$WILMAR INTERNATIONAL LIMITED(F34.SI)$Wilmar is in a v sweet spot now. It has a strong unfair advantage because it have both upstream and downstream, not many companies have that, it is able to minimize supply chain disruption and all the consequential problem due to that. Its also able to jump onto the new speed train of central kitchen and ready to eat food that have a high growth rate that is speed up due to Covid. Most companies that want to jump into these market might not have the resources and supply so will lose the first runner advantage
being in upstream to downstream of comodities food is difficult to analyse.
one can see the upstream success in price is not fully reflected in their results as upstream gain is lost by down stream. over time the increased in commodity price will be reflected as down stream increased price. and such increaed in price will stay much longer even after upstream commodity price has come down. do not believe ? just look at the milkxxxx condense milk once upon a time it was $1 as i know it. then slowly up a few 10 of cents over time with special price discount whenever there are inflation index time. now is about $1.90+ range. i believe downstream will be able to recover their profit lost over time.
the most valuable part of wilmar is the network of factory, distributions warehouses and business contact. with these distribution channels near to consumer they advantage in transport cost and time to reach. plus they can load more fast moving product thru these network.
can see from their current effort they are selective. condiments are higher margin they load. precook food in demand and new trend , they jummed into it. yes there is always risk in any new product. but they have been cautious in their adventure. they start small first to test then now say expand to 100 central kitchen as they figure it work. how well it will help the bottom line only time can tell. got to take a longer term look as these are building business, estimate take at least 2 years for it to turn significant. what is significant to me is they are loading their distributions channels. will they turn into a major fmcg brands owner. remember their subsidiary goodman fielder is already a successfull brand down under. jsut need to duplicate the experince and expertise.
a commodity farmer and fmcg brand owner has different valuation.
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