Period  4Q13 and FY13

Actual vs. Expectations PPB Group’s (PPB) FY13 core net profit* (CNP) of RM962m is broadly within expectations at 101% of consensus forecast (RM952m) and 108% of ours (RM890m).

Dividends  As expected, a final single tier dividend of 17 sen was announced and this brought the full-year dividend to 25 sen in FY13 (+25% YoY).

Key Results Highlights   YoY, FY13 CNP improved by 14% to RM962m due to higher earnings contributions from Wilmar (PBT +10%), PPB’s cinema division (PBT +23%) and consumer products division (PBT +22%).

 QoQ, 4Q13 CNP slipped 1% to RM283m due to seasonally lower contributions from Wilmar (PBT -11%). However, this was mitigated by strong performance from flour division (PBT +131%) and consumer products division (PBT +5%).

Outlook  FY14 earnings outlook is bright as Wilmar should benefit from higher CPO prices and the rapid implementation of biodiesel policy in Indonesia. PPB’s own operations are also expected to do well in line with better GDP growth in Malaysia.

Change to Forecasts Maintain FY14E CNP of RM963m while FY15E CNP is maintained at RM993m.

Rating Maintain OUTPERFORM PPB is poised to benefit from Wilmar’s earnings recovery.

Valuation  We maintain our TP of RM17.00 based on an unchanged Fwd. PER of 20.9x on FY14E EPS of 81.2 sen.

Risks to Our Call

 Lower-than-expected earnings from Wilmar.

 Lower-than-expected sales or margin for PPB’s business divisions.

Source: Kenanga