Broker: OCBC Investment Research

Date of Report: 14 August 2025

Wilmar International: Navigating a Mixed 2025 With China’s Resilience and Operational Strength

Wilmar International: A Vertically Integrated Agribusiness Powerhouse

Wilmar International Limited, established in 1991 and headquartered in Singapore, stands as a leading agribusiness group in Asia. Its expansive operations span oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining, as well as the manufacturing of consumer products, specialty fats, oleochemicals, biodiesel, fertilizers, and flour and rice milling. Wilmar’s integrated business model covers the entire value chain, from cultivation and processing to merchandising and manufacturing, enabling cost efficiencies and operational synergies across more than 1,000 manufacturing plants and a vast distribution network covering China, India, Indonesia, and over 50 countries worldwide.
With a workforce of around 90,000 employees and its own fleet of distribution vessels, Wilmar commands a leading share in consumer-packed agricultural products across Asia and Africa. The company’s scale and integration allow it to extract margins at every step, ensuring resilience and competitive advantage in diverse market conditions.

1H25 Performance: Higher Taxes and Segment Headwinds Temper Growth

Wilmar’s 1H25 results reflected a mixed performance:

• Revenue: USD 32.9 billion, up 6.3% year-on-year.
• Net Profit: USD 594.9 million, a 2.6% increase year-on-year.
• Core Net Profit: USD 583.7 million, down 3.7% year-on-year, missing expectations.
• Interim Dividend: 4 Singapore cents per share, a 33.3% year-on-year decrease, reflecting management’s conservative stance amid regulatory and legal uncertainties in Indonesia.
• Share of Profits from Associates and JVs: More than doubled year-on-year to USD 196.5 million, benefiting from Asian investments.

Segment Performance Highlights

• Food Products: Revenue rose 5% year-on-year, driven by higher sales volumes in consumer and bulk products. Profit before tax jumped 34% to USD 195.7 million, mainly due to robust flour and rice performance in China.
• Feed & Industrial Products: Revenue increased 7% year-on-year to USD 20.3 billion, but profit before tax plunged 29% to USD 381.6 million. Stronger crush margins and higher demand in oilseeds and grains were offset by weak refining margins in tropical oils and lower sugar merchandising volumes.
• Plantations & Sugar Milling: Benefited from higher palm oil prices and increased sugar milling sales volumes (+15% year-on-year), leading to a 16% rise in revenue and over 100% increase in profit before tax.

2H25 Outlook: China’s Recovery Balances Operational Challenges

Looking ahead, Wilmar anticipates a mixed performance for the second half of 2025. The Food Products segment is expected to remain robust, supported by an improving macro environment in China. Soybean crush margins have improved, aided by stable soymeal demand and lower soybean prices in China. Management expects stable crushing operations and favorable plantations business in 2H25.
However, refining margins for tropical oils are likely to remain under pressure, particularly in Indonesia and Malaysia. Regulatory and legal headwinds in Indonesia continue to be a concern, prompting a cautious cash flow approach.
The fair value estimate for Wilmar’s shares has been revised down from SGD 3.67 to SGD 3.54 to reflect the mixed outlook and higher tax environment.

ESG Initiatives: Continuous Improvement and Industry Leadership

Wilmar has made significant strides in environmental, social, and governance (ESG) performance:

• Carbon Intensity: Reduced from 279 mt CO2e/USD million sales in 2020 to ~202 in 2022, outperforming the industry average of 370.
• Board Practices: An upgraded governance score following the resignation of two directors in April 2023, eliminating board entrenchment concerns. Wilmar now features a majority independent board with fully independent audit and remuneration committees.
• Water-Risk Mitigation: Strong strategies in place, vital given reliance on water-intensive crops like soy and palm oil.
• Community Relations: Policies and grievance channels for indigenous peoples are established, though land-use conflict allegations persist, especially in biodiverse regions like Malaysia.

Key Catalysts and Risks

Potential Catalysts:

• Rising crude palm oil and sugar prices.
• Operational efficiencies and better margins through integrated model synergies.
• Accretive regional acquisitions at attractive valuation multiples.

Investment Risks:

• Macroeconomic deterioration.
• Declining palm oil and sugar prices.
• Asset impairments.
• Trading and investment risks.

Valuation and Peer Comparison

Wilmar remains attractively valued against peers. Here’s a summary of key valuation metrics for FY25E and FY26E:

Wilmar Financial Performance: FY2020–FY2024

Revenue Breakdown by Business and Geography (FY24)

• By Business:
  • Tropical Oils: 34.9%
  • Oilseeds & Grains: 15.3%
  • Sugar: 12.6%
  • Consumer Products: 15.7%
  • Medium Pack and Bulk: 27.1%
  • Plantation and Sugar Milling: 1.9%
• By Geography:
  • China: 48%
  • South East Asia: 21%
  • India: 3%
  • Europe: 4%
  • Australia/New Zealand: 4%
  • Africa: 8%
  • Others: 12%

Dividend and Earnings Per Share Trends

• Dividends per Share (S cents):
  • FY2020: 19.5
  • FY2021: 15.5
  • FY2022: 17.0
  • FY2023: 17.0
  • FY2024: 16.0
• Earnings per Share (US cents):
  • FY2020: 24.2
  • FY2021: 29.5
  • FY2022: 37.5
  • FY2023: 23.8
  • FY2024: 18.7

Conclusion: Investment Thesis and Market Position

Wilmar International is well-positioned as a vertically integrated agribusiness leader with strong operational synergies and diversified revenue streams. The company’s ability to extract value across the supply chain, coupled with its dominant market share in China, provides a buffer against global volatility. While regulatory and margin challenges persist, especially in Indonesia and Malaysia, Wilmar’s robust presence in China and ongoing ESG improvements support its long-term investment appeal.
With a fair value of SGD 3.54 and a BUY rating, Wilmar offers a compelling blend of yield, stability, and growth potential for investors seeking exposure to Asian consumer staples and agribusiness sectors.