PBB Group’s 1H23 core PATMI came in within MIDF’s and above consensus forecast at 50% and 61%, amounting to RM682.7m. Revenue remained stable at RM3.00b supported by its two-core business which are grains and agribusiness and film exhibition and distribution. In addition, the operating profit was higher at RM234.4m while the margin improved by +8.7 ppt to 7.8% on the better film exhibition subsegment.
The grains and agribusiness segment profit declined to RM68.2m during the quarter, mainly attributable to losses recorded at the Indonesia and China flour mills with lower demand volume and higher cost of raw materials on hand. However, for 1H23, it improved to RM126.7m and the margin improved to 5.6% (>100ppt), thanks to the better performance of the Malaysian operations with higher sales and profit margin, on the back of a less volatile grains commodity market during the period under review.
As for the film exhibition and distribution segment, it managed to return a profit of RM14 million in tandem with a surge in revenue of RM296.4m recorded. This was mainly due to a 33% and 42% increase in box office collections and admissions for Malaysian operations coupled with a strong contribution from the Vietnam operations.
Drop in average commodity prices will result in grains and agribusiness margins normalise, aided by prudent procurement of feedstock as well a decline in the price of wheat, MIDF projects this segment would continue to lift the group’s operating profit to RM160m level over the 3 years.
The house maintains neutral on the stock, however, optimism in the core business was tapered by Wilmar’s performance. (easing in all 3-core business).
