KUALA LUMPUR: PPB Group Bhd supports its associate company Wilmar International Ltd’s proposed initial public offering (IPO) in China, said managing director Tan Gee Sooi (pic).
PPB, however, declined comment on whether it would take up shares offered by Wilmar for the Chinese IPO since the proposal was still under evaluation.
“We don’t even know the full structure of the IPO as it has not been approved,” Tan said yesterday after a press and analysts briefing on PPB’s financial results for the six months ended June 30.
In May, Singapore Exchange-listed Wilmar said it was planning to raise up to US$4bil by listing 20% to 30% of its China business on the Shanghai Stock Exchange or Hong Kong Stock Exchange.
Wilmar’s China business accounted for almost half of its US$14.3bil revenue and close to 40% of its net profit in 2008.
Last month, Wilmar confirmed that it had shortlisted BOC International, Goldman Sachs and Morgan Stanley to evaluate the feasibility of listing in Hong Kong.
On whether PPB intended to further increase its existing stakes in Wilmar, Tan said: “We are definitely interested but Wilmar shares, currently trading over S$6, is too high for us.”
PPB currently has 18.4% stake in Wilmar, which is the world’s largest palm oil trader, controlling 54% of global palm oil trade.
On another note, Tan said PPB Group spent about RM77mil of its total capital expenditure (capex) of RM293mil to set up new flour mills and feed mill warehouses, new cinemas as well as upgrade its sugar refineries in the first half of the year.
“Some RM27.5mil was spent on setting up new flour mills in Kota Kinabalu, Prai and Indonesia and also, new warehouses for our flour mills and feed mills, while RM28.7mil went to upgrading our storage, packaging and melting capacity in the sugar refineries.”
Tan said the remaining capex would be carried forward to 2010 for other projects development spending, mostly for the expansion of new flour mills regionally.
He said PPB’s joint-venture wheat flour mill at Cilegon, in the western part of Java Island which include silos, warehouses and other infrastructure facilities, had been commissioned. “We plan to push for the flour sale in Indonesia before the end of this month,” he added.
Earlier, on PPB’s latest results, Tan said the economic slowdown would continue to affect its performance in 2009 due to lower demand and margins for its goods and services.
He said fluctuations in prices of raw materials and ocean freight rates would persist as challenging factors affecting the group’s profitability.
“However, we are confident our performance for 2009 will remain satisfactory.”
PPB’s net profit for the quarter ended June 30 rose 19.3% to RM397.5mil from a year ago.
This was achieved on higher contributions from Wilmar and improved performance from the sugar refining, trading and cane plantation division.
Its revenue of RM833.95mil was marginally lower against the same quarter last year.
Net profit and revenue for the first half of 2009 were lower at RM669.4bil and RM1.6bil respectively, due to decreased contributions from the flour and feed milling, chemicals trading and manufacturing as well as property divisions.
Wilmar accounted for 79% of PPB’s first half 2009 net profit. An interim single-tier dividend of 5 sen per share has been recommended.
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