We Think You Should Be Aware Of Some Concerning Factors In PPB Group Berhad's (KLSE:PPB) Earnings

By
Simply Wall St
Published
April 21, 2022
KLSE:PPB
Source: Shutterstock

PPB Group Berhad's (KLSE:PPB) robust recent earnings didn't do much to move the stock. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.

Check out our latest analysis for PPB Group Berhad

earnings-and-revenue-history
KLSE:PPB Earnings and Revenue History April 21st 2022

An Unusual Tax Situation

We can see that PPB Group Berhad received a tax benefit of RM9.0m. It's always a bit noteworthy when a company is paid by the tax man, rather than paying the tax man. Of course, prima facie it's great to receive a tax benefit. However, our data indicates that tax benefits can temporarily boost statutory profit in the year it is booked, but subsequently profit may fall back. In the likely event the tax benefit is not repeated, we'd expect to see its statutory profit levels drop, at least in the absence of strong growth.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On PPB Group Berhad's Profit Performance

In its most recent report, PPB Group Berhad disclosed a tax benefit, as we discussed above. Tax is usually an expense, not a benefit, so we don't think the reported profit number is a particularly good guide to the earning potential of the business. For this reason, we think that PPB Group Berhad's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. Nonetheless, it's still worth noting that its earnings per share have grown at 39% over the last three years. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - PPB Group Berhad has 1 warning sign we think you should be aware of.

This note has only looked at a single factor that sheds light on the nature of PPB Group Berhad's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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