Investment Highlights

• 9MFY17 earnings within expectation

• 9MFY17 earnings improved 51% yoy

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM17.69

9MFY17 earnings within expectation. PPB Group Berhad (PPB) 9MFY17 Net Profit of RM829.5m came in within expectation. Although 9MFY17 Net Profit makes up 87% of our estimate and 80% of consensus, we are expecting Wilmar contribution to moderate in 4QFY17 due to strong Ringgit. As Wilmar result is reported in USD, stronger Ringgit means lower value when it is translated back in Ringgit.

9MFY17 earnings improved 51% yoy. The strong earnings growth is caused by higher contribution from Wilmar (PBT contribution +108% yoy to RM631m). This 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. Earnings contribution from Wilmar to PPB profit is expected to be the major earnings driver in the near and long term.

Maintain NEUTRAL with TP of RM17.69. Our Target Price is based on 1.0x Book Value. Despite our bullish view on palm oil prices, PPB exposure to pure upstream plantation is diversified through Wilmar hence we expect it to benefit less than other plantation companies.

Source: MIDF Research - 24 Nov 2017