wilmar+international中国限制大豆油脂加工产量，行业.pdf

September 4, 2008 Wilmar International (WLIL.SI) S$3.65 September 4, 2008 COMMENT Wilmar International (WLIL.SI) S$3.65 China to cap soybean crush capacity, accelerate consolidation News According to a Reuters report, China will close small soybean crushers and restrict expansion by big plants in a move to consolidate the industry in which average utilization rates are below 50%. The NDRC (National Development and Reform Commission) will cap soy processing capacity at 75mn tons p.a. in 2010, and further reduce that to 65mn tons p.a. in 2012. It will not approve new facilities or expansion by individual soy plants or groups that already process more than 15% of the country’s annual total. Analysis We estimate Wilmar’s market share in China soybean crushing at more than 15%, so this news is incrementally negative, as it curbs its future expansion opportunities in soybean crush capacity. However, this is unlikely to be an issue over the next 1-2 years, as we believe that Wilmar has sufficient spare capacity at hand (we estimate current capacity utilization of between 60% and 70%). Going forward, we expect that Wilmar will continue to expand its agri-processing businesses in China with investments in flour and rice milling, oleochemicals, specialty fats and processing of other oilseeds like groundnut and rapeseed. On a positive note, accelerated consolidation of the China soybean crushing industry could be positive for crushing margins going forward. Implications No change to our earnings estimates or 12-month target price. The stock price is down 9% today amid a broader sell-down of commodities-related stocks in Singapore. We see this as a buying opportunity and maintain our Buy rating. INVESTMENT LIST MEMBERSHIP Asia Pacific Buy List Coverage View: Neutral Singapore: Agriculture Patrick Tiah, CFA