Wolf Money(Wilmar AGM Q&A)
My last contributions to the Wilmar’s investing community before I sold the share today. Below were the questions I submitted before AGM. Question in bold.
Can you provide the figure for the total shareholders' return for 3, 5, 7, 10 years respectively? The point of my question was due to poor shareholders' return over the past 3 years, where Straits Times Index is at 18 years high and Wilmar's stock price languishing at decade low valuation.
3. Is Wilmar doing anything to tackle the high gearing given the company needs to come up with more than USD 1b for the purchase of Adani Wilmar held by Adani at the end of this year. If I add purchase price to your gearing, Wilmar is trading close to 1x which in my view is high. The management might be comfortable with the seemingly high gearing, but the company shouldn't be oblivious to market perception. The underperforming of the company's share price in my view might be due to the high gearing. Your commentary.
Our debts are predominately trade-related and short-term in nature, meaning we borrow to finance our purchases of raw materials such as palm oil and soybeans. Hence when commodity prices are on an upward trend, our borrowings will increase. Conversely, as commodity prices decline so will our borrowings. Excluding the debt for such working capital requirements, our adjusted net debt-to-equity ratio was 0.33x in FY2024, an improvement from 0.37x in FY2023.
In general, our investments/capex are funded by internally generated cashflows and not dependent on borrowings, as indicated in the table above.
Regarding the proposed increased investment in AWL Agri Business Limited (previously known as Adani Wilmar Limited), we plan to fund it from internal sources as well as bank borrowings. We are also exploring opportunities to bring in strategic investors to participate in AWL’s growth story. Hence, we believe any increase in debt relating to this transaction will be manageable.
4. Any chance of a Wilmar Sugar Australia listing to lower gearing and risks associated to the Australia sugar market? Industrial action, adverse weather patterns and volatility in sugar price are some challenges I can think of.
As explained in our response to Q3, we believe our gearing levels are manageable.
With regard to the risks associated with the Australian sugar market, we manage such risks in a similar way to our other businesses. For example, on commodity price risks, we carefully monitor and manage our open commodity positions by using forward physical contracts and/or derivatives.
God bless!
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