Reinventing to stay relevant


An efficient conglomerate like PPB Group understands the needto move at a much faster pace to remain competitive. It strives tobe a market leader in its core businesses and further expand intoother related areas to enhance shareholders' value. 

PPB Group Bhd has stamped its mark as one of Asia's most diversified conglomerates. 

The group attributes much of its success to strategic acquisitions and joint ventures under the dynamic leadership of its parent, the Kuok group helmed by Tan Sri Robert Kuok. 

Formerly known as Perlis Plantations Bhd, the group started off with the cultivation and milling of sugar cane in Chuping, Perlis, in 1968. 

The business empire has since expanded into flour and feed milling, edible oils refining and trading, oil palm plantations and environmental engineering, infrastructure and waste management services. 

Other businesses under the group's umbrella include film exhibition and distribution, property ownership, livestock farming, bulk and consumer packaging, consumer products distribution, chemical manufacturing and commodity trading. 

The group's core businesses are mainly located in Malaysia and Indonesia. It also has strategic operations in China, Vietnam, Myanmar, Thailand, Singapore and Europe. 

Industry observers said one of the most interesting aspects of PPB Group was the company's willingness to re-invent itself. This is well reflected by the wide spectrum of businesses to ensure continued success in future. 

Despite its slow but steady corporate approach, PPB Group has been good at creating values for its shareholders, particularly over the past five years. 

CIMB Research analyst Ivy Ng said: “PPB Group is always ready to capitalise on new opportunities towards greater achievement.”  

In 2003, the group took FFM Bhd (formerly known as Federal Flour Mills Bhd) private as part of its continuing effort to enhance shareholder value.  

The group last year made a landmark decision to sell its listed plantation arm, PPB Oil Palms Bhd (PPBOP), to Singapore-based Wilmar International Ltd, a company led by chairman and chief executive officer Kuok Khoon Hong, who is a nephew of Robert Kuok. 

Many believe that the enlarged Wilmar entity – one of Asia's largest integrated agribusiness group – would turn into another solid business legacy for the Kuok group. 

Ng said: “The Wilmar-PPBOP merger has boosted the illiquid nature of PPB Group share price.” The share closed higher at RM7.75 last Friday compared with RM5.80 early this year.  

“All eyes will be on the potential contributions from the enlarged Wilmar entity to PPB Group, which will be the second largest shareholder in Wilmar with 18.2% stake after the completion of the deal by the second half this year.”  

The deal will provide economies of scale and better competitive advantages to PPB Group as Wilmar, which is listed on the Stock Exchange of Singapore, has larger market capitalisation and trading at a high price-earnings ratio. 

Meanwhile, the Kuok group had taken up controlling stakes in freight service-based Transmile Group Bhd and gas-based Hexagon Holdings Bhd over the past few years. 

In addition, Robert Kuok also sits on the advisory panel of the Iskandar Development Region project in Johor. 

A plantation analyst with a foreign brokerage said PPB Group had positioned itself in the trading of core commodities like sugar and flour, as well as the cinema and waste water-treatment businesses. 

“Although not considered as hot sectors among market players, these businesses will be able to generate positive cashflows to the group,” he added. 

The PPB Group stock over the past few years was “under appreciated” due to the nature of its commodities business, which were subject to the volatile commodity prices, while sugar and flour were controlled items in Malaysia. 

The analyst said: “Those holding PPB Group shares are normally long-term players. Some even like the group's conservative but prudent management style.” 

PPB Group executive chairman Datuk Oh Siew Nam recently said: “We believe the synergy from the Wilmar-PPBOP merger will be greater and its dividend stream will be able to cover our existing core flour, sugar, cinema and waste water-treatment businesses.” 

Oh was positive that PPB Group would continue to pay good dividends to its shareholders as “Wilmar is poised to perform better in the future, given its stature as a global plantation company with strong upstream and downstream operations.” 

As at Dec 31, 2006, PPB Group ranked among the top companies listed on Bursa Malaysia with a market capitalisation of RM6.46bil.  

The group's total assets amounted to RM7.3bil with a turnover of RM11.5bil.  

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