This article first appeared in The Edge Financial Daily on March 8, 2019

KUALA LUMPUR: PPB Group Bhd, which is controlled by billionaire Robert Kuok, is confident of performing well in financial year 2019 (FY19) ending Dec 31, 2019, unfazed by concerns over a slowing economy and a volatile commodity market.

Its managing director (MD) Lim Soon Huat (pic) said this is on the back of a focus on generating volume growth while managing its cost structure, provided that there will be no more impairment at its largest profit contributor, Wilmar International Ltd.

He added that the group’s financial results for the year will be dependent on the performance of its 18.55%-owned associate Wilmar, which Lim expects will continue to do well this year.

“I can’t speak for Wilmar, but I believe it has done what is adequate for now,” he told a press and analyst briefing here yesterday.

“From [what we gather in public releases], I think it (Wilmar) is quite optimistic about all its segments. We [too] believe it will continue to do well given its integrated business model, and with its recent diversification into consumer products, which has contributed also to its profit especially in 2018,” Lim said.

Wilmar contributed over 70% of PPB’s FY18 profit. Last month, Wilmar announced its net profit for the fourth quarter more than halved to US$200.9 million (RM821.68 million), from a restated US$426.7 million a year ago, chiefly due to impairment on its sugar-milling operations in Australia on the back of a prolonged slump in sugar prices.

Lim also said PPB will focus on driving volume growth and cost efficiency at its core grains and agribusiness segment this year, which is operating in a competitive environment due to volatility in the commodity market.

“We don’t believe in resorting to price increase to maintain or increase our margin. Our focus is on volume growth, economies of scale and driving efficiency and good productivity, and not just passing on the costs [to consumers],” he added.

Lim said PPB is allocating RM831 million to its expansion over the next four years.

Nearly half of this will be spent on its grains and agribusiness (RM401 million) for its Chinese and Vietnamese flour mill expansion, followed by RM373 million for its film exhibition and distribution segment where it will see new and upgrading of existing cinemas locally and abroad.

The remaining will be used for the construction of new production facility and purchase of assets for its consumer products division (RM16 million), purchase of equipment and office renovation for environmental engineering and utilities division (RM5 million), and upgrading of its existing mills (RM3 million), and the balance of RM33 million on other plant and machinery purchases.

Meanwhile, Chemquest Sdn Bhd MD Leong Yew Weng said the company is well positioned to bid for another RM500 million more of projects, which could fetch profit margins of 5% to 10%.

The division’s tender book of RM350 million comprises projects by the state and federal governments, and outcome can be expected by May, he said.

GSC positive about continued growth after strong FY18

Golden Screen Cinemas Sdn Bhd (GSC) chief executive officer Koh Mei Lee is positive about the group’s film exhibition and distribution segment’s performance this year, having seen a 17% jump in segment profit attributable to contribution from new cinemas and strong local titles in FY18.

GSC is targeting to open two more new cinemas this year, at EkoCheras here next month, and at Mid Valley Southkey in Johor Baru by the fourth quarter.

In Vietnam, the company targets to open five new cinemas through its joint venture partnership with Galaxy Studio Joint Stock Co, while the planned opening of a cinema in Phnom Penh, Cambodia has been delayed to next year awaiting conclusion of the mall’s renegotiation with anchor tenants.

PPB is also currently in preliminary talks to bring the group’s exhibition and distribution business to Myanmar, she said, although the venture is not seen as an immediate necessity.

“Myanmar is within the Indochina market, where we already have presence in Vietnam and are planning to open [cinema] in Cambodia. So, it is a natural progression that we cover Myanmar as well,” Koh explained.

GSC, which operates a total of 344 screens in Malaysia, contributed 26% of the group’s total profit in FY18, after grains and agribusiness at 51%.