1Q ahead of expectations — Wilmar reported strong 1Q net profit of RM380m, which is better than our and market expectations. Net profit made up 35% of our and 33% of consensus full-year estimate. The better performance was due to improvement in margins especially at the palm & laurics and consumer products segment.

PBT for palm & laurics up 72% YoY — Sales volume for palm & laurics was down 15.5% to 3.9m metric tonnes (MT) due to more cautious risk management stance following industry defaults at end-2008. However, margins for this segment rose sharply from US$27/t in 1Q08 to US$55/t in 1Q09. This was due to the group’s ability to time its purchases of raw materials and sales of products well.

PBT for consumer products up 389% — Margins for this segment improved sharply to US$106/t in 1Q09 from US$18/t due to lower feedstock prices. Also, recall that margins in 1Q08 were affected by the Chinese Government’s price intervention measures. The measures were subsequently lifted in Dec 2008 when inflation was no longer a concern.

Evaluates listing of China operations — The group is evaluating the feasibility of listing its China operations in either Hong Kong or Shanghai. In FY08, China accounted for 49% of group revenue and 40% of group assets.