Can PPB Benefit from MCO?

While Malaysians are obeying Movement Control Order (MCO) at home to fight against the pandemic (Convid – 19), many companies affected from MCO. Would PPB Gourp Berhad (PPB) benefit from this MCO?

Company Profile

PPB operation separated into 7 operation segment which are:

i)                  Grain & Agribusiness

ii)               Consumer Products

iii)            Film Exhibition and Distribution

iv)            Environmental Engineering and Utilities

v)               Property

vi)            Investment in Equities

vii)         Other Operation

i) Grain & Agribusiness

External Sales (2018) :

RM 2,992,121,000 (66.07 %)

Segment results (2018) :

RM 125,952,000

Operational Margin (2018) :

4.21 %

Operation Segment :

a) Flour milling and manufacturing animal feed

b) Wheat and maize trading

c) Production of day-old chicks

d) Egg and other related downstream activities

e) Oil Palm Plantation

Products :

a) Flour :

    Anchor, Blue Key, Muhibah

b) Eggs:

    Sri Murni

ii) Consumer Products

External Sales (2018) :

RM 637,721,000 (14.08 %)

Segment results (2018) :

RM 15,177,000

Operational Margin (2018) :

2.38 %

Operation Segment :

a) Marketing and distribution of edible oils and consumer products

b) Production and distribution of frozen food and bakery products

c) Manufacturing of toilet requisites and household product

Products :

a) Bread:

    Massimo

b) Edible oil:

    Neptune, Krystal

c) Frozen and can food:

    Marina

d) Margarine

     Blue Team

iii) Film Exhibition and Distribution

External Sales (2018) :

RM 538,352,000 (11.89 %)

Segment results (2018) :

RM 63,394,000

Operational Margin (2018) :

11.78 %

Operation Segment :

Exhibition and distribution of movies and content

Product :

Golden Screen Cinema

iv) Environment Engineering and Utilities

External Sales (2018) :

RM 204,589,000 (4.52 %)

Segment results (2018) :

RM 14,861,000

Segment results (2018) :

a) Construction works specialising  in water and environmental industries

b) Provision of waste management services

Products :

a) CWM Group Sdn Bhd

b) Sitamas Enviromental Systems Sdn Bhd

v) Property

External Sales (2018) :

RM 51,395,000 (1.13 %)

Segment results (2018) :

RM 12,251,000

Operational Margin (2018) :

23.83 %

Operation Segment :

a) Letting of commercial properties

b)  Development of residential and commercial properties

Products :

a) Taman Segar

b) Cheras Leisure Mall

c) Cheras Plaza

d) Masera Bukit Segar

e) Southern Marina Residences

f) Megah Rise

g) The Linc

h) Pnderosa Woods

i) New World Park

j) The Whiteways Arcade

k) Taman Sinar Mentari

v) Investment in Equities and Other Operation

External Sales (2018) :

RM 104,082,000 (2.23 %)

Segment results (2018) :

RM 14,824,000

Operational Margin (2018) :

14.24 %

Operation Segment :

a)  Investment in quote and unquoted shares

b) Chemical Trading and manufacturing

c) Investment holding

d)Packaging

Products :

a) Wood Adhesives

b) Formalin

c) Paper Chemicals

d) Phenoset® Microspheres

e) Phenolic Resins

Operation Benefit from MCO

From the above operating segments that might able benefit from MCO are Grain & Agribusiness and Consumer Products. Both operating segments had a combined revenue of RM 3,629,842 which representing 80.16 % of PPB 2018 revenue.

During MCO Malaysian would start to stock up frozen food, can food and eggs as this food have long shelf life besides that there would be more cooking at home hence increase of demand of ediable oil. These are the product of consumer products segment.

With many more Malaysian staying at home, starting of home base activities like cooking and baking would increase the demand of flours and eggs which would benific the Grain & Agribusiness segment.

Although MCO most likely to affect the Film & Distribution and Properties segment. It does not affect PPB much because this segments only stand 5.65% of 2018 revenue.

Sustainability of PPB through Pandemic

From 2018 annual report PPB has RM 23,244,633,000 of asset compare to RM 1,507,792,000 of liability. This make PPB debt ratio to 0.065.

Besides that the financial cost for 2018 is RM 33,893,000 and operating income (EBIT) is RM 1,201,576,000.Hence the interest coverage ratio of PPB is 35.45.

Low debt ratio and high interest coverage ratio make PPB most likely to survive through this pandemic.

Conclusion

In conclusion PPB is a company worth to research at during the MCO and stock market selldown.

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