PPB Group Bhd’s (PPB) earnings recovery appears to be taking shape, with stronger contributions across most business segments despite lingering volatility in its Wilmar International Ltd (WIL) unit.
Excluding fair value gains, forex losses, and impairment reversals, PPB reported a core net profit (CNP) of RM638.3 million for the first half of FY25, a 9% year-on-year (YoY) increase. This accounted for 45% of Kenanga’s and 47% of consensus full-year forecasts.
Earnings were broadly supported by steady performance in property and consumer products, alongside a sharp turnaround at Golden Screen Cinemas (GSC), which swung from a RM5 million loss in 1QFY25 to a RM37.6 million pre-tax profit in 2QFY25. However, weaker contributions from WIL (-6% YoY) and flattish consumer product earnings (-0.3% YoY) tempered overall growth.
On a quarterly basis, PPB’s 2QFY25 CNP slipped 19% quarter-on-quarter (QoQ) to RM285.7 million, due to weaker performances from WIL and its grains & agribusiness (G&A) unit, but was only down 2% YoY.
The group’s balance sheet strengthened further, with net cash rising to RM1.3 billion, up 27% QoQ and 71% YoY. An interim dividend of 12 sen was declared, in line with expectations, with Kenanga maintaining its annual DPS forecast at 45 sen for FY25 and FY26.
Outlook: Growth Across Key Segments
Analysts expect PPB’s earnings recovery to continue into FY25-26, underpinned by exposure to Asia-Pacific’s fast-growing consumer markets:
Long-term demand for flour is expected to grow steadily across Southeast Asia and China, supported by rising affluence and urbanisation. Wheat and corn prices are expected to remain stable, though earnings could remain volatile due to trading activities.
Despite a slower-than-expected post-pandemic recovery, industry prospects are improving. PPB projects 5% annual growth driven by blockbuster releases, premium cinema formats such as Aurum and Velvet, and more efficient site management following its 2021 acquisition of MBO Cinemas.
Contributions are set to grow with the rollout of Lumina Bedong, a RM900 million township in Kedah, launched in late 2024, and an upcoming low-density condominium project in Kwasa Damansara.
Headwinds remain due to regulatory issues in Indonesia and past disruptions in China and Australia. WIL is still contesting charges related to palm oil exports and rice packaging, with a USD729 million deposit placed with Indonesian authorities. Kenanga estimates that if forfeited, the impact on PPB would be around RM600 million, or RM0.42 per share. However, analysts expect these challenges to gradually resolve within 6–18 months.
