FGV rises on higher CPO price, takeover talk

The price rally is a combination of several factors including the CPO price rising to the current level and better performance of other plantation stocks


FGV Holdings Bhd attracted investors’ interest as crude palm oil (CPO) prices rose to a 34-month high and on speculation of the entry of new shareholders.

The integrated oil palm group rose 13 sen or 9.8% to RM1.45 yesterday as the benchmark CPO contract price rose RM46 to RM2,904 a tonne on Bursa Malaysia, and news reported that businessman Tan Sri Syed Mokhtar Al-Bukhary is interested in taking a stake in the company.

In a statement to the local bourse, FGV stated its board of directors and management were unaware of any proposals involving the businessman.

“FGV wishes to clarify that after checking with its board of directors and senior management, it is unaware of the proposals and discussions described in the articles,” it said yesterday.

The planter added that it will continue to explore all avenues to create values that benefit the group’s shareholders.

Talks linking the businessman and the company are not new. Former CEO and president Datuk Zakaria Arshad denied such corporate move at the Palm and Lauric Oils Price Outlook Conference and Exhibition in 2017.

FGV’s substantial shareholders now are the Federal Land Development Authority (Felda) and Koperasi Permodalan Felda Malaysia Bhd (KPF), which currently own 33.6% and 5.52% stakes respectively.

The other major shareholders are Kumpulan Wang Persaraan (Diperbadankan) with a 6.43% stake and Urusharta Jamaah Sdn Bhd with a 7.78% stake.

At the moment, FGV has a total of 439,725ha landbank and about 351,000ha of that is leased from Felda under the land lease agreement (LLA).

As part of its listing requirement, the planter entered into an LLA with Felda in November 2011, which saw a 99 years of leasing agreement to FGV.

In return, FGV had to pay an annual fixed payment of RM248 million and a 15% share of the operating profits from the land under the LLA.

FGV’s share price also rallied 62.01% since October on the improved pricing of CPO, which has helped the overall performance of the plantation sector.

Rakuten Trade Sdn Bhd VP (research) Vincent Lau said the surge in FGV’s share price was prompted by a combination of several factors, including the planter’s fitter management.

“The price rally is a combination of several factors including the CPO price rising to the current level and better performance of other plantation stocks, including the small-caps plantation stocks.

“FGV’s recent quarterly result was better, on top of its new set of management,” he said.

FGV is valued at RM5.29 billion according to yesterday’s market capitalisation.

According to Bloomberg, analysts have raised FGV target price (TP) by 29% in the past three months to a consensus one-year TP of RM1.38.

For the past 52 weeks, FGV’s shares had advanced 84% with 20% of that achieved in the past month.