KUALA LUMPUR (Nov 27): PPB Group Bhd fell as much as 26 sen or 1.38% to RM18.54 despite the group's third quarter net profit rising 4.41% to RM411.57 million.

At 11.44am, the counter pared some losses at RM18.56, still down 24 sen or 1.28%.

The stock, which was the fourth biggest loser this morning, saw 53,100 shares changed hands.

PPB announced yesterday that its third quarter net profit rose 4.41% to RM411.57 million, from RM394.18 million a year ago, thanks to higher profit contribution from associate Wilmar International Ltd.

Revenue for the quarter ended Sept 30, 2020 fell 13.17% to RM1.04 billion, from RM1.19 billion a year earlier.

For the nine months ended Sept 30, the group’s net profit climbed 16.07% to RM931.57 million, from RM802.61 million a year earlier, which was mainly attributable to higher contribution from Wilmar at RM855 million.

Affin Hwang Capital’s analyst Nadia Aquidah said in a note today that PPB’s 9MFY20 core net profit of RM911.8 million came in above her expectations, due mainly to a higher-than-expected contribution from Wilmar.

“We raise our 2020 to 2022 core earnings per share [forecast] by 9% to 12% given the stronger-than-expected 9M20 results, especially the higher earnings contribution from Wilmar underpinned by improving demand for its food products, a higher level of crushing activities and higher contribution from the plantation and sugar milling segments.

“We expect earnings to continue to improve in 2021 onwards as the economy progressively re-opens and demand for consumer products improves,” she said.

She maintained her "hold" call on PPB, and revised up its target price to RM19.70, from RM18.90 previously.

Meanwhile, Kenanga Research’s analyst Nikki Thang said PPB's 9MFY20 core net profit of RM929.8 million is within her expectations at 82%.

“Moving forward, we believe the group should remain resilient, as Wilmar’s earnings remain anchored by relatively stable soybean crush margins on recovering swine herds and HoReCa demand,” she said.

She also opined that fairly sturdy demand in the grains and agribusiness segment’s flour milling business should help offset the weaker average selling price in its livestock farming business.

“The film segment is likely to remain sluggish as long as the pandemic rages on, as profitability is expected to remain impacted by closure of cinemas and postponement of major movie titles,” she said.

She maintained her earnings forecast as well as her "market perform" call on PPB with an unchanged market price of RM18.90.