PPB declines after one-for-five bonus issue goes ex

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KUALA LUMPUR (July 25): PPB Group Bhd shares declined in early trade today as investors factored in the group’s larger share base after its one-for-five bonus issue went ex yesterday.

The stock was among the top decliners in early trade today, losing as much as 18 sen or 1.07% to trade at RM16.60 as at 9.47am. However, the stock later pared its loss to trade at RM16.70 on the back of 42,100 shares exchanged.

The bonus issue of 237.1 million shares, which had been proposed in May this year, is the group’s first bonus issue since 2005. It increased the group’s share base to 1.42 million shares.

In a note today, MIDF Research said it expects fundamentals of the palm oil and film distribution conglomerate to remain intact, as it continues to be largely influenced by its 18.5%-owned Singapore-listed Wilmar International Ltd. Wilmar had contributed between 62% to 75% of total earnings for the group over the last five years.

Ex-bonus, MIDF Research lowered its target price for PPB to RM16.16 from RM19.40 without changing its valuation method of 1.1 times the group’s book value.

“Overall, the positive newsflow surrounding potential Wilmar’s China operations initial public offering will keep PPB share price supported.

“However, this is neutralised by high chance of earnings to decline year-on-year,” MIDF Research analyst Alan Lim said.