Its share price also fell to its lowest level in nearly four months, dropping by 20 sen to RM14.54 in early morning trade. However, it managed to claw back its losses to end the day up two sen at RM14.76, valuing the group at RM21 billion.
Its Q1 FY2024 net profit fell 11% to RM337.17 million from RM377.54 million a year ago on lower contributions from its associate, Singapore-based Wilmar International Ltd, and soft sales from Golden Screen Cinemas (GSC) under its film exhibition and distribution segment.
Q1 revenue fell 15% to RM1.29 billion from RM1.52 billion a year earlier, PPB Group said in a bourse filing yesterday.
Kenanga Research said it was “disappointed” with PPB Group’s Q1 FY2024 results with core net profit at only 18% of both its full-year forecast and the full-year consensus estimate.
“The variance against our forecast came largely from weaker-than-expected performance from Wilmar,” it said, adding this was partially cushioned by improved profits from PPB Group’s own flour and feed businesses.
“GSC sales softened on poor blockbuster lineup and disruptions from ongoing relocations. Its property earnings were also weak as its new project will only be launched later in FY2024,” the research house said in a note today.
Kenanga cut its FY2024F net profit forecast for PPB Group by 4%, and lowered its target price by 5% to RM17.50 from RM18.50 previously.
It, however, maintains its “outperform” rating as PPB Group enjoys a strong business position in consumer essentials such as flour, feed, ready-to-eat products as well as mass entertainment in Asean. In addition, Wilmar provides exposure to Chinese and Indian consumer markets, it added.
Strategic stake in Wilmar
PPB Group is the largest shareholder with an 18.8% stake in Wilmar, one of the world’s leading palm oil producers and agribusiness groups. It is listed on the Singapore Exchange with a market capitalisation of S$19.8 billion (RM68.9 billion).
Its businesses include oil palm cultivation, oilseed crushing, edible oils refining, flour and rice milling, sugar milling and refining, manufacturing of consumer products, biodiesel and fertilisers, among others
PPB Group is a diversified conglomerate which engages in food production, agriculture, waste management, film distribution, property investment and development.
According to its latest annual report, Kuok controls PBB Group via his private vehicle Kuok Brothers Sdn Bhd, which has a 50.81% stake. The next largest shareholder is EPF with 9.77%.
The company was founded in 1968 as Perlis Plantations Bhd by Kuok to cultivate and mill sugar cane in Perlis. The company went public in 1972 and has since ventured into other industries. Its listing coincided with Kuok shifting the focus of his business outside Malaysia, especially to Singapore.
Today, its main business is the supply of flour to downstream food producers. Its subsidiary, FFM, is the largest flour miller in Malaysia. PBB Group also has operations in China, Vietnam, Thailand and Singapore.