INVESTMENT HIGHLIGHTS

• 1HFY18 Net Income is in line with expectations

• 1HFY18 revenue improved 7%yoy to RM2.23b

• 1HFY18 earnings improved 15%yoy

• Earnings estimates maintained

• Maintain NEUTRAL with TP of RM16.16

1HFY18 Net Income is in line with expectations. PPB Group 1HFY18 core net income (CNI) of RM494.0m is within expectations as it makes up 54%/48% of our/consensus expectations. As expected, an 8.0 sen dividend is announced.

1HFY18 revenue improved 7%yoy to RM2.23b due to higher revenue in the "grains and agribusiness", "film exhibition and distribution", "enviromental engineering" and "property" segment.

1HFY18 earnings improved 15%yoy to RM494.0m as Wilmar contribution was higher at RM376m (against 1HFY17 RM323m). Among PPB own businesses, "grains and agribusiness", "enviromental engineering" and "property" segments registered better earnings.

Earnings estimates maintained. We maintain our FY18 earnings estimate of RM912m. We also maintain our FY19 earnings estimate of RM1.03b. Earnings contribution from Wilmar to PPB profit is expected to be the major earnings driver in both FY18 and FY19.

Maintain NEUTRAL with TP of RM16.16. Our Target Price is based on 1.1x Book Value. The positive newsflow surrounding potential Wilmar’s China operations IPO will keep PPB share price supported.

Source: MIDF Research - 30 Aug 2018