‘Iran conflict impact mixed’: Maybank Securities upgrades Wilmar to ‘buy’ on constructive outlook, despite headwinds

[SINGAPORE] Maybank Securities has upgraded its call on Wilmar International to a “buy”, citing earnings tailwinds for the agribusiness, as its 2026 outlook remains constructive amid geopolitical and operating headwinds.On Tuesday (Mar 10), the brokerage raised its target price for Wilmar by 23.4 per cent, from S$3.12 to S$3.85, S$0.32 or 9.1 per cent above its latest closing price of S$3.53 on Monday. Highlighting that Wilmar delivered a “resilient” performance for FY2025 – the group posted a 38.3 per cent rise in H2 net profit to US$815.9 million and a 20.6 per cent increase in full-year earnings to US$1.41 billion – Maybank Securities analyst Hussaini Saifee said that the company’s earnings are “on an upward trajectory”. “Forward momentum is intact, supported by mid-single-digit growth in food product volumes, stable pricing conditions, and continued product mix optimisation, underpinning a projected 9 per cent FY2025 to FY2028 earnings compound annual growth rate,” Saifee said. He noted that the “bulk of regulatory overhang” facing the company is largely behind, with adequate provisions having already been recognised. Foreign exchange movements may benefit the company, with the weakening of the greenback against the Chinese yuan, Australian dollar and Euro providing “incremental earnings tailwinds” for Wimar, which derives around 55 per cent of its revenues from these geographic locations. “With earnings on an upward trajectory and leverage trending lower, balance sheet flexibility is improving, creating scope for potential dividend enhancement,” Saifee said. As Wilmar’s net debt to earnings before interest, taxes, depreciation, and amortisation of 1.7 times remains “comfortable”, Saifee said that its earnings trajectory signals “potential for dividends to increase accordingly”. However, he noted that the impact of the Iran war on Wilmar’s business could be “mixed”. While elevated crude oil prices could support biofuels, this could be offset by higher freight and insurance costs alongside potential demand softness, in the event that the conflict escalates. Stable growth trajectory Notwithstanding geopolitical and operating headwinds flagged by management, Saifee said the granular 2026 outlook for Wilmar remains “constructive”. This comes as food product volumes are guided at mid-single-digit growth, with double-digit expansion in newer categories such as flour, rice and noodles. Notably, China’s improved growth outlook and increased services consumption presents upsides for Wilmar, Saifee said. This factor could drive up volumes for the company, which derives over 90 per cent of its revenues from high growth emerging markets such as China, India, South-east Asia and Africa. He added that global supply-demand dynamics support stable pricing and positive refining margins in Indonesia and Malaysia, and noted that even though soybean margins are set to soften, with plantation output coming in weak in early 2026, recovery is anticipated.