Analyst keeps ‘hold’ call on PPB shares

KUALA LUMPUR Research company Wilson and York has maintained a “hold” call on PPB Group Bhd while reducing its valuation on the stock to RM17.68.

The analyst, in its latest note to investors, said economic uncertainties in China and Europe has a rippling effect on business conditions in neighbouring markets.

Historically, PPB Group’s profits were driven by its grains, consumer and film distribution business. The analyst expects steady growth in the grains and consumer products division while the film division is anticipated to recover some momentum next year.

PPB Group routinely ranks in the top half of Bursa Malaysia’s key index FBM KLCI for sales, profit or owners’ equity growth. For the second quarter, the company ranked within Top 10 of all FBM KLCI members for growth in owners’ equity.

While profits from Wilmar International Ltd took a beating last year, Wilson and York sees the company churning solid profits for PPB Group in the current year and 2018.

“Net margins at Wilmar are expected to range between 2.6 and 3.0per cent over this year. A strong US dollar tends to increase the ringgit contribution from Wilmar to PPB Group,” said Wilson and York, adding, however, that a weaker US dollar would reduce the ringgit value. “Though operating conditions are challenging, any downside from the current share price is likely to present buying opportunities.”