KUALA LUMPUR (May 15): Robert Kuok-owned PPB Group Bhd’s shares, which have been steadily rising since April, rose as much as 32 sen on the back of its Singaporean subsidiary’s Wilmar International Ltd stellar first quarter results.
At 3:01 pm, the plantation group became the third top gainer as it traded 32 sen or 2.36% higher at RM13.90, which is also its intraday high. A total of 679,200 shares changed hands.
The last time the plantation group’s share price reached this high was on October 30 of last year, though it ended up closing at RM13.88.
In a note last Wednesday (May 8), CIMB Research analyst Ivy Ng Lee Fang said the research house expects the market to reach positively to Wilmar’s good results, as its core net profit for the first quarter ended March 31, 2013 (1QFY13) jumped 52% from a year earlier.
In 1QFY13, Wilmar’s core net profit came to S$314 million compared to S$206 million in the previous corresponding period.
Ng said the company’s surging core net profit was due to higher contributions from all segments except for palm and laurics and plantations and mills’ segments.
PPB is Wilmar’s biggest shareholder, with an 18.3% stake in the latter.
“(Wilmar’s) stock remains our top pick in the plantation sector as its earnings are more resilient compared to upstream plantation companies during times of lower (crude palm oil) CPO prices,” said CIMB’s Ng.
Meanwhile, local news agency Bernama yesterday reported PPB chairman Datuk Oh Siew Nam saying the group plans to invest heavily in its flour mill segment, with RM307 million in capex allocated.
“We will invest RM307 million this year and of this amount, about RM185 million will be used to establish nine flour mills in China,” Oh was quoted as saying.
Meanwhile, PPB will also invest RM73 million to set up flour mills in Hanoi, he added.
Oh said PPB revenue increased last year due to higher income generated from grains trading, flour and feed milling segment.
PPB, which is 50.81%-owned by Kuok Brothers Sdn Bhd, is also set to invest RM152 million for expansion and refurbishment exercises of its cinema business Golden Screen Cinemas Sdn Bhd.
In a note on Monday, Kenanga Investment Bank analyst Lim Seong Chun raised PPB’s target price by two sen to RM15.20 while maintaining an “outperform” call.
PPB is one of the only two plantation counters with the “outperform” rating. The remaining eight were rated “market perform”.
TSH Resources Bhd is the other company given the “outperform” call by Kenanga’s Lim. He revised the company’s target price by 44 sen or 22% to RM2.44.