Period 4Q12/ 9M12
Actual vs. Expectations
PPB’s FY12 core net income of RM842m
beat both the consensus and our estimates. It made up 118% of the consensus
forecast of RM713m and 113% of our forecast of RM748m.
We believe FY12
earnings was ahead of the consensus due to the better than expected earnings
from Wilmar (which we had accounted for previously during Wilmar’s earnings
release).
On the other hand,
the results were ahead of ours due to the better than expected margin at PPB’s
Grains Trading, Flour and Feed Milling (GFF) division in 4Q12.
The GFF division’s
PBT margin surged to 12.1% in 4Q12 and was remarkably better than the 9M12 PBT
margin of 5.7%. This could be caused by a lower input cost from a cheaper wheat
price in 4Q12.
Dividends A final single tier dividend of 13.0 sen was announced.
This was above both the consensus and our expectations, mainly due to the
better than expected earnings.
Key Results Highlights
YoY, the FY12 net profit declined
14% YoY to RM842m in line with the lower contribution from Wilmar in 1H12 due
to losses at Wilmar’s Oilseeds and Grains (OAG) division. That said, Wilmar’s
OAG division had recovered strongly to register a 2H12 PBT of USD106m against a
1H12 Loss Before Tax of USD92m.
QoQ, the 4Q12 net
profit jumped 23% to RM306m due to margin improvement in PPB’s GFF division and
the sustained profitability at Wilmar’s OAG division. The GFF division’s PBT margin
surged to 12.1% in 4Q12 (from 1.7% in 3Q12).
Outlook The worst should be over for PPB due to the sustained
earnings recovery at Wilmar and the improved margin in PPB’s GFF division.
Change to Forecasts
Increase FY13E earnings by 4% after
assuming better PBT margin in PPB GFF division.
Rating Maintain OUTPERFORM
Valuation Upgraded our Target Price to RM15.00 based on unchanged
Fwd. PER of 20.9x to the higher FY13E EPS of 71.8 sen (previously 68.8 sen).
Risks Lower
than expected earnings contribution from
Wilmar and poorer margin at PPB’s GFF division.
Source: Kenanga
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