DESPITE the downtrend on the Malaysia Securities Exchange Bhd (MSEB), PPB Group Bhd has managed to sustain its share price at near its historical high.
PPB's share price surged to a record level of RM6.75 on Tuesday last week before slipping back to close at RM6.65 yesterday.
The stock has charted a steady upward trend since March last year, rising from RM4-level a year ago. It has outperformed the MSEB Composite Index by as much as 28% in the past 10 months.
Analysts said its impressive earnings had propped up the price. Furthermore, its venture into water engineering activities in China could turn out to be an important source of earnings growth for the group, said an analyst.
Strong crude palm oil prices had also lifted the group's financial performance.
Besides, its sugar refining division had also driven PPB's earnings growth, said analysts.
For the nine months ended Sept 30, the group's profit rose to RM271.5mil from RM170.7mil a year before. Turnover expanded to RM6.75bil from RM5.65bil previously.
Earnings per share (EPS) grew to 55.34 sen from 34.79 sen previously.
The group's annualised EPS would come to 73.78 sen for the financial year ended Dec 31, 2003. This represents a price-earnings ratio of nine times at yesterday's price of RM6.65.
CIMB Securities said the falling global raw sugar prices had widened the profit margin for the sugar refining division.
PPB owns businesses in sugar refining, flour milling, edible oil refining, cinema operations and water engineering. The group proposed to take private its flour-milling unit FFM Bhd last November.
The low-profile PPB has hardly drawn analysts' attention, although its plantation unit PPB Oil Palms Bhd is one of the favourite plantation stocks among investment analysts.
The share price of this conglomerate had hovered between RM3 and RM4 for at least four years before the current uptrend, the reason being the lack of exponential earnings growth in the well-diversified group.
However, PPB has also foreseen the non-exciting growth in foodstuff business; hence, the group is expanding its water engineering activities to China via subsidiary Chemquest Sdn Bhd.
A consortium in which Chemquest is a member has managed to secure one sewage project in Beijing.
The management has noted the project would help pave the way for the group to win more projects in the future. And it expects the water engineering division to be a core driver for future earnings growth.
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