PPB Group Bhd is not planning to sell the profitable GSC Group. Instead, it has allocated RM215 million to expand the film exhibition and distribution business.
PPB Group Bhd has set aside more than half of its RM401 million capital expenditure (capex) this year to expand its film exhibition and distribution business under GSC Group.
The diversified group, which deals in six business segments including the flagship grains and agribusiness, also quashed rumours that it was selling GSC.
Group managing director Lim Soon Huat said while some parties had offered to buy the cinema franchise, PPB has no intention of selling.
“There had typically been a lot of mergers and acquisitions within the entertainment landscape in Malaysia and we have been approached before by some parties looking to acquire GSC.
“But, I can confirm that at this point, we are not selling the unit as the business is doing really good.
“In fact, within the group, GSC is the second-highest profit contributor,” said Lim at a briefing, here, yesterday.
GSC contributed RM59 million to PPB Group’s net profit last year, second only after the grains and agribusiness at RM267 million.
For the year-ended December 31 last year, the group reported a net profit of RM1.11 billion on a RM4.19 billion revenue.
Lim said GSC’s operation would be expanded locally and in the region.
“For this year, we are allocating RM215 million in capex for GSC from the total RM401 million. This will mainly for the opening of three cinemas in Malaysia and six in Vietnam through our existing joint venture with Galaxy Studio JSC.”
The capex will also be used towards adding three screens at GSC Summit USJ, upgrading existing cinema equipment and investment in Cambodia.
“We expect to begin our Cambodian operations under the GSC brand by year-end upon the completion of the mall the cinema will be located in,” said Lim.
He said PPB allocated between US$5 million and US$6 million (RM26.73 million) a year for its film distribution segment as the currency exchange exposure for GSC is minimal.
The rest would go to grains and agribusiness (RM138 million), property division (RM24 million), other operations (RM14 million), consumer products (RM7 million) and environmental engineering and utilities (RM3 million).
“We are currently pursuing water and sewage treatment projects with an estimated value of RM600 million. I rather not say which projects we are bidding now, but we do have an existing order book of RM160 million,” said Lim.
Last year, the group completed 18 sewage treatment plans under the Greater KL Sewage Scheme with a combined contract deal of RM96 million.
It also secured sewage network pump station projects valued at RM93 million in total.
“We expect the operating environment this year to remain challenging, especially with the intense competition in the flour markets in Indonesia, Vietnam and Malaysia. Domestically, we expect the feed market to be uncertain with the rapidly evolving industry landscape,” he said.
PPB Group Bhd managing director Lim Soon Huat (right) and director Datuk Ong Hung Hock at a press briefing in Kuala Lumpur yesterday.