 1,071 1,041- Palm and laurics 645 693 587 586 853 938 885- Oilseeds and grains 590 607 118 423 (119) 133 157Consumer products 75 225 150 85 177 204 234Plantation and palm oilmills

327 397 636 734 649 669 689

Sugar 141 91 101 117Others 73 84 189 42 69 83 99Share of associates'profits

111 46 38 185 103 116 134

Unallocated expenses (32) 242 (73) (117) (96) (117) (122)PBT growth by segment 116% 28% -28% 26% -17% 23% 3%Merchandising & proc'ing 179% 5% -46% 43% -27% 46% -3%- Palm and laurics 150% 7% -15% 0% 46% 10% -6%- Oilseeds and grains 219% 3% -81% 260% -128% -211% 18%Consumer products -28% 198% -33% -43% 107% 15% 15%Plantation and palm oil

mills

15% 21% 60% 15% -12% 3% 3%

Sugar -35% 11% 16%Others 413% 16% 125% -78% 66% 20% 20%Share of associates'profits

86% -58% -18% 386% -45% 13% 15%

Unallocated expenses -59% -859% -130% 62% -18% 23% 4%% PBT 100% 100% 100% 100% 100% 100% 100%Merchandising & proc'ing 69% 57% 43% 49% 42% 50% 47%- Palm and laurics 36% 30% 36% 28% 49% 44% 40%- Oilseeds and grains 33% 26% 7% 20% -7% 6% 7%Consumer products 4% 10% 9% 4% 10% 10% 11%Plantation and palm oilmills

18% 17% 39% 35% 38% 31% 31%

Sugar 0% 0% 0% 7% 5% 5% 5%Others 4% 4% 11% 2% 4% 4% 5%


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Share of associates'profits

6% 2% 2% 9% 6% 5% 6%

Unallocated expenses -2% 11% -4% -6% -6% -6% -6%

PBT/MT by segment(US$/MT)Merchandising & proc'ing 37.75 37.48 18.02 25.07 15.22 20.09 17.13- Palm and laurics 33.19 36.33 28.20 28.85 35.00 35.00 30.00- Oilseeds and grains(blended)

44.43 38.88 6.43 21.21 (5.00) 5.00 5.00

- Oilseeds 6.43 21.21 (5.00) 5.00 5.00- Rice 0.00 0 .00 (5.00) 5.00 5.00- Flour 0.00 0 .00 (5.00) 5.00 5.00Consumer products 24.65 70.59 40.72 19.40 35.00 35.00 35.00Sugar - milling 29.67 32.47 35.44Sugar - refining 20.00 20.00 20.00

Source: J.P. Morgan estimates, Company data.

Figure 6: Bloomberg consensus earnings revision and share price

Source: Bloomberg.

PBT/MT marginOilseeds & grains

FY12E: From US$0 to US$5


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Table 2: Wilmar sum of parts valuation

US$ in millions, unless otherwise stated

FY12E PATMI P/E Valuation Per share RemarksMerchandising & processing- Palm and laurics 659 12.0x 7,905 1.23 30% to Malaysian refining peer, Mewah, due to Indonesia

exposure and global operations.- Oilseeds and grains 3,424 0.53 Valued at FY12E book value.Consumer products 137 12.0x 1,640 0.26 In line with the palm & laurics segment.Plantation and palm oil mills 501 15.0x 7,520 1.17 In line with target P/E for major Malaysian and Indonesian

peers.Sugar 369 0.06 Valued at book value.Associates 79 9.0x 714 0.11 In line with P/E applied to value China Agri-IndustriesRNAV for property investments 25 0.00 Based on Wilmar's 35% stake in JV.Fair value of Wilmar International (US$) 21,598 3.37Fair value of Wilmar International (S$) 4.30Price target (S$) 4.30Current price (S$) 3.76Upside to price target 14%No of shares outstanding (million) 6,403

Source: J.P. Morgan estimates.

Figure 7: 12-month forward P/E(x)

Source: J.P. Morgan estimates, Company data, Bloomberg.

Figure 8: 12-month trailing P/B(x)

Source: J.P. Morgan estimates, Company data, Bloomberg.

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-06

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-06

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-07

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-08

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-11

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12M Fwd P/E Mean -2 S.D. -1 S.D. +1 S.D. +2 S.D.

+2 SD: 16.2x

+1 SD: 12.6xMean: 9.0x

-1 SD: 5.4x

-2 SD: 1.8x

+2 SD: 23.6x

x

+1 SD: 21.2xMean: 18.9x

-1 SD: 16.6x

-2 SD: 14.2x

Re-rating post Wilmar

China IPO news.

0.0

0.51.0

1.5

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3.03.5

4.0

Jun-07

Aug-07

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12M Trailing P/B Mean -2 S.D. -1 S.D. +1 S.D. +2 S.D.

Mean: 2.1x

Mean: 2.3x

-1 SD: 1.4x

+1 SD: 2.8x

+1 SD: 2.7x

-1 SD: 2.0x


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Table 3: Regional peer valuation comparison

As at: 28 May-12 Ticker Price Rtg Mkt cap P/E EV/ha

(US$)

2yr EPS

CAGR

P/B ROE Div Yld Target

(LC) (US$mn) CY12E CY13E FY12E 2012 - 13E FY12E FY12E FY12E (LC)

IndonesiaAstra Agro Lestari AALI IJ 19,600 N 3,307 11.3 11.1 18,549 4.9% 3.4 31.5 5.8% 22,500Bakrie Sumatera Plant UNSP IJ 250 NR 367 6.2 5.2 NA -6.0% 0.4 5.9 0.8% NRBW Plantation BWPT IJ 1,240 NR 537 12.7 9.1 NA 31.1% 2.8 25.0 1.0% NRLondon Sumatra Indon LSIP IJ 2,475 OW 1,809 10.7 11.3 16,655 0.4% 2.6 26.6 3.7% 2,900Salim Ivomas Pratama SIMP IJ 1,200 NR 2,034 10.4 8.8 NA 9.0% 1.3 13.5 2.4% NRSampoerna Agro SGRO IJ 2,775 NR 562 9.0 8.0 NA 9.9% 1.8 21.1 3.7% NR

Weighted average* 5,116 11.1 11.2 17,880 3.3% 3.1 29.8 5.1%MalaysiaGenting Plantations GENP MK 9.04 UW 2,180 14.3 13.3 34,409 7.6% 1.9 14.1 1.7% 8.60Hap Seng Plantations HAPL MK 2.91 NR 740 10.2 9.4 NA -1.0% 1.2 11.7 6.6% NRIJM Plantations IJMP MK 3.00 NR 764 12.7 11.8 NA 7.6% 1.7 13.8 3.0% NRIOI Corporation IOI MK 5.00 UW 10,209 14.8 13.4 54,420 9.2% 2.4 16.2 3.5% 5.00Kuala Lumpur Kepong KLK MK 22.08 N 7,490 15.5 13.6 42,842 5.9% 3.1 19.8 3.6% 24.10Kulim Malaysia KUL MK 4.60 NR 1,845 13.1 12.2 NA -8.2% 1.3 12.5 1.3% NR

Sarawak Plantation SPLB MK 2.58 NR 230 7.8 6.8 NA 13.2% NA 14.2 6.5% NRSime Darby SIME MK 9.52 OW 18,179 13.0 11.7 25,067 10.9% 2.2 16.5 3.6% 11.60Weighted average* 38,057 14.0 12.6 36,975 9.3% 2.4 16.9 3.5%

SingaporeFirst Resources FR SP 1.60 OW 1,975 11.3 9.8 25,735 9.7% 2.0 17.7 2.2% 2.20Golden Agri-Resources GGR SP 0.65 N 6,138 10.7 10.0 20,574 1.4% 0.7 6.9 2.8% 0.75Indofood Agri Resources IFAR SP 1.20 OW 1,354 8.1 7.4 12,977 12.1% 0.9 11.4 0.3% 1.90Kencana Agri KAGR SP 0.33 NR 297 14.4 9.2 NA 18.3% 1.1 8.3 1.5% NRMewah International MII SP 0.41 N 484 9.7 7.9 NA 35.8% 0.8 9.0 2.6% 0.52Wilmar International WIL SP 3.76 N 18,872 14.1 11.5 NA 4.0% 70.7 2.2 1.3% 4.30Weighted average* 9,951 10.4 9.5 19,564 6.2% 1.0 9.7 2.4%Sector weightedaverage*

53,125 13.1 11.9 49,436 8.1% 2.2 16.8 3.4%

Source: J.P. Morgan estimates, Bloomberg, Bloomberg consensus for stocks Not Rated (NR).


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Wilmar International Limited: Summary of FinancialsIncome Statement Cash flow statement$ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E $ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E

Revenues 30,378 44,710 51,384 58,227 67,153 Profit before tax 1,644 2,079 1,727 2,126 2,193% change Y/Y 27% 47% 15% 13% 15% Depreciation & amortization 251 480 556 643 730

Gross Margin 8.3% 8.7% 7.2% 7.4% 7.0% Change in working capital -3,926 22 -1,352 -1,386 -1,808EBITDA 1,814 2,737 2,572 3,030 3,195 Other non-cash items -58 161 309 276 302

% change Y/Y -28.7% 50.8% -6.1% 17.8% 5.5% Cash flow from operations -2,319 1,948 538 899 616

EBITDA Margin 6% 6% 5% 5% 5% Capex -997 -1,482 -1,500 -1,500 -1,500EBIT 1,563 2,257 2,015 2,387 2,465 Disposal/(purchase) 111 47 0 0 0

% change Y/Y (32%) 44% (11%) 18% 3% Cash flow from investing -2,629 -2,068 -1,500 -1,500 -1,500EBIT Margin 5% 5% 4% 4% 4% Equity raised/(repaid) 12 11 0 0 0

Net Interest -73 -259 -391 -377 -406 Debt raised/(repaid) 7,665 3,762 3,111 0 0Earnings before tax 1,644 2,079 1,727 2,126 2,193 Other -2,337 -2,494 0 0 0

% change Y/Y -28.3% 26.4% -16.9% 23.1% 3.2% Dividends paid -385 -280 -267 -328 -339Tax -190 -379 -311 -383 -395 Cash flow from financing 4,956 1,000 2,844 -328 -339

as % of EBT 11.5% 18.2% 18.0% 18.0% 18.0% Net change in cash 8 879 1,882 -929 -1,223Minority Interest -131 -99 -82 -101 -104 Beginning cash 5,135 6,788 7,898 9,781 8,852

Net income (reported) 1,324 1,601 1,334 1,642 1,694 Ending cash 5,143 7,667 9,781 8,852 7,629% change Y/Y (30%) 21% (17%) 23% 3%

Net Profit (Recurring) 1,052 1,517 1,334 1,642 1,694Shares outstanding 6,400 6,402 6,402 6,402 6,402 Free cash flow -3,316 466 -962 -601 -884

EPS (reported) 0.21 0.25 0.21 0.26 0.26 DPS 0.04 0.05 0.04 0.05 0.05

Balance sheet Ratio Analysis

$ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E $ in millions, year end Dec FY10 FY11 FY12E FY13E FY14E

Cash 6,788 7,898 9,781 8,852 7,629 EBITDA margin 6% 6% 5% 5% 5%

Accounts receivable 3,126 3,503 4,026 4,562 5,261 EBIT margin 5% 5% 4% 4% 4%Inventories 6,737 7,265 8,350 9,462 10,912 Net profit margin 4% 4% 3% 3% 3%

Others 3,375 5,098 5,098 5,098 5,098 SG&A/Sales 4.9% 5.7% 5.3% 5.4% 5.4%

Current assets 20,026 23,765 27,255 27,973 28,900

LT investments 1,270 1,579 1,579 1,579 1,579 Sales growth 27% 47% 15% 13% 15%Net fixed assets 6,112 7,469 8,413 9,269 10,039 EBIT growth (32%) 44% (11%) 18% 3%

Total Assets 33,969 39,640 44,073 45,649 47,345 Net profit growth (30%) 21% (17%) 23% 3%EPS growth (28%) 21% (17%) 23% 3%

Short-term loans 14,904 18,409 20,000 20,000 20,000

Payables 1,447 1,710 1,965 2,227 2,568 Interest coverage (x) 25 11 7 8 8Others 1,918 2,011 2,011 2,011 2,011 Net debt to equity 87% 95% 96% 94% 94%

Total current liabilities 18,269 22,130 23,976 24,238 24,579Long-term debt 2,522 2,480 4,000 4,000 4,000 Sales/assets 106% 121% 123% 130% 144%

Other liabilities 621 782 782 782 782 Assets/equity 166% 159% 305% 290% 277%Total Liabilities 21,412 25,391 28,758 29,019 29,361 ROCE 6% 7% 6% 6% 6%

Shareholders' equity 11,856 13,370 14,437 15,751 17,106 ROE 12% 13% 10% 11% 10%

Total Liabilities & equity 33,969 39,640 44,073 45,649 47,345

BVPS 1.85 2.09 2.26 2.46 2.67

Source: Company reports and J.P. Morgan estimates.


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JPM Q-ProfileWilmar International Ltd. (SINGAPORE / Consumer Staples)As Of: 25-May-2012 [email protected]

Local Share Price Current: 3.80 12 Mth Forward EPS Current: 0.26

Earnings Yield (& local bond Yield) Current: 9% Implied Value Of Growth* Cur rent: - 29 .08%

PE (1Yr Forward) Current: 11.6x Price/Book Value Current: 1.4x

ROE (Trailing) Current: 11.35 Dividend Yield (Trailing) Current: 1.23

Summary

Wilmar International Ltd. 19988.13 As Of:

SINGAPORE 41.03575 SEDOL B17KC69 Local Price: 3.80

Consumer Staples Food Products EPS: 0.26

Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg

12mth Forward PE 11.56x 9.25 28.80 16.22 16.99 26.10 7.87 -20% 149% 40% 47%

P/BV (Trailing) 1.40x 0.53 9.66 2.03 2.27 5.93 -1.39 -62% 588% 44% 62%

Dividend Yield (Trailing) 1.23 0.00 2.78 0.41 0.61 2.10 -0.87 -100% 125% -67% -50%

ROE (Trailing) 11.35 -64.86 42.43 12.18 7.74 57.48 -41.99 -672% 274% 7% -32%

Implied Value of Growth -29.1% -0.33 0.56 0.18 0.15 0.64 -0.34 -13% 291% 163% 151%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

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Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple researchanalysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document

individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report.

Important Disclosures

Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of WilmarInternational Limited: Ying-Jian Chan.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Wilmar InternationalLimited.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the followingcompany(ies) as clients, and the services provided were non-investment-banking, securities-related: Wilmar International Limited.

Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,and the services provided were non-securities-related: Wilmar International Limited.

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment bankingservices in the next three months from Wilmar International Limited.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or servicesother than investment banking from Wilmar International Limited.

Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgancovered companies by visiting https://mm.jpmorgan.com/disclosures/company , calling 1-800-477-0406, or [email protected] with your request.

Date Rating Share Price(S$)

Price Target(S$)

22-Jun-09 OW 4.88 5.8014-Aug-09 OW 6.55 6.80

25-Sep-09 N 6.99 6.80

12-Nov-09 N 6.60 6.60

11-Jan-10 N 6.90 6.80

25-Jan-10 OW 6.69 9.00

13-Aug-10 OW 6.27 8.20

06-Oct-10 OW 5.91 7.80

10-Nov-10 OW 6.51 7.20

03-Jan-11 UW 5.66 4.60

04-Mar-11 N 5.19 5.40

18-Jul-11 OW 5.65 6.50

16-Feb-12 OW 5.79 6.80

22-Feb-12 OW 5.86 6.00

10-May-12 OW 4.27 5.20

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entireperiod.J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = Underweight

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months,we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverageuniverse.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocksin the analyst's (or the analyst's team's) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, each

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Wilmar International Limited (WLIL.SI, WIL SP) Price Chart

N S$6.8OW S$9 OW S$7.2 OW S$5

OW S$6.8N S$6.8 OW S$7.8N S$5.4 OW S$6

OW S$5.8N S$6.6 OW S$8.2UW S$4.6OW S$6.5OW S$6.8

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

Initiated coverage Jun 22, 2009.
https://mm.jpmorgan.com/disclosures/companyhttps://mm.jpmorgan.com/disclosures/companymailto:[email protected]://mm.jpmorgan.com/disclosures/companymailto:[email protected]


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stocks expected total return is compared to the expected total return of a benchmark country market index, not to those analystscoverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analysts coverage universe can

be found on J.P. Morgans research website, www.morganmarkets.com.

Coverage Universe: Chan, Ying-Jian: China Agri-Industries (0606.HK), China Minzhong Food Corporation Limited (CMFC.SI),ComfortDelgro (CMDG.SI), First Resources Limited (FRLD.SI), Golden Agri-Resources Ltd (GAGR.SI), Indofood Agri Resources Ltd(IFAR.SI), Mewah International Inc (MEWI.SI), SMRT (SMRT.SI), ST Engineering (STEG.SI), SingPost (SPOS.SI), WilmarInternational Limited (WLIL.SI)

J.P. Morgan Equity Research Ratings Distribution, as of April 3, 2012

Overweight(buy)

Neutral(hold)

Underweight(sell)

J.P. Morgan Global Equity Research Coverage 45% 43% 12%

IB clients* 51% 45% 34%

JPMS Equity Research Coverage 43% 48% 9%

IB clients* 70% 61% 53%

*Percentage of investment banking clients in each rating category.For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold

rating category; and our Underweight rating falls into a sell rating category.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for coveredcompanies, please see the most recent company-specific research report athttp://www.morganmarkets.com , contact the primary analystor your J.P. Morgan representative, or [email protected] .

Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation basedupon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues,which include revenues from, among other business units, Institutional Equities and Investment Banking.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-USaffiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS,and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, publicappearances, and trading securities held by a research analyst account.

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Options related research: If the information contained herein regards options related research, such information is available only to persons who havereceived the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options,

please contact your J.P. Morgan Representative or visit the OCC's website at http://www.optionsclearing.com/publications/risks/riskstoc.pdf

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Wilmar by JPM 28 May 2012

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