Kenanga: PPB to gain from Wilmar’s earnings recovery

Kenanga: PPB to gain from Wilmar’s earnings recovery



KUALA LUMPUR (Mar 3): PPB Group Bhd is expected to benefit its 18.3%-owned Singapore-listed Wilmar International Ltd's earnings recovery as crude palm oil (CPO)prices rise, according to Kenanga Investment Bank Bhd.

In a note today, Kenanga analyst Alan Lim Seong Chun said PPB was also expected to gain from Indonesia's biofuel policy. This is because Wilmar is the largest biodiesel producer in Indonesia.

"(PPB's) FY14 earnings outlook is bright as Wilmar should benefit from higher CPO prices and the rapid implementation of biodiesel policy in Indonesia.

"PPB’s own operations are also expected to do well in line with better GDP growth in Malaysia," Lim said.

Lim Seong Chun said Kenanga had maintained its core net profit forecast for PPB. Kenanga had also retained its "outperform" call for PPB shares with an unchanged target price of RM17.

At 10.10am, PPB shares fell 12 sen or 0.8% to RM15.80.

Kenanga's note followed PPB's announcement of its FY13 fourth-quarter and full-year financials.

PPB reported last Friday net profit fell 8% to RM280.7 million in the fourth quarter ended December 31, 2013 from RM306 million a year earlier. Revenue however rose to RM900.2 million from RM782.6 million.

Full-year net profit climbed to RM994.2 million from RM842.2 million a year earlier while revenue was higher at RM3.31 billion versus RM3.02 billion.

PPB plans to pay a dividend of 17 sen a share for the quarter in review. This brings full-year dividends to 25 sen a share.

Today, Lim said PPB's FY13 core net profit of RM962 million was "broadly within expectations". He said PPB's core figures accounted for 101% and 108% of consensus and Kenanga's forecast respectively.

"(PPB's core net profit) Excluded one-off gain of RM17m resulting from sale of an investment property, and RM16m from the sale of Tradewinds shares," Lim said.


The Edge Malaysia
By Chong Jin Hun of theedgemalaysia.com