MARKET DEVELOPMENT
PPB’s Growth Continues to Improve From Wilmar
PPB’s Growth Continues to Improve From Wilmar
30/11/2015 (Borneo Post) - PPB Group Bhd (PPB Group) continues to see strength in its core net profits following an improvement in the first nine months of 2015 (9M15) jumping seven per cent to RM682 million as Wilmar’s contribution rose 13 per cent to RM499 million.
To note, Wilmar’s 9M15 core net profits improved by one per cent to US$816 million as profit before tax (PBT) under its Oilseeds and Grains (O&G) division jumped 128 per cent on crushing margin recovery, despite Tropical Oils’ PBT declining 36 per cent on weak crude palm oil prices.
According to Kenanga Investment Bank Bhd (Kenanga Research), PPB’s own operations PBT rose eight per cent on higher Engineering contribution due to higher revenue recognition of raw water and sewage projects.
“However, Consumer Products’ PBT was lower by 34 per cent due to lower sales of agency products,” it said in a report on Friday.
“Quarter on quarter, core net profit in the third quarter of 2015 (3Q15) jumped 46 per cent mainly on higher contribution from Wilmar which saw its core net profits jumping 85 per cent on sugar’s seasonal turnaround (US$109 million PBT) and O&G PBT doubling to US$244 million on higher volume.”
PPB’s PBT excluding Wilmar nearly doubled to RM124 million, observed the research firm, as Grains segment’s margins recovered to 13 per cent on forex gains and higher feed volume.
Meanwhile, lower Film segment’s PBT was in line as 2Q traditionally sees the highest film distribution contribution due to summer blockbuster releases.
“We are overall neutral on PPB’s own businesses. On the positive side, we agree with the management’s positive view on its Grains, Film and Engineering segments due to strong distribution channels, new cinema openings and recognition of construction contracts.
“However, we also concur with the management’s view that property sales are likely to be weak due to soft sentiment. Nevertheless, PPB’s overall financial results continue to be contingent on Wilmar’s performance.”
Kenanga Research remained neutral on Wilmar as it believed their improving O&G and plantation downstream segments could be dragged by its uninspiring Plantation upstream and Consumer segments.
“However, 4Q15 contributions to PPB should be sustained as Wilmar’s refining margins should improve post-levy in Indonesia, and if the US dollar continues to strengthen.”
To note, Wilmar’s 9M15 core net profits improved by one per cent to US$816 million as profit before tax (PBT) under its Oilseeds and Grains (O&G) division jumped 128 per cent on crushing margin recovery, despite Tropical Oils’ PBT declining 36 per cent on weak crude palm oil prices.
According to Kenanga Investment Bank Bhd (Kenanga Research), PPB’s own operations PBT rose eight per cent on higher Engineering contribution due to higher revenue recognition of raw water and sewage projects.
“However, Consumer Products’ PBT was lower by 34 per cent due to lower sales of agency products,” it said in a report on Friday.
“Quarter on quarter, core net profit in the third quarter of 2015 (3Q15) jumped 46 per cent mainly on higher contribution from Wilmar which saw its core net profits jumping 85 per cent on sugar’s seasonal turnaround (US$109 million PBT) and O&G PBT doubling to US$244 million on higher volume.”
PPB’s PBT excluding Wilmar nearly doubled to RM124 million, observed the research firm, as Grains segment’s margins recovered to 13 per cent on forex gains and higher feed volume.
Meanwhile, lower Film segment’s PBT was in line as 2Q traditionally sees the highest film distribution contribution due to summer blockbuster releases.
“We are overall neutral on PPB’s own businesses. On the positive side, we agree with the management’s positive view on its Grains, Film and Engineering segments due to strong distribution channels, new cinema openings and recognition of construction contracts.
“However, we also concur with the management’s view that property sales are likely to be weak due to soft sentiment. Nevertheless, PPB’s overall financial results continue to be contingent on Wilmar’s performance.”
Kenanga Research remained neutral on Wilmar as it believed their improving O&G and plantation downstream segments could be dragged by its uninspiring Plantation upstream and Consumer segments.
“However, 4Q15 contributions to PPB should be sustained as Wilmar’s refining margins should improve post-levy in Indonesia, and if the US dollar continues to strengthen.”