Felda’s White Paper enhances FGV

This has improved investors confidence which led to the rise in FGV’s share price


The RM6.2 billion government aid to the Federal Land Development Authority (Felda) and analysts’ upgrades helped lift investor sentiment on FGV Holdings Bhd.

CIMB Investment Bank Bhd regional head of agribusiness research Ivy Ng said the announcement made in the Parliament yesterday about the financial state of Felda would require an improved financial performance from FGV as well.

“The increase in FGV’s share price is sentiment-driven as the White Paper suggests the government wants to provide better governance. This has improved investors’ confidence which led to the rise in FGV’s share price,” she told The Malaysian Reserve.

FGV’s share price rose 3.17% or four sen to RM1.30 yesterday on heavy volumes, a sixmonth high. FGV now has a market capitalisation of RM7.74 billion.

FGV’s share price has appreciated by 66 sen from its record low of 64 sen in December 2018.

“The White Paper was on Felda, FGV is a public-listed entity, it needs its own White Paper,” she said.

The White Paper on Felda revealed that Felda had spent RM6 billion from the RM10.5 billion raised from FGV’s initial public offering (IPO) in 2012 on loss-making and unproductive ventures.

The period leading up to the tabling of the White Paper, provided trading opportunities for investors and shareholders of FGV.

Since March, the Retirement Fund Inc or better known as Kumpulan Wang Persaraan (Diperbadankan) disposed of about 68.95 million shares in FGV while acquiring 2.14 million shares.

“The change in KWAP’s stake is normal as the value is not significant to its total stake. It is just a mere trading opportunity for them,” Ng said.

Analysts at DBS Bank Ltd and KAF Seagroatt and Campbell Bhd this week upgraded the integrated edible oils group to a ‘Buy’ with a target price to RM1.75 and RM1.50 respectively on expectation of improved financial performance going forward.

For its financial year ended Dec 31, 2018, FGV recorded a net loss of RM1.07 billion due to impairments and provisions of RM1 billion — its worst performance since going public in 2012 compared to the RM130.93 million net profit posted in the previous year.

Revenue for the year declined by 20.4% to RM13.47 billion from RM16.92 billion in 2017.

FGV’s registered a net loss of RM208.8 million for the fourth quarter (4Q) ended Dec 31, 2018, from a net profit of RM50.44 million a year ago, due to impairments and low crude palm oil (CPO) prices.

4Q revenue fell 24% year on- year to RM3.23 billion on lower CPO prices, its previous exchange filing noted.