PPB Group Bhd - I3investorDevelopment Sdn Bhd (SM) in 2013. The latter has acquired about 12.5 acres...

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22 April 2015 | Initiate Coverage

PPB Group Bhd Initiate NEUTRAL

A giant in the consumer staple space Target Price (TP): RM15.30 INVESTMENT HIGHLIGHTS

• A Syariah-compliant ‘consumer products’ company and a

constituent of FTSE Bursa Malaysia 30

• Wide range of business segments with strategic fit to obtain

synergistic benefits

• Sizeable exposure to the agribusiness through 18.3% stake

in Wilmar, Asia’s leading agribusiness group

• We are initiating coverage on PPB with a NEUTRAL

recommendation, attaching a fair value of RM15.30 based

on sum-of-parts valuation methodology

One of the leading ‘consumer products’ company under FBM30.

PPB Group Bhd (PPB) has an array of core businesses under ‘consumer

products’ category. On the local bourse, it is listed as one of the 30

constituent companies of the FBMKLCI. Among PPB’s key business

segments are: i) Flour and feed milling, and grains trading; ii)

Marketing, distribution and manufacturing of consumer products; iii)

Film exhibition and distribution; iv) Environmental engineering, waste

management and utilities; v) Property investment and development; and

vi) Chemicals livestock, investments and other operations.

Synergistic business structure. PPB’s integrated business model

revolves mainly around the consumer product segments. This strategy

enables the company’s core business segments to complement each

other, thus, creating synergistic benefits. Among the benefits of having

such structure are economies of scale and marketing and distribution

advantages. However, any hiccup in one of segments might affect the

wellbeing of other segments and the group as a whole.

Sizeable exposure to Wilmar. Besides the six core businesses, PPB

also involved in agribusiness via its associate, Wilmar International

Limited (Wilmar). The exposure to Wilmar further strengthens their

presence in the food and agribusiness. However, its shareholding in

Wilmar would also heighten PPB exposure to the volatilities in

commodity price movements as well as foreign exchange rate, in

particular the US Dollar. On average, contribution from PPB made up

more than 70% to PPB’s pretax profit (PBT).

Initiate with NEUTRAL recommendation. We are initiating

coverage of PPB with a Neutral recommendation. We value PPB with a

target price of RM15.30 per share based on sum-of-part valuation

methodology. Our target price translates into an implied FY16 forward

PER of 16.5x based on FY16 forecasted EPS of 92.7sen.

RETURN STATS

Price (20 April 2015) RM15.80

Target Price RM15.30

Expected Share Price

Return -3.16%

Expected Dividend Yield +1.90%

Expected Total

Return -1.26%

STOCK INFO

KLCI 1,862.80

Bursa / Bloomberg 4065 / PEP MK

Board / Sector

Main/

Consumer

Products

Syariah Compliant Yes

Issued shares (mil) 1,185.50

Par Value (RM) 2.00

Market cap. (RM’m) 18,944.3

Price over NA (x) 1.13

52-wk price Range RM13.42 –

RM16.52

3-mth Avg Daily Vol (m) 0.35

3-mth Avg Daily Value RM5.24m

Major Shareholders (%)

Kuok Brothers S/B 50.81

EPF 7.64

Nai Seng S/B 4.16

KWAP 3.00

MIDF EQUITY BEAT Wednesday, 22 April 2015

2

COMPANY BACKGROUND

One of the leading ‘consumer products’ company. As one of the top ‘consumer products’ companies in

Malaysia, PPB Group Berhad (PPB) manufactures and distributes wide range of fast-moving consumer goods (FMCG)

products under its own brand names as well as other local and international brands. Being a conglomerate, PPB is

also actively involved in grains trading, flour and animal feed milling together with a host of other downstream

activities such as livestock farming, food processing, bakery and marketing and distribution of consumer products.

Besides food manufacturing, the company owns Golden Screen Cinemas Sdn Bhd which involves in the entertainment

business. It has also successfully diversified into environmental engineering and waste management, contract

manufacturing, chemicals manufacturing, property development and management as well as packaging operations.

Main Business Segments

i. Flour & Feed Milling, & Grains Trading

PPB is involved in the flour milling business through its 80%-owned subsidiary FFM Bhd. FFM is currently the largest

flour miller in Malaysia which owned five flour mills with a combined milling capacity of 2,550-mt per day. Apart from

this, FFM also has milling factories across South East Asia, some of which is through its business associates. On

aggregate, FFM has access to milling capacity of more than 20,150-mt per day.

Table 1: Group milling capacities

Subsidiary / associate Milling capacity (mt per day) Location

80%-subsidiary FFM Bhd 2,250 Malaysia

80%-subsidiary FFM Bhd 550 Vietnam

80%-subsidiary FFM Bhd 2,000 Indonesia

43.4%-associate Kerry Flour Mills Ltd 400 Thailand

20% interest in nine associates in China 14,950 China

Total 20,150

Source: Company, MIDFR

FFM is also one of the leading feed millers in Malaysia. It has a combined feed milling capacity of 1,500-mt per day.

The group marketed its feed product unders the “Friendship” brand, bearing the logo of five rings. FFM’s feed is

available in form of mash, crumble and pellets. All in, the segment contributed approximately 61% and 57% of PPB’s

revenue and total segment profits in 2014.

ii. Marketing, Distribution & Manufacturing of Consumer Products

FFM Marketing Sdn Bhd (FMSB) was initially set up to market and to distribute consumer goods produced by the FFM

Group. Over the course of more than 20 years, it has established a strong distribution network for its own brand as

well as a healthy mix of other international and local brands. At present, it has 12 warehouses located across

Peninsular and East Malaysia boasting a total warehousing capacity of 300,000 sqft.

PPB also has a 38.5% effective stake in Products Manufacturing Sdn Bhd (PMSB) who provides contract-

manufacturing services for the cosmetic, toiletry and household product industries. One of its noteworthy customers

includes the Diversey Group. PMSB produces an assortment of products such as creams, cold and hot mix liquids,

lotions, gels, powders and pastes for the hair care, skin care, baby care, body care and household care items.


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Table 2: Product portfolio

Own brands/products External agency product portfolio

Brand Product description Brand Product description

Anchor Packaged flour Johnson & Johnson Baby care / personal care

Blue Key Packaged flour Clorox Liquid bleach

Muhibah Packaged flour (East Malaysia) Bluebell Household care and floor care

Masimo Loaves and buns Glads Wraps and bags

Blue Team Shortening and margarine Jordan AS Toothbrushes & oral care

products

Neptune Blended cooking oil Blacktop Insecticide / mosquito coils

Seri Murni Palm-based cooking oil Softex Personal care products (East

Malaysia)

Krystal Corn oil / sunflower oil / canola

oil Star Brand

Culinary flavouring and

colouring

Marina Canned foods Lingham Chilli sauces

Marina Frozen foods V-soy / Vita Milk Soyabean milk

Seri Murni Standard eggs Orang Kampung Herbal energy drink

Shamu Canned fruits S&P Herbal soup spices, coconut

milk, cream powder and ketupat

Snow Brand Milk powder and vegetable oil

spread

Eversweett 3-in-1 Beverages / natural sweetener

Kart Food Frozen food


iii. Film Exhibition & Distribution

To better serve the consumer market, PPB diversifies further its business into cinema exhibitor and distributor. It is

the sole owner of the Golden Screen Cinemas (GSC) chain in Malaysia. GSC operates the largest cinema chain in the

country boasting 284 screens in 31 locations across Peninsular and East Malaysia. PPB also extends its reach into the

Vietnam market through its 25%-associate, Galaxy Studio Joint Stock Company which operates 18 screens in 4

locations in Vietnam.

Besides operating cinemas in Malaysia and Vietnam, GSC also acquires and distributes film to cinemas and sub-

licences movie content to video, television (Pay TV and Free TV) and hotel operators. Aside from movies, GSC halls

also cater for events such as gala premieres, press conferences, product launches and seminars. GSC cinemas provide

comfortable seating with facilities such as wide screen projection, Digital and LCD projector for full audio-visual

presentation for event organizers.

Table 3: GSC cinema experiences

D- Box GSC MAXX Gold Class THX

Dolby Atmos GSC Lite Premiere Class Twin Seats

GSC Signature Glitters Digital Halls

Source: GSC’ website, MIDFR


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iv. Environmental Engineering, Waste management & Utilities

Another contributor to PPB’s revenue and earnings is the environmental engineering and waste management

segment. The division which operates by CWM Group Sdn Bhd provides innovative solutions, advance technologies

and professional management in the water, sewage, solid waste and drainage industries. CWM Group’s track record

comprises of more than 100 water, sewage and drainage projects with a combined contract value in excess of RM1b.

The Group also provides solid waste collection as well as disposal services for the industrial and commercial sectors in

the Central Region of Peninsular Malaysia. With its established track record, CWM group has been successful in

securing the tenders of sewage infrastructure projects under the Greater KL Scheme premised on the design and

build concept.

v. Property Investment & Development

PPB’s earnings are also supported by the contribution from its Property Investment and Development arms. Currently,

PPB Group owns and manages four retail/commercial properties namely; (i) New World Park, (ii) The Whiteaways

Arcade – both in GeorgeTown, Penang, (iii) Cheras LeisureMall and (iv) an office building, Cheras Plaza in Taman

Segar, Kuala Lumpur. To expand its property business, PPB acquired an effective 28% interest in Southern Marina

Development Sdn Bhd (SM) in 2013. The latter has acquired about 12.5 acres of land in Puteri Harbour, Nusajaya,

Iskandar Malaysia for the proposed development of a mixed residential – commercial property project. Under its

wholly-owned subsidiary, PPB Hartabina Sdn Bhd, PPB also received the Developmet Order for 14 high-end bungalows

at Taman Tanah Aman in Seberang Prai.

Figure 1: Artist impression of Southern Marina

Source: Online website

vi. Chemicals, Livestock, Investments & Others

Another core business segment of PPB is the combined business of chemicals trading & manufacturing, livestock

farming, bakery and others. The chemicals manufacturing activities is operated by 55%-owned Chemquest Group. It

is involved in the trading, distributing and manufacturing of chemicals. The trading division imports and distributes a

wide range of chemicals, petroleum solvents, refrigerated gases and filter aids from principals in the United States

and Europe. Meanwhile, the Malaysian Adhesives & Chemicals Sdn Bhd (MAC) – a subsidiary of Chemquest,

manufactures chemical intermediate for a range of industries. The products of the chemicals business are marketed to

domestic wood-based industries for use in the production of plywood, medium-density fibreboards and particleboards.


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Another division under this category is the livestock farming. This business complements PPB’s animal feed milling

and grains trading operations. It operates a table-egg layer farm and two broiler-breeder farms. The breeder farms

are located in Sua Betong, Negari Sembilan and Gurun, Kedah. The combined production capacity of the farms is

3.25m broiler chicks a month. For the layer farm, the production capacity is 20m eggs, which then marketed as ‘Seri

Murni Fresh Eggs’. Due to its complementary business functions, the management intends to reclassify this division

under the “Flour & Feed Milling, & Grains Trading”.

As for the bakery business, the contribution by this division to the group’s total segment profit is very small, circa 1%.

Bakery business is operates by The Italian Baker Sdn Bhd (TIB), a wholly-owned subsidiary of FFM Berhad. Currently,

it has two production lines comprising a 10,000 loaves-per-hour bread line and a 24,000 roll-per-hour roll line. Among

TIB’s products are Massimo Sandwich loaf with Wheat Germ, Massimo White Sandwich loaf, Massimo Favourite Cream

Roll and few others.

ASSOCIATE – WILMAR INTERNATIONAL LIMITED

Single largest shareholder of Wilmar at 18.3%. Through a series of M&A exercises, PPB currently is the single

largest shareholder of Wilmar. Wilmar is one of Asia's largest integrated agribusiness groups with operations in more

than 20 countries across the globe and has over 450 manufacturing plants. Wilmar has an extensive distribution

network for its products, which are sold in more than 50 countries globally.

Entry into Wilmar. In 2007, the PPB Group merged its oil palm plantation and edible oils trading and refining

businesses with Wilmar International Limited (Wilmar) in exchange for shares in Wilmar. As one of Asia's largest

integrated agribusiness groups with worldwide operations, Wilmar's business activities include oil palm cultivation,

oilseeds crushing, edible oils refining, sugar milling and refining, specialty fats, oleochemicals, biodiesel and fertilisers

manufacturing, and grains processing. PPB is presently the largest shareholder in Wilmar with an equity interest of

18.3%. Despite being an associate company, Wilmar’s contribution to PPB Group is significant. For the past five years,

Wilmar contributed more than 70% to PPB’s PBT. This indirectly exposes PPB’s earnings to the volatility in agricultural

commodity prices such as palm oil and soybean.

KEY ATTRIBUTES

Synergistic structure. The conglomerate structure enables PPB to create synergy from the integration of its various

core activities, i.e. flour milling to animal feed milling to livestock and food business to movie business. The structure

also allows PPB to gain a better control over the value chain and enable them to control costs throughout the

distribution process. This consequently helps PPB to improve efficiency and maintain the quality of their products.

Stable earnings growth… Apart from the operational improvement, the conglomerate structure also provide stable

earnings stream to the Group as the downside risk of one business can be counterbalanced by other businesses. The

earnings stability will also be supported by the involvement of the company in food businesses, personal care and

household item. The performance of consumer products companies is generally less sensitive to changes in the

economy and tends to be resistant to economic downturns. Excluding the gain and loss arising from the corporate

exercises, PPB has recorded consistent earnings stream of more than RM800m over the past 5 years. This is

comparable to Kuala Lumpur Kepong, its peer in the FBM KLCI 30, which has a market cap of RM24.2b.


6

Source: Company, Bloomberg, MIDFR

KEY RISKS

…but indirectly exposed to the volatility in commodity prices. However, its bottom line might be affected by

the fluctuation of Wilmar’s earnings. As Asia’s leading agribusiness company, Wilmar’s earnings are susceptible to

price fluctuations in the commodities markets. The

ownership of Wimar’s shares has indirectly influence

the financial performance of PPB. For the past five

years, Wilmar has contributed about 70-80% to PPB’s

PBT.

Exposure to FOREX movements. Besides the

volatility of the commodities market, PPB is also highly

exposed to the variation in foreign exchange rate – the

translation effect on the consolidation of Wilmar’s

earnings (in USD) to PPB’s accounts. This situation has

not only affected PPB’s bottom-line, but also influenced

the dividend payout pattern of the company, i.e.

dividend received from Wilmar has partly determined

the capability of PPB to pay dividend to its shareholders.

FINANCIAL PERFORMANCE OVERVIEW

Revenue. As one of the leading consumer products companies, PPB’s revenue growth was generally in tandem with

the growth of Malaysian income per capita. The year-on-year sequential improvement in revenue was also

underpinned by a healthy business environment, which helped PPB to achieve higher sales especially from its grains

trading and flour business, the largest contributor to PPB’s revenue. On top of that, better cinema ticket collections

and higher contribution from the environmental engineering, waste management, and utilities division also

contributed to the increase in revenue.

Chart 2: PPB's revenue Chart 3: FY14 revenue breakdown

*Chemical trading & manufacturing (3%), Livestock farming (3%), Bakery (3%), Frozen food (1%), & Others (2%)

Source: Annual Report, MIDFR

Chart 1: Wilmar’s contribution to PPB’s PBT and the relationship with commodity prices


7

Earnings. Over the past five years, PPB has recorded stable earnings in the range of RM840m to RM1,046m. This

was mainly due to its nature of business as well as its status of a conglomerate where it is exposed to the risks from

various types of business. The major contributor to PPB’s earnings is the Flour & Feed Milling & Grains Trading

division. In 2014, this segment contributed about 57% to PPB’s earnings before interest and tax (EBIT). The margins

from these businesses are nonetheless not very compelling. However, as the largest flour producer in Malaysia, PPB

managed to gain higher market share compared to the other flour manufacturers. The average EBIT margin of this

division for the past five years was only circa 8%.

Unlike the flour and feed milling and grains trading division, the property division as well as film exhibition and

distribution have recorded commendable EBIT margins. For the past 5-years, the property division as well as film

exhibition and distribution contributed to double-digit margins with an average of 38% and 14% respectively.

Chart 4: PPB's earnings

Chart 5: Contribution by segment in FY14 (EBIT)

*Chemical trading & manufacturing (1%), Livestock farming (5%), Investment Income (3), Bakery (3%) & Others (-9%)

Source: Annual Report, Company

Dividends. As one of the constituents of FBM30, PPB has consistently rewarded their shareholder through dividends.

Over the past five years, PPB paid about 15% to 30% of their earnings to the shareholders. Besides the operational

performance, PPB’s dividend payout was also associated with the dividend income received from Wilmar. Willmar has

on average paid about USD75m (approximately RM248m) to PPB between the years of 2010-2014.

OUTLOOK

Stronger growth from property and cinema businesses. Moving forward, we are expecting the property and

the film exhibition and distribution divisions to continue to grow and help to further elevate PPB’s earnings. The

sluggishness in the current property market could be advantageous to PPB as they may be able to acquire lands at

competitive price for the expansion of their property’s business. Meanwhile, for the cinema business, we are

anticipating a stronger growth in 2015. This will be supported by strong line-up of film title releases, which will drive

higher admissions. On the other note, in the light of volatile commodity markets and the implementation of the Goods

and Services Tax (GST), the consumer sentiment in Malaysia is likely to be cautious. However, the stable rise in

income and employment are expected to support household spending. Hence, we are expecting the performance of

the PPB’s flour, feed and food-related businesses to continue to be sustained.


8

Expecting modest contribution from Wilmar. We believe that lower commodity prices, particularly palm oil,

crude oil and sugar, will negatively impact Wilmar’s upstream businesses. However, we are expecting Wilmar’s

downstream operations to benefit from the lower feedstock costs and help to partly offset the downturn in its

upstream segment. Additionally, we also expect that Wilmar’s biodiesel business to benefit from the recently

announced biodiesel policy in Indonesia. Overall, we are anticipating Wilmar’s earnings to be moderate.

VALUATION

Undemanding valuation. We are valuing PPB with a target price of RM15.30 per share. We are applying sum-of-

part valuation methodology to reflect the different business segments of the group as well as to take into

consideration the proportionate value of Wilmar which accrue to the group. Our target price translates into an implied

FY16 forward PER of 16.5x imputed based on FY16 forecasted EPS of 92.7sen. This is slightly below the seven-year

historical average PER of 17.1x.

Table 4: Sum-of-parts valuation table

Segments Target PER (x)

FY 16 Segment value (RMm)

Remarks

Flour & feed milling & grains trading 13 1,540.1 Average sector forward PER

Marketing, distribution & manufacturing of consumer products

16 354.0 Average sector forward PER

Film exhibition & distribution 20 1,082.4 Average sector forward PER

Environmental engineering, waste management & utilities

132.9 Book value

Property investment & development 9 235.1 Property mid cap forward PER

Chemicals, livestock, investment and other

operations 7.3 Book value

18.3% stake in Wilmar International Ltd 16 13,875.4 Five years historical average

PER

14% stake in Malaysian Bulk Carriers Bhd 183.4 Sum-of-part valuation

Net (debts)/cash (Holdings co.)

722.3

Equity value (RMm)

18,132.9

Share capital (m)

1,185.5

SOP/share (RM)

15.30

Figure 2: PPB’s Forward PER Band

5

7

9

11

13

15

17

19

21

23

25

2010 2011 2012 2013 2014 2015

15x

18x

21x

RM

25x

Source: Bloomberg,MIDFR


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INVESTMENT STATISTICS

FYE 31st Dec (RMm) 2013 2014 2015F 2016F 2017F

Revenue 3,312.9 3,701.0 3,911.5 4,150.4 4,400.8

EBIT 259.2 296.1 331.1 351.3 385.1

Finance income 28.4 29.2 30.1 31.0 31.9

Share of Associates 785.7 719.5 830.4 890.4 809.8

Share of Joint Venture 3.9 4.6 4.7 4.8 4.9

Finance costs -13.6 -21.3 -23.6 -20.9 -17.9

Profit before tax 1,063.4 1,028.1 1,142.6 1,225.5 1,182.0

Taxation -72.5 -89.2 -90.3 -96.9 -107.6

Profit after tax 990.9 938.9 1,052.4 1,128.6 1,074.4

Non-controlling interest -8.4 -22.1 -26.1 -29.3 -29.3

Profit attributable to the owner 982.6 916.8 1,026.3 1,099.3 1,045.0

EPS (sen) 82.9 77.3 86.6 92.7 88.2

EPS growth (%) 16.7 -6.7 11.9 7.1 -4.9

PER (x) 19.3 20.7 18.5 17.2 18.1

DPS (sen) 25.0 23.0 28.3 30.3 28.8

Dividend yield (%) 1.6 1.4 1.8 1.9 1.8

Source: Company, MIDFR estimates

DAILY PRICE CHART

Nadia Kamil

[email protected] 03-2772 1669


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FINANCIAL STATEMENTS Income Statement (RM m) 2013 2014 2015F 2016F 2017F Balance Sheet (RM m) 2013 2014 2015F 2016F 2017F

Revenue 3,312.9 3,701.0 3,911.5 4,150.4 4,400.8 Property, plant & equipment 1,196.0 1,264.3 1,317.0 1,365.8 1,410.8

EBIT 259.2 296.1 331.1 351.3 385.1 Investment properties 204.1 195.6 203.8 211.3 218.3

PBT 1,063.4 1,028.1 1,142.6 1,225.5 1,182.0 Biological assets 2.9 3.2 3.3 3.4 3.5

PATAMI 982.6 916.8 1,026.3 1,099.3 1,045.0 Other intangible assets 2.7 3.0 3.1 3.2 3.3

EPS (sen) 82.9 77.3 86.6 92.7 88.2 Investment in associates 12,628.2 13,801.2 14,299.5 14,833.7 15,319.6

DPS (sen) 25.0 23.0 28.3 30.3 28.8 Investment in joint venture 57.4 58.5 63.2 68.0 73.0

EBIT margin (%) 7.8 8.0 8.5 8.5 8.8 Others 760.1 612.6 612.6 612.6 612.6

PATAMI margin (%) 29.7 24.8 26.2 26.5 23.7 Non-current assets 14,851.3 15,938.3 16,502.5 17,098.0 17,641.1

Cash Flow Statement (RM m) 2013 2014 2015F 2016F 2017F Inventory 508.5 718.6 759.5 805.9 854.5

PBT 1,063.4 1,028.1 1,142.6 1,225.5 1,182.0 Receivables 645.7 801.0 846.5 898.2 952.4

Amortization & Depreciation 109.0 112.4 117.2 121.8 126.1 Others 95.0 68.0 68.0 68.0 68.0

Interest expense 13.6 21.3 23.6 20.9 17.9 Deposits 498.3 423.1 437.4 449.7 466.4

Share of associates -785.7 -719.5 -830.4 -890.4 -809.8 Short-term fund placements 296.5 401.7 328.1 337.3 349.8

Share of joint venture -3.9 -4.6 -4.7 -4.8 -4.9 Cash and bank balances 170.2 254.5 328.3 337.6 350.1

Interest income -25.4 -17.8 -30.1 -31.0 -31.9 Current assets 2,214.1 2,666.8 2,767.8 2,896.7 3,041.2

Others -1.2 -0.1 0.0 0.0 0.0

OP before ∆ in WC 369.9 419.8 418.2 442.1 479.3 TOTAL ASSETS 17,065.4 18,605.2 19,270.2 19,994.7 20,682.3

∆ in current assets -118.2 -293.5 -86.4 -98.1 -102.8

∆ in current liabilities 35.4 169.0 28.5 35.5 35.1 Share capital 1,185.5 1,185.5 1,185.5 1,185.5 1,185.5

Cash from operations 287.1 295.3 360.2 379.4 411.6 Share premium 6.7 6.7 6.7 6.7 6.7

Tax paid -62.2 -76.7 -90.3 -96.9 -107.6 Retained Earnings 14,461.1 15,628.3 16,318.8 17,058.5 17,761.7

Net cash from Operations 224.9 218.6 269.9 282.6 304.0 Shareholder funds 15,653.3 16,820.5 17,511.1 18,250.7 18,953.9

Non-controlling interests 538.6 560.8 586.9 616.2 645.5

Purchase of PPE -207.7 -182.5 -178.3 -178.3 -178.3 TOTAL EQUITY 16,191.9 17,381.3 18,097.9 18,866.9 19,599.4

Associates' dividend received 184.7 244.3 332.2 356.1 323.9

Interest received 25.9 17.8 30.1 31.0 31.9 Long-term borrowings 89.7 62.0 53.0 44.1 35.1

Others -132.7 -12.8 0.0 0.0 0.0 Others 80.0 85.3 85.3 85.3 85.3

Net cash from Investments -129.9 66.9 183.9 208.8 177.5 Non-current liabilities 169.7 147.3 138.3 129.4 120.4

Bank term loans -21.9 118.7 -80.0 -80.0 -80.0 Payables 348.5 552.2 580.7 616.1 651.2

Dividend paid -249.0 -292.6 -335.8 -359.6 -341.9 Short-term borrowings 329.1 491.3 420.3 349.2 278.2

Interest paid -16.4 -21.5 -23.6 -20.9 -17.9 Bank overdrafts 0.74 0.27 0.27 0.27 0.27

Others 106.5 18.4 0.0 0.0 0.0 Others 25.6 32.8 32.8 32.8 32.8

Net cash from Financing -180.7 -177.0 -439.4 -460.6 -439.8 Current Liabilities 703.9 1,076.6 1,034.0 998.4 962.5

Net movement in cash -85.7 108.5 14.5 30.8 41.7 TOTAL LIABILITIES 873.5 1,223.9 1,172.3 1,127.8 1,082.9

Beginning cash balance 1,049.7 964.3 1,079.0 1,093.5 1,124.4

Effect of exchange rate ∆ 0.3 6.3 0.0 0.0 0.0 TOTAL EQUITY & LIABILITIES 17,065.4 18,605.2 19,270.2 19,994.7 20,682.3

Ending cash balance 964.3 1,079.0 1,093.5 1,124.4 1,166.1

Key Ratios 2013 2014 2015F 2016F 2017F

Cash Flow Statement Reconciliation Return on Equity (%) 6.3 5.5 5.9 6.0 5.5

Cash and bank balances 170.2 254.5 328.3 337.6 350.1 Return on Assets (%) 5.8 4.9 5.3 5.5 5.1

Deposits 498.3 423.1 437.4 449.7 466.4 Current ratio (x) 3.1 2.5 2.7 2.9 3.2

Short-term fund placements 296.5 401.7 328.1 337.3 349.8 Quick ratio (x) 2.4 1.8 1.9 2.1 2.3

Bank overdrafts -0.7 -0.3 -0.3 -0.3 -0.3 BV per share (sen) 13.7 14.7 15.3 15.9 16.5

Ending cash balance 964.3 1,079.0 1,093.5 1,124.4 1,166.1 Debt-to-equity (x) 0.03 0.03 0.03 0.02 `




APPENDIX

i) PPB ORGANISATION STRUCTURE

Source: Company


12

ii) Wilmar’s global presence

Source: Company


MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X).

(Bank Pelaburan)

(A Participating Organisation of Bursa Malaysia Securities Berhad)

DISCLOSURES AND DISCLAIMER

This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (23878-X). It is for distribution only under such circumstances as may be permitted by applicable law.

Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MIDF AMANAH INVESTMENT

BANK BERHAD makes no representation or warranty, expressed or implied, as to the accuracy, completeness or

reliability of the information contained therein and it should not be relied upon as such.

This report is not, and should not be construed as, an offer to buy or sell any securities or other financial

instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts

will initiate, update and cease coverage solely at the discretion of MIDF AMANAH INVESTMENT BANK BERHAD.

The directors, employees and representatives of MIDF AMANAH INVESTMENT BANK BERHAD may have interest in

any of the securities mentioned and may benefit from the information herein. Members of the MIDF Group and their

affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose.

MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS

STOCK RECOMMENDATIONS

BUY Total return is expected to be >15% over the next 12 months.

TRADING BUY Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has

been assigned due to positive newsflow.

NEUTRAL Total return is expected to be between -15% and +15% over the next 12 months.

SELL Negative total return is expected, by -15% or more, over the next 12 months.

TRADING SELL Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has

been assigned due to negative newsflow.

SECTOR RECOMMENDATIONS

POSITIVE The sector is expected to outperform the overall market over the next 12 months.

NEUTRAL The sector is to perform in line with the overall market over the next 12 months.

NEGATIVE The sector is expected to underperform the overall market over the next 12 months.

PPB Group Bhd - I3investorDevelopment Sdn Bhd (SM) in 2013. The latter has acquired about 12.5 acres...

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Transcript of PPB Group Bhd - I3investorDevelopment Sdn Bhd (SM) in 2013. The latter has acquired about 12.5 acres...