PPB unperturbed by possible Indonesian plantation land ownership cap

KUALA LUMPUR: PPB Group Bhd, which expects to better its performance in FY13 in the current financial year ending Dec 31, 2014 (FY14), is unperturbed by a possible 30% cap on foreign ownership of plantation land in Indonesia.
Managing director Lim Soon Huat said the bill on the proposed limit is still being drafted and given the current political development in Indonesia, it is not likely to be a priority of the new Indonesian president.
"However, we are still waiting for more clarity as to how this bill will go and it is not a concern for us, particularly to PPB, because we're not in the plantation business," Lim said at a press and analyst briefing here yesterday.
PPB's exposure to the plantation sector is through 18.3% owned Wilmar International Ltd which in turn owns 160,000ha plantation land in Indonesia. Singapore Exchange-listed Wilmar contributed 72% to PPB's net profit in FY13 and 54% to 1H14 results.
He said the market has over-reacted to the news and that "nobody talks about it" in Indonesia.
"In 1H14, our core businesses have done well. However, we're dragged down by Wilmar's earnings and that is quite a big contribution to PPB's group profitability.
"We expect our businesses and operations to continue to perform well in 2H14. For FY14, we expect a better year compared with FY13. However our profitability continues to be dependent on Wilmar's results because we own 18.3% of Wilmar, which is a significant stake of the group," said Lim.
Meanwhile Golden Screen Cinemas Sdn Bhd (GSC) chief executive Koh Mei Lee said the group expects a dip in ticket sales with the additional 6% goods and service tax on top of the net ticket price for movies, but does not expect the sentiment to last for long. Cinema tickets are already subject to entertainment tax, of 20%.
"For ticket pricing, it's a small ticket item so the value of the GST added to the ticket price is small. It should not affect admissions or spending in cinemas in the medium or longer term," she said.
GSC will be opening three new cinemas in Klang Parade, Nu Sentral and Quill City Mall in Q414, bringing it to a total of 31 cinemas. There are another nine new cinema openings planned over the next two years.
Moving forward, PPB has a remaining capital commitment of RM342 million over the next two years, mostly to be spent on the film exhibition and distribution segment and flour and feed milling and grains trading segment.
The group expects to complete the construction of a new 500 tonnes per day flour mill in northern Vietnam under its flour and feed milling and grains trading segment and launch its residential units in its integrated waterfront development in Puteri Harbour, Iskandar Malaysia, under its property investment and development segment this year.