Tuesday, November 23, 2010

PPB falls to month's low on weak earnings, downgrade

KUALA LUMPUR: PPB GROUP BHD []'s shares fell to a month's low at midday on Tuesday, Nov 23 after it reported a set of weaker earnings and was downgraded to fully valued.

At 12.11pm, it was down 36 sen to RM18.44 with 334,900 shares done. This was the lowest since Oct 21.

The FBM KLCI fell 6.23 points to 1,496.67. Turnover was 480.18 million shares valued at RM754.16 million. Losers battered gainers 531 to 121.

Hwang DBS Vickers Research cut PPB's FY10-FY12F earnings by 5%-9% following the downgrade of Wilmar's earnings, although the impact was offset by stronger flour margins.

'We also cut our SOP-derived TP to RM15.75 after reducing Wilmar's TP to S$6.60 which is balanced off by moving the valuation of its other businesses such as flour, film exhibition and distribution to a multiple approach compared to just book value previously.

'Valuations are not compelling at 18x FY11 EPS (at premium to Sime and IOI of 15-16x) given the lack of catalysts going forward,' it said.

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