FGVH set to sell insurance stake by year-end

Looking to sell off the entire 16% instead of a certain percentage of Axa Affin


Felda Global Ventures Holdings Bhd (FGVH) is targeting to complete the disposal of its 16% stake in Axa Affin General Insurance Bhd by the year-end.

The company said the involvement of Bank Negara Malaysia (BNM) in the deal has caused delays to the transaction, but remained confident it will be closed in the coming months.

“There are some regulations that we have to follow, and the central bank is looking into the approvals. We would like to sell off the entire 16% instead of a certain percentage, because this is not our core business altogether. We expect to conclude the deal before end of this year. That is our wish list at the moment,” FGVH officer-in-charge Datuk Khairil Anuar Aziz told a media briefing last Wednesday.

The integrated edible oils giant has undergone a change at the management and board level as it seeks to set out a four-year plan to consolidate its assets and improve the performance of its core businesses, namely plantation, sugar and logistics, while cashing out on its non-core and non-performing businesses.

Axa Affin is one of a few other divestments the group is looking to conduct this year.

Khairil said FGVH has set out a list on the disposals, but declined to give details.

“There are some that we are planning to conclude this year, but the rest perhaps next year.

We want to dispose the non- core to potential buyers who see such assets as their core, hence we get a better value,” Khairil said.

“It is safe to say it is slightly above RM100 million and would be very important in terms of contributing to our bottom line this year,” he added.

Affin Holdings Bhd has been the frontrunner in acquiring FGVH’s stake in the insurance provider.

The financial group’s CEO Kamarul Ariffin Mohd Jamil earlier said Axa Affin was an important business to Affin and hoped the deal would be concluded by Aug 5. No further announcement has been made thus far.

Kamarul Ariffin said the book value of FGVH’s 16% interest in Axa Affin stood at RM7.85 per share, or RM149.5 million in value. The completion of the deal will bring Affin’s shareholding in Axa Affin to 50.5% from the current 34.5%.

For the second-quarter ended June 30, 2017 (2Q17), FGVH reported a 65% decline in its net profit to RM25.9 million versus RM73.7 million last year, tugged by its loss-making sugar business.

The sugar segment posted a loss of RM41.6 million for the quarter compared to a profit of RM99.2 million in the corresponding period a year ago, due to higher raw sugar material cost and a weaker ringgit.

The group’s plantation and logistics, and other businesses returned to profit in the 2Q with a net profit of RM148 million and RM5.4 million respectively, versus a net loss of RM9.7 million and RM6 million respectively, a year ago.

The improved performance in the plantation segment was attributed to higher average crude palm oil price realised of RM2,916 per metric tonne, while higher throughput and tonnage carried by the group’s transportation operation contributed to the better result in the logistics and other segments.

“We could see the numbers (for the plantation segment) have improved tremendously for the quarter. I hope in another two quarters we will achieve a much better performance for the company,” Khairil added.

The group’s revenue for the quarter rose 8.3% to RM8.6 billion from RM7.9 billion a year ago.

Moving forward, FGVH expects fresh fruit bunch production for the second-half of 2017 to improve further, due to increased productivity resulting from higher output of crops and consolidated efforts to overcome the shortage of plantation workers.

The group will continue to consolidate by-products business, such as palm kernel shell, sludge oil, biomass as well as biogas, and is expecting an additional revenue of more than RM60 million per annum for export and local markets.