PPB says not in talks with FGV over MSM

TheEdge Thu, Sep 05, 2019 10:19am - 4 years View Original


KUALA LUMPUR: PPB Group Bhd, controlled by the Kuok family, has confirmed it is not in talks with FGV Holdings Bhd to regain control of FGV’s sugar refiner, MSM Malaysia Holdings Bhd.

MSM, which commands 60% of the domestic sugar market, was once part of PPB before it was sold to Felda Global Ventures Holdings Sdn Bhd in 2009 for RM1.22 billion. The transaction was completed in January 2010 and subsequently, MSM was listed by FGV in June 2011, marking the exit of Robert Kuok — once dubbed the Sugar King — from the local sugar refining business. PPB’s cost of investment in MSM was RM50.79 million, made from 1976 to 1999.

“FGV has said they are looking for strategic investors or partners, but I can confirm PPB is not in discussion with FGV,” PPB managing director Lim Soon Huat (pic) told a press and analyst briefing yesterday when asked if the group was interested in regaining the sugar refiner.

In July, The Edge Financial Daily reported that FGV was looking to divest some of its 51% equity interest in MSM. According to the report, FGV said it was exploring potential collaboration in the sugar industry, including strategic alliances.

At least four companies are said to be eyeing the block of shares, including JAG Capital Holdings  Sdn Bhd, an investment holding company linked to the family of former second finance minister Datuk Seri Johari Abdul Ghani, and PPB’s associate company, Wilmar International Ltd. While Wilmar declined to comment when contacted previously, Johari confirmed he had put in a bid.

As for Wilmar’s proposed listing of Yihai Kerry Arawana Holdings in China, Lim said PPB shareholders may get see a payout if the group receives special dividends from Wilmar post-listing.

“But there is no certainty that Wilmar will list, although we know it is more positive [now] given that Wilmar’s listing submission has been accepted by the Shenzhen Stock Exchange. If we do receive special dividends from Wilmar, we would like to distribute back to the shareholders. However, we can’t be certain — the world is so uncertain these days. I think it is better for us to have a strong balance sheet and cash flow in times of uncertainty,” he added.

Lim said the group —whose net profit fell 17.3% year-on-year to RM408.42 million in the first half of the year, from RM493.99 million — believes its largest profit contributor Wilmar will perform satisfactorily this year, although it expects an overall challenging operating environment due to economic slowdown and global trade disruptions.

“Consumers are expected to be quite cautious in spending as negative sentiments weigh on consumer and business confidence.

“While it doesn’t look that positive, despite the headwinds, we remain confident we will and can navigate the challenging environment as our main products are basic food and necessities, and also given our experience in navigating the challenging times in the past,” he added.

As such, the group is pressing on with its planned RM794 million capital expenditure for the next three to four years, the bulk of which will be spent on its grains and agribusiness (RM395 million) and its film exhibition and distribution (RM379 million) business segments.

This includes the US$19.7 million (RM82.94 million) needed for the construction of a 500 tonnes per day wheat flour mill at VFM-Wilmar Flour Mills Co Ltd’s existing factory location in northern Vietnam, which is to be completed by the fourth quarter of 2020 (4Q20).

PPB is also targeting to open, by 4Q19, an 18-screen Golden Screen Cinemas at Mid Valley Southkey in Johor Baru, and a five-screen cinema each in Mekong and Ho Chi Minh City under its partnership with Galaxy Studio in Vietnam.

The group expects its film segment to be supported not just by new cinemas, but also the introduction of new cinematic technology and facilities in selected locations, and strong title releases.

Lim said PBB’s grains and agribusiness will likely be impacted by price fluctuations in commodity and foreign exchange.

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Related Stocks

FGV 1.380
JAG 0.305
MSM 3.400
PPB 15.600

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