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RHB |
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Wilmar International (WIL SP) China Still The Main Story; Maintain BUY
Reiterate BUY, SGD5.45 TP, 14% upside with c.3% FY20F yield. We maintain our positive view on Wilmar, post its analyst briefing. With Yihai Kerry’s China listing in its final lap – awaiting approval from China Securities Regulatory Commission – management now expects the IPO to be completed by end-September. As the market has now, by and large, priced the Yihai Kerry listing at 22-23x PE, we believe the performance of Yihai Kerry post-IPO will create another upside leg for investors.
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Delfi (DELFI SP) Hit By COVID-19; Maintain NEUTRAL
Maintain NEUTRAL, new SGD0.80 TP from SGD0.74, 8% upside with c.4% yield. Delfi recorded 1H20 PATMI at USD10.8m, down 30% YoY on a 12% YoY decline in sales. The 1H20 results are slightly ahead of our estimates, but still below Street projections. Its outlook for 2H20 and FY21 remains cloudy. The interim dividend was maintained at 1.27 US cents per share. While the group saw economic activities picking up in June, business has yet to recover to pre-pandemic levels.
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MAYBANK KIM ENG |
RHB |
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Wilmar International (WIL SP) Rising momentum
Operating conditions improving. IPO upside WIL’s 1H20 PAT was in-line with Street/MKE expectations. Margins and volumes rose from recovering demand in China supported by the dual improvements from COVID-19 and ASF in the Mainland. The Group is also in the final stages of listing its China businesses (~60% of revenue) in SZSE by 2H20 where PE multiples are >2x higher than now. This also opens up the potential for a special dividend to existing shareholders. We have raised 2020-2022E EPS and updated our peer basket valuations. Following roll forward of our DCF and peer-PE methodology to 2021E, we have raised our TP to SGD5.24. With 12% upside, maintain BUY.
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China Aviation Oil (CAO SP) Aviation Traffic Recovery Delayed; Now NEUTRAL
Downgrade to NEUTRAL, with SGD0.95 TP from SGD1.25, 2% upside and 3% 2021F yield. We lower 2020F-2022F profit by 26%-27% to account for a delay in China’s aviation traffic recovery. While China’s domestic aviation traffic continues to register MoM improvement, the resurgence of COVID-19 infections will push international traffic recovery to 2021. This would impact earnings for Shanghai Pudong International Airport Aviation Fuel Supply (SPIA), which accounted for 65% of China Aviation Oil’s 2019 PBT. While valuations remain compelling, we now prefer to wait for clear signs of traffic recovery.
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