INVESTMENT HIGHLIGHTS

• FY17 earnings within expectation

• FY17 earnings improved 15% yoy

• Earnings estimate maintained

• Maintain BUY with TP of RM19.46

FY17 earnings within expectation. PPB Group Berhad (PPB) FFY17 Net Income of RM1.21b is broadly within expectations as it makes up 113% of our estimate and 111% of consensus.

FY17 earnings improved 15% yoy. The strong earnings growth is caused by higher contribution from Wilmar (PBT contribution +26% yoy to RM1.06b). This has more than offset the weak earnings from PPB’s own businesses.

Earnings estimate maintained. We maintain our FY18 earnings estimate of RM1.12b. We also introduce our FY19 earnings estimate of RM1.14b. Earnings contribution from Wilmar to PPB profit is expected to be the major earnings driver in both FY18 and FY19.

Maintain BUY with TP of RM19.46. Our Target Price is based on 1.1x Book Value. We like the stock for the positive newsflow surrounding potential Wilmar’s China operations IPO.

Source: MIDF Research - 1 Mar 2018