PPB focuses on growth and payouts

PPB Group Bhd says it aims to reward its shareholders with a consistent dividend payout while focusing on strengthening its core businesses via capacity building and automation for future growth.

This comes after the diversified conglomerate, controlled by Malaysian billionaire Tan Sri Robert Kuok, said that its overall financial results for the current financial year ending Dec 31, 2025 (FY25), and the upcoming third quarter of FY25 (3Q25) will depend on the performance of its 18.8% equity interest in the integrated agribusiness group Wilmar International Ltd.

Wilmar has said that the group expects to report a loss for 3Q25, but to remain profitable for the full year.

This is due to a penalty imposed in Indonesia, linked to the Indonesian Supreme Court’s recent ruling which recently overturned a prior acquittal in a 2021 graft case involving cooking oil export permits.

The case involved three major palm oil groups: Wilmar Group, Permata Hijau Group and Musim Mas Group.

Wilmar’s expected quarterly loss follows the anticipated forfeiture of its deposit of 11.88 trillion rupiah (approximately US$729mil) with the Indonesian Attorney General’s Office as a result of the Court’s decision.

Wilmar has said that while it respects the decision of the Indonesian Supreme Court, it maintains that the actions taken by the Wilmar respondents during the period of a cooking oil shortage in the Indonesian market were done in compliance with prevailing regulations and carried out in good faith.

The company in a statement tells StarBiz 7 that in the meantime, it’s business as usual for the group’s core businesses.

PPB has five main business divisions, comprising firstly, the grains and agribusiness segment, which includes flour milling, animal feed manufacturing, grains trading and livestock farming.

FFM Group, in which PPB holds an 80% interest, owns and operates five flour mills in the country and two in Vietnam.

The group also operates a flour mill in Thailand via its 43.4% associate, Kerry Flour Mills Ltd.

In China, FFM Group has a 20% interest in seven associates.

Additionally, PPB has other businesses, including film exhibition and distribution – owning Golden Screen Cinemas Sdn Bhd – and a bakery, The Italian Baker Sdn Bhd, which produces products under the Massimo brand.

PPB’s consumer segment is involved in marketing and distributing edible oils.

The group also has its hand in the property business.

It owns and manages several retail and commercial properties in Kuala Lumpur and Petaling Jaya, including Cheras Leisure Mall, Cheras Plaza, Megah Rise Mall, as well as New World Park and The Whiteaways Arcade in George Town, Penang, according to information on its website.

Consistent dividend payouts

On dividends, PPB says: “We evaluate our dividend payout based on the company’s cash position, our needs for business expansion, investment and ongoing operations.

“We aim to reward shareholders with a consistent dividend payout.”

For its most recent quarter, PPB declared an interim dividend of 12 sen per share, the same as the year before. Its net profit for 2Q25 fell by 9% year-on-year (y-o-y) due to a decrease in contribution from Wilmar.

For 2Q25, net profit dropped to RM279.84mil, or earnings per share of 19.67 sen, despite revenue increasing 3% y-o-y to RM1.36bil.

PPB said in a recent Bursa Malaysia announcement that the overall financial results for 3Q25 and the full FY25 would depend on Wilmar’s performance, as well as contributions from the group’s core business segments, which are expected to remain profitable.

In a note to clients, MBSB Research says it has revised Wilmar’s FY25 earnings lower by 49.3%, factoring in weaker contributions in the second half of FY25.

In tandem, it cut PPB’s earnings forecast by 38.1% to RM778.4mil and lowered the dividend per share forecast to 25 sen from 35sen, implying a dividend yield of 2.5%.

“We believe most short-term risks are largely priced in, while the long-term outlook remains supported by a rebound in Wilmar’s earnings contribution, driven by improvements across most business segments except plantation and sugar milling.

“Notably, wheat prices (have) continued to consolidate.”

MBSB Research upgraded the stock from “neutral” to “buy”, raising the target price to RM11.02 from RM9.01.

“Post-litigation, the long-term outlook for FY26 to FY27 remains decent, as short-term risks appear largely priced in following the recognition of the legal compensation.

“As such, we believe the stock to be undervalued at (this) current juncture.”

It also notes that the moderation in wheat prices, alongside prudent feedstock procurement, should help normalise “crushing” margins within the grains and agribusiness main division.

Overall, the group’s core businesses are expected to sustain operating profits well above RM360mil annually over the next three years, MBSB Research adds.

At last look, PPB’s stock was priced at RM10.20 apiece, valuing the entire group at RM14.5bil. In the last four weeks, it has traded between RM9.52 and RM10.44.