Wilmar International Limited’s Valuation: Then Vs. Now

Wilmar International Limited (SGX: F34) is one of the largest oil palm plantation owners listed on Singapore’s stock market. It is also one of the largest stocks here with its market capitalisation of nearly S$23 billion.

Its business activities include oil palm cultivation, oilseed crushing, edible oils refining, sugar milling and refining. There’s also the manufacture of specialty fats, oleochemicals, biodiesel and fertiliser, as well as flour and rice milling.

In the last 12 months, Wilmar’s share price is up by 23%. Given the strong performance, I thought it’d be interesting to look at the company’s current valuations in relation to history. The two valuation ratios I’m going to focus on are the price-to-book (PB) ratio and the price-to-earnings (PE) ratio.

Here’s a chart showing how Wilmar’s PB ratio has changed over the last five years:

Source: S&P Global Market Intelligence

As we can see from the chart above, Wilmar’s current PB ratio of 1.2 is near a five-year low.

The next chart shows the company’s PE ratio over the past five years:

Source: S&P Global Market Intelligence

Interestingly, Wilmar’s PE ratio of 22 right now is actually near a five-year high.

A Foolish conclusion   

To sum it up, although Wilmar currently has a low PB ratio in relation to history, the same cannot be said when it comes to the company’s PE ratio.

In any case, there’s something important to note when it comes to valuation ratios: Even if a company has a low PE and PB ratios in relation to history, it does not mean it will be a good investment. Companies that see their businesses crumble can still be lousy investments even if bought at low valuations.

Valuation ratios are only one of the many aspects about a company that investors should consider before making an investment decision.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.