Wilmar International Limited (SGX: F34) Share Price at S$4.26: Here's What You Should Know About the Company
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Wilmar International Limited (SGX: F34) Share Price at S$4.26: Here's What You Should Know About the Company

Sudhan P
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As of the time of writing, Wilmar International Limited (SGX: F34), an agribusiness group, has a share price of S$4.26.

Those who are looking to invest in the company, however, should go beyond the share price to understand more about its business.

In this article, let’s quickly explore Wilmar’s business, including its historical financial highlights, major business risk, and valuation.

What’s Wilmar’s Business About? 

Wilmar was founded in 1991 and prides itself in being Asia’s leading agribusiness group.

Currently, it has over 900 manufacturing plants in 32 countries and regions.

Wilmar’s business is broken down into four segments:

  • Tropical Oils (Plantation and Manufacturing)
  • Oilseeds and Grains (Manufacturing and Consumer Products)
  • Sugar (Milling, Merchandising, Refining and Consumer Products)
  • Others

Wilmar mainly makes money from the sales of agricultural commodities and consumable products.

Wilmar’s Financial Highlights 

Here, let’s explore how Wilmar has been performing financially over the past five years (the company has a 31 December year-end):

 20152016201720182019
Revenue
(US$' million)
38,77741,40243,57444,49842,641
Profit before tax from continuing operations
(US$' million)
1,3791,3001,5631,6121,698
Net profit – including discontinued operations
(US$' million)
1,0239721,1961,1251,293
Return on equity (%)7.06.77.97.07.9
Net gearing (x)0.820.810.790.840.79
Net asset value per share
(US cents)
227.8228.5252.4253.6264.4

From 2015 to 2019, Wilmar’s revenue grew from US$38.8 billion to US$42.6 billion, up by just 2.4% per annum.

Its net profit increased by a slightly faster rate at 6% annually, from US$1.0 billion in 2015 to US$1.3 billion in 2019.

Businesses in the commodity industry tend to be low margin ones and Wilmar is no exception. Wilmar’s net profit margin for 2019 stood at 3%.

The net profit margin reveals how much net profit a firm makes for every dollar of revenue it generates.

Generally, the higher the figure, the better it is.

Moving on, return on equity (ROE) has hovered around 7% to 8% over the last five years, which is low.

ROE shows how efficient a company’s management is in using shareholders’ capital.

The less-than-ideal ROE figure was also discussed in Wilmar’s latest annual general meeting, on top of its business performance for 2019.

Wilmar-International-AGM

Wilmar’s Dividend History

Here’s a look at Wilmar’s dividend and dividend payout ratio from 2015 to 2019:

 Total dividend per share
(Singapore cents)
Dividend payout ratio (%)
20158.036
20166.531
201710.039
201810.543
201912.545

Wilmar has rewarded shareholders handsomely as its dividend has grown by around 12% annually in the last five years.

It has done so by mainly increasing its dividend payout ratio, from 36% in 2015 to 45% in 2019.

The dividend payout ratio tells investors what percentage of a company’s earnings are paid out yearly as a dividend.

Major Risk for Wilmar to Take Note Of

In 2019, even though Wilmar’s sales volume grew 3.8%, lower commodity prices resulted in a 4.2% decline in revenue to US$42.6 billion.

Movement of commodity prices is something that is beyond Wilmar’s control, so investors have to be aware of this risk.

In my opinion, investors would be better off investing in companies that can raise prices without reducing demand for its products (pricing power).

A company with high pricing power could mean that it has an economic moat to keep competitors at bay.

Wilmar’s Share Price and Valuation

Wilmar’s share price has increased by 32% in the last five years.

Wilmar share price
Source: Google Finance

At Wilmar’s share price of S$4.26, it has a price-to-earnings ratio of 15 and a dividend yield of 2.9%.

Want to Discuss Further on Wilmar?

Why not check out the Seedly Community and participate in the lively discussion surrounding stocks such as Wilmar (SGX: F34) and many more!

Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock.

About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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