Brokers' view: Midas

Wilmar is one of Asia’s leading agribusinesses, and with a market cap of over $26 billion it ranks among the world’s elite blue-chip stocks.

The group primarily operates in the edible oil sector and is involved in all stages of production, from growth to processing and merchandising.

Notably, Wilmar is the largest global processor of palm and lauric oils, which are increasingly becoming key commodities for the global food industry. The group is also a major supplier for other consumer goods industries such as cosmetics, and is the world’s largest manufacturer of palm biodiesel.

With over three-quarters of the group’s revenue coming from Asia, Wilmar is a prime beneficiary of emerging market development, population growth and the world’s ever-increasing food needs.

Impressive record
This should pave the way for future earnings growth, building upon the group’s already impressive track record, which has seen compound annual revenue growth of 34 per cent over the past five years.

Despite its dominant market position, Wilmar appears alert to new investment opportunities, as highlighted by a recent joint venture with PZ Cussons to extend their footprint in Africa’s rapidly growing markets.

With a strong net cash position, the group remains under-leveraged, enabling further investment and M&A activity in the years to come.

With Wilmar’s strong investment case warranting a premium valuation, the recent market falls offer an attractive entry point. The stock currently trades on an EV/EBITDA multiple of 11 times and a price-to-earnings ratio of 18.