Hot stock: Wilmar shares up 5.9% on net profit, special dividend announcement

SHARES of Wilmar International jumped 5.5 per cent on Monday after the agri-business group posted a 20 per cent rise in Q3 net profit and announced a special dividend on Friday.

The counter hit an intraday high of S$4.28 on Monday, up 5.9 per cent or S$0.24 as at 9.55am. The last time the counter closed near this level was on Oct 22 at S$4.30.

As at 11.59am on Monday, Wilmar International shares were the highest traded by value and fourth most traded by volume, rising 5 per cent or S$0.20 to S$4.24, with 29.2 million shares changing hands.

Wilmar on Friday posted a 20 per cent rise in net profit for the third fiscal quarter ended September to US$536.6 million from US$447.1 million for the year-ago period.

Wilmar's core net profit rose 19.6 per cent to US$501.4 million, the highest third-quarter core results since its listing, the group said in a bourse filing.

The group has also proposed a special dividend for its shareholders, to commemorate the market debut of its Chinese unit Yihai Kerry Arawana. Details of the special dividend will be disclosed in February next year, together with the release of Wilmar's full-year results.

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CGS-CIMB's research team is estimating a special dividend allocation of US$309 million or S$0.065 per share. Meanwhile, RHB projects a special dividend per share of S$0.12 post listing of Yihai Kerry, which raises dividend yield to 6 per cent.

Wilmar's US$1.14 billion net profit for the nine months ended Sept 30, 2020, was above CGS-CIMB research team's expectations as it makes up 87 per cent of its full-year projections. The research team has maintained its "add" call on Wilmar, with an unchanged target price of S$5.53.

CGS-CIMB analyst Ivy Ng said: "Over the past 10 years, nine-month core net profit has on average made up 68 per cent of its full-year core net profit."

RHB analyst Juliana Cai has maintained "buy" on the stock with a raised target price of S$5.60 from S$5.45 previously. Ms Cai said the outlook for Wilmar's tropical oils segment could strengthen on higher crude palm oil (CPO) prices and Indonesia's new export levy structure.

"As CPO prices have been volatile of late, we revise our FY2021 assumption to RM2,650 per tonne to reflect the anticipated slight year-on-year increase. As such, our FY21F earnings are now higher by 6 per cent," she said.