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Goodman Fielder Rejected Wilmar, But So What?
Tradeable, Tradeable Ideas | 30 April 2014
Related stocks:
F34
By: Lim Si Jie
Articles (169) Profile
  1. Wilmar’s cheap valuations and consistent dividend yield give investors confidence to invest.
  2. Analysts are very bullish about the prospects of Wilmar
  3. Wilmar has utilised its strong cash flows to invest selectively in projects that complement its existing operations and also in new growth markets in recent years.

Company Profile & Business Model

Wilmar International Limited operates in seven segments: palm & laurics, oilseeds & grains segment, consumer products, plantation & palm oil mills, and milling segment.

Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, specialty fats, oleo chemical, biodiesel and fertiliser manufacturing and grain processing. It has over 450 manufacturing plants and an extensive distribution network covering China, India, Indonesia and some 50 other countries.

Wilmar is currently the world’s largest processor and merchandiser of palm and lauric oils, as well as largest in edible oils refining and fractionation, oleo chemicals, specialty fats and palm biodiesel

Fundamental Analysis

Analysts’ Recommendations

Source: Factset

As you can see, analysts are very optimistic about the performance of Wilmar in the near future. Most analysts are recommending taking a long position on Wilmar.

Corporate Development

In recent years, Wilmar has utilised its strong cash flows to invest selectively in projects that complement its existing operations and also in new growth markets. These investments have begun to make meaningful contribution to its performance in FY2013.

Recently, Wilmar had its $1.2 billion takeover proposal rejected by Goodman Fielder, Australia’s largest baker. This $1.2 billion takeover bid is an all cash offer from Wilmar. I view this as an attempt by Wilmar to strengthen its operations in the consumer products segment.

With $11.99 billion cash and liquid investments sitting inside Wilmar’s pocket, spending it for acquisitions is a shrewd move by Wilmar without affecting its daily operations.

#Bullish

Although Wilmar’s bid for Goodman Fielder was rejected, I am still pretty bullish about Wilmar’s future prospects, especially with the relatively attractive valuations as well as a strong management that actively seeks improve their core business operations via M&A.

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Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

Wilmar Int'l  3.820 +0.10 +2.69%   
Business: Co's integrated agribusiness model encompasses the entire value chain of the agricultural commodity processing biz, from origination and processing to branding, merchandising and distribution of a wide range of agricultural pdts.

Insight: May-19, 1Q19 revenue fell 6.2% to US$10.4b driven ... Read More


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