INVESTMENT HIGHLIGHTS

• 1QFY17 net income within expectations

• 1QFY17 earnings grew 45% yoy

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM17.69

1QFY17 net income within expectations: Although PPB 1QFY17 net income makes up 38% of our estimate and 33% of consensus, we deem the result as within expectation. We are expecting Wilmar result to moderate in the coming quarters due to lower CPO price estimated in the remaining quarters.

1QFY17 earnings grew 45% yoy. The strong earnings growth is caused by higher contribution from Wilmar (PBT +64% yoy to RM296m) which has more than offset the weak earnings from PPB’s own businesses.

Earnings estimate maintained. We maintain our FY17 earnings estimate of RM945m. We also maintain FY18 earnings estimate of RM947m. Wilmar contribution is likely to affect PPB net income significantly as we expect its PBT contribution to be 63% of PPB Group’s PBT.

Maintain NEUTRAL with TP of RM17.69. Our Target Price is based on 1.0x Price To Book. Despite the strong 1QFY17 result, we expect earnings to moderate for the rest of FY17 due to lower CPO price.

Source: MIDF Research - 26 May 2017