PPB’s first half in line with expectations
KUALA LUMPUR: PPB Group Bhd (PPB) posted a core net profit of RM448 million for the first half of 2017 (1H17), coming in broadly within expectations at 40 and 44 per cent of consensus and Kenanga Investment Bank Bhd’s (Kenanga Research) estimates, respectively.
The research firm in a report deemed this to be broadly within expectations considering the fiveyear average 1H contribution of 33 per cent to full-year profits.
An interim dividend of 8.0 sen was announced, in line with previous 1H dividend declaration.
PPB’s own businesses, excluding that of Singaporean-listed Wilmar International Ltd, reported profit before tax of of RM156 million which was below Kenanga Research’s RM482 million forecast at 32 per cent on weaker Grains and Agribusiness (Grains) margins.
“It was a tough quarter. Year-onyear, core net profits jumped 1.6 times largely on higher Wilmar contribution of RM340 million from merely RM11 million in 1H16 as Wilmar saw a trading hit from its Oilseed and Grains (O&G) division due to soy price volatility.
“In its own businesses, PPB’s
It was a tough quarter. Yearon-year, core net profits jumped 1.6 times largely on higher Wilmar contribution of RM340 million from merely RM11 million in 1H16 as Wilmar saw a trading hit from its Oilseed and Grains (O&G) division due to soy price volatility.
Grains segment PBT weakened 34 per cent on higher wheat cost, seasonally lower sales volume and lower Indonesian selling prices due to high competition.
Property PBT weakened 81 per cent on completion of its Taman Tanah Aman project in 2016 and ongoing refurbishment in investment properties.
Film contribution was also weaker by 28 per cent on forex losses and lower revenue from local movies. Meanwhile, Consumer Products contribution jumped 1.3 times on a RM8 million gain on land disposal, excluding which core PBT improved 21 per cent to RM8.7 million on improved bakery results.
Quarter-on-quarter, core net profits fell 72 per cent largely as Wilmar contribution dropped 85 per cent due to lower O&G performance and higher sugar segment losses. For its own businesses, only property segment saw some improvement in profit before tax on higher associates contribution. Grains PBT weakened 41 per cent on higher wheat costs.
“We are positive on the grains, film and property segment prospects, thanks to expansions and new project launches due later in the year.
“The grains segment should see a boost as its new 500-ton perday (TPD) flour mill in Pasir Gudang is scheduled for completion in mid-2017, while management is confident of better margins in 2H17 on stronger flour demand expectations.
“Film performance should also see growth with 9 new locations scheduled for 2017 (three in Malaysia, six overseas), in addition to a better film lineups. The property segment is set to launch its Taman Megah (Petaling Jaya) development with GDV of RM500m in 4Q17, which should improve sales over the next one to two years.”
MIDF Amanah Investment Bank Bhd (MIDF Research) maintained its FY17 earnings estimate of RM945 million in addition to keeping its FY18 earnings estimate of RM947 million.
“Wilmar’s contribution is likely to affect PPB net income significantly as we expect its PBT contribution to be 63 per cent of PPB Group’s PBT.”
Kenanga Research