PPB keeps cinema business

  • Markets
  • Wednesday, 10 May 2017

We are still growing the business through expansions in Malaysia, Vietnam and Cambodia. We still think there is growth to be tapped here.

 KUALA LUMPUR: Despite some challenges, PPB Group Bhd will remain focused on the Malaysian consumer market.

It will neither sell its Golden Screen Cinemas Group (GSC) nor raise prices of its consumer products such as bread and flour.

The diversified group, which is part of Robert Kuok’s stable of businesses, planned to hold on to the cinema business, as there is still growth to be tapped.

“We are still growing the business through expansions in Malaysia, Vietnam and Cambodia. We still think there is growth to be tapped here.

“This is a good business that will add value to shareholders,” GSC chief executive officer Koh Mei Lee told a press conference after the group’s AGM here.

“There are people who will be interested and approach us, but I can confirm that we are not selling,” she added.

It was reported last year that PPB was seeking to sell GSC for as much as US$500mil (RM2.17bil). To this, the group had responded that it was considering various “strategic options” for all its businesses with a view to optimise shareholder value.

Koh was bullish on the cinema operations and confident that GSC could do even better this year with the pipeline of movie titles.

“All our cinemas are profitable, and we are looking forward to re-entering the Johor market with the planned opening of our screens in Paradigm JB with 16 screens,” she said.

The segment’s performance would largely be influenced by the number and quality of movie titles that are released, and this year, there are more than 400 planned releases.

“There are seven to eight titles being released every week. There is growth, but it is driven very much by blockbuster movies and we are very fortunate that there’s a very strong slate this year,” Koh said.

PPB planned to open three new cinemas with an additional 39 screens this year at the MyTOWN shopping centre in Cheras, Melawati Mall and Paradigm Mall in Johor Baru.

Its Galaxy Studio Vietnam, which is 40%-owned through Galaxy Studio Joint Stock Company, is also expected to open in six new locations, adding 37 screens.

It had also made some investments in Cambodia last year.

The film exhibition and distribution segment grew by some 8% in the financial year ended Dec 31, 2016 (FY16) due to contribution from new cinemas opened in FY15, while profits were down by some 10% to RM59mil due to foreign-exchange translation losses on US dollar-denominated loans.

Meanwhile, PPB would not resort to price hikes of its products even as margins were impacted last year due to increased costs.

The group planned to maintain market share and noted that recent laws introduced, including the Anti-Profiteering Act, 2011, had made it harder for it to raise prices.

“Increasing prices to derive better profit is easier said than done because this won’t create the right chemistry between us and the consumers, plus there is also a third party, which is the competitor.

“The current economic environment is very challenging and trying. High traffic outlets are also affected,” said Datuk Ong Hung Hock, managing director of PPB’s 80%-subsidiary FFM Bhd.

“The way we derive profit is to lower costs by asking for better margins from suppliers, as we are not going to be absent from shelf space.

“We would like to sustain our market share so that when the good times come, we can have the benefits of shelf space. In every marketing effort we must not lose market share, as losing it is very easy but winning it back is difficult,” Ong added.

This segment sells its own brand of bread and flour besides other brands to the end-consumers.

Its profits dropped by some 13% to RM22mil last year despite a 6% rise in revenue to RM626mil.

The group attributed the decreased profit to higher staff costs and lower sales of higher-margin products.

Meanwhile, PPB managing director Lim Soon Huat said it had no plans to increase its stake in its China operations for flour milling from 20% now.

“The business has started to be profitable due to the big population base. We make 15,000 tonnes of wheat per day there.

“This will continue to contribute to the overall profitability of the group,” Lim said.

On the property front, the group said it wanted to launch two projects this year: a mixed development in Taman Megah, Petaling Jaya, and another project in Penang.

PPB is also looking for more land in strategic areas either in the Klang Valley, Johor or Penang.

It will also build a bridge to link the upcoming mass rapid transit station to improve access and increase retail space in its Cheras Leisure Mall.

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Business , PPB Group , GSC , cinemas , Robert Kuok , flour , bread , consumer , products , Mei , Koh , Lee , stocks , shares ,


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