PPB not raising stake in Wilmar


  • Business
  • Thursday, 14 May 2015

(from left) PPB Group Bhd chairman Datuk Oh Siew Nam and PPB Group managing director Lim Soon Huat at the companys AGM today.

KUALA LUMPUR: PPB Group Bhd has no immediate plan to raise its existing 18.3% stake in Wilmar International Ltd but will continue to explore new opportunities while expanding on its core businesses.

Chairman Datuk Oh Siew Nam said: “A definite strategy for PPB Group is to develop its own businesses. We have no thoughts to increase stake in our associate company Wilmar.”

In 2007, PPB Group merged its oil palm plantation, edible oils trading and refining businesses with Wilmar in exchange for shares in Singapore-listed Wilmar, which is one of Asia’s largest integrated agribusiness groups.

“Our investment in Wilmar already formed an integral part of PPB Group’s business portfolio and also our largest investment,” PPB Group managing director Lim Soon Huat said after the company’s AGM here yesterday.

Oh pointed out that most oil palm plantation companies today would remain profitable even with crude palm oil (CPO) price currently trending at between RM2,190 and RM2,200 per tonne as “most of the planters’ cost of production to produce CPO is not more than RM1,400 per tonne.”

On the group’s outlook, Lim is confident PPB will achieved better growth this year driven by its diversified core businesses in flour and feed milling, the Golden Screen Cinemas (GSC) operation and Wilmar’s good prospect.

According to chief financial officer Leong Choy Ying, the PPB Group has allocated RM535mil in capital expenditure (capex) for the next two years for the expansion of its various core operations.

Of the total capex, RM208mil has been set aside for the expansion and upgrading of its flour and feed milling operations, RM283mil in film exhibition and distribution, 11 new cinemas, investment in Vietnam and RM19mil for the expansion of its frozen food processing plant in Pulau Indah.

The remaining RM6mil will be for marketing and distribution, new warehouse, upgrading of office building, plants and machinery and RM3mil to acquire bakery support equipment and sales trucks for its bakery division.

Leong said: “We foresee all these investments will provide better returns in the future in terms of revenue.”

On flour and feed mill operations, PPB subsidiary FFM Bhd’s managing director Datuk Ong Hung Hock said: “The performance of this segment should be sustainable given the resilient domestic and regional consumption patterns.”

He said the construction of a new 500-tonne per day four mill was underway at the existing premises in Pasir Gudang to improve efficiency and increase milling capacity.

“We target the new mill to be completed by 2017,” added Ong.

On the cinema business, GSC Group chief executive Koh Mei Lee said: “We are fortunate because this year, there are quite a number of block buster movies.

“Despite the implementation of goods and services tax (GST) in April, we have not seen any setbacks as we have movies such as Avengers: The Age of Ultron. Fast and Furious 7 and coming soon; James Bond, Jurassic Park and Mission Impossible movies.”

In fact, GSC would also perform well next year as “we expect more admissions and this bodes well with our continued expansion.”

For this year, three new cinemas have opened in Nu Sentral in KL, Ipoh Parade and IOI City Mall Putrajaya with another three to open in Klang, Alor Star and Bintulu.

As for its property division, PPB Group chief operating officer (properties) Chew Hwei Yeow said this segment was expected to perform satisfactorily this year despite subdued sentiments in the local property market.

PPB’s 28% associate, Southern Marina Development Sdn Bhd, plans to launch phase 1 of the Southern Marina Residences with an estimated gross development value of RM650mil later this year.

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