PETALING JAYA: PPB Group Bhd
is expected to deliver firmer earnings in 2026, with analysts saying the worst of its recent negative surprises may already be behind it, as its core agribusiness operations, cinema business and associate earnings from Wilmar International Ltd continue to underpin performance.
UOB Kay Hian (UOBKH) Research remained positive on the group’s earnings trajectory, maintaining a “buy” call with an unchanged target price of RM14.10, implying upside from its current level of RM12.20.
“We continue to like the stock for its steady earnings outlook, supported by both its internal operations as well as associate income from Wilmar, which is forecast to post 17% core earnings growth in 2026.”
The research house expected PPB’s underlying earnings to strengthen this year, supported by resilient margins in flour and feed milling, alongside improving contributions from Wilmar.
The group’s 2025 results showed that core operations gained momentum, with pre-tax profit from core businesses rising 41% year-on-year to RM480mil, lifting their share of total group pre-tax profit to 30% from 26% previously.
Agribusiness remained the largest internal earnings pillar, with segment pre-tax profit climbing 22% to RM393mil on lower cost of sales.
Its film business posted a sharp turnaround, with pre-tax profit surging to RM68mil from just RM4mil a year earlier, as box office collections improved.
“Management remains optimistic on delivering another firm performance in 2026,” UOBKH Research said, despite heightened trade and geopolitical uncertainties.
For agribusiness, the research house noted that PPB expects its cost base to remain “relatively stable overall”, even with slightly higher logistics costs and near-term commodity volatility.
Wheat feedstock prices, a key cost component, are expected to stay manageable due to ample global supply, while a stronger ringgit against the US dollar should help soften imported raw material costs.
That currency trend is also expected to benefit the film division, which sources overseas film rights.
The cinema business is projected to extend last year’s recovery, with management citing “another robust line-up of movie titles anticipated in 2026” to support higher traffic and ticket sales.
A major overhang from last year, the RM4.2bil impairment linked to Wilmar, is also being treated as largely non-recurring.
PPB said the write-down was a one-off, non-cash accounting adjustment arising from the gap between Wilmar’s market value and book value, stressing that it would not affect dividend capacity.
Management also reiterated its dividend commitment, maintaining a 42 sen payout for 2025 despite lower dividend income from Wilmar.
With net cash rising 45% to RM1.85bil, UOBKH Research believes PPB retains financial flexibility while Wilmar remains a strong long-term earnings anchor.
