PBB’s Wilmar to drive earnings

The company’s business segments have registered lower earnings except for its property and investments, says MIDF Research 


PBB Group Bhd’s earnings expected to receive support from its 18.5%-owned Singapore-listed Wilmar International Ltd. 

MIDF Research in a note yesterday said all of PBB’s business segments have registered lower earnings except for its property and investments and other operations segments. 

However, Wilmar’s earnings rose 21% year-on-year (YoY) to RM1.5 billion in the financial year 2021 (FY21) from RM1.2 million in FY20. 

“Aside from that, the group’s film exhibition and distribution segment still recorded losses on the back of intermittent cinema closures since the second quarter of 2020 (2Q20). 

“Nonetheless, it is worthwhile to note that the film segment registered lower losses of RM113.3 million in FY21 from RM135.6 million in FY20,” the bank said in a statement. 

Although this segment is mostly impacted by the Covid-19 pandemic and performed poorly, MIDF expects it to recover slowly as now cinemas have been reopened for full-vaccinated adults. 

“On top of that, we remain concerned about the performance of its grains and agribusiness and consumer products segment on the back of higher agriculture commodity prices and higher distribution costs,” it said. 

PPB’s 4QFY21 normalised earnings came in at RM561.9m, up by +37.1% YoY.

In tandem, the group recorded higher FY21 normalised earnings at RM1.6b (+21% YoY) from RM1.3b in FY20. This was attributable to higher contributions from the Wilmar segment.

“All in, the group’s FY21 financial performance came in within our and consensus expectations, accounting for 95.0% and 104% of full year FY21 earnings estimates respectively,” said MIDF. 

MIDF maintains their ‘Buy’ recommendation on PBB with an unchanged target price (TP) of RM19.83 which implies their expected total return of 12.5%. 

“We are maintaining our TP of RM19.83 by pegging its FY22 earnings per share of 99.1 sen to price earnings ratio of 20x which is the group’s one-year historical average.” 

PPB’s proposed final dividend per share of 25 sen per ordinary share. 

“Altogether, the group has announced 35 sen per share dividend for FY21 (including interim dividend: 10 sen) which is slightly below our expectation, accounting for 7.7% of our full-year FY21 dividend estimates,” said MIDF. 

MIDF has also decided to maintain its FY22 and FY23 forecasts at RM1.4 billion and RM1.6 billion as its FY21 results were within its expectations.