DESPITE making a powerful comeback in its earnings for the third quarter of the monetary yr 2021 (Q3’21), the looming danger of FGV Holdings Bhd
being delisted in 2022 continues to have an effect on analysts’ score on the inventory.
In Q3’21, the planter posted the best quarterly revenue since its itemizing, beating market expectations.
Buoyed by the bullish crude palm oil (CPO) costs, the group’s internet revenue jumped to RM399.39mil for the quarter underneath evaluate from RM136.89mil in the identical quarter final yr on the again of a better income of RM5.31bil.
Analysts usually are combined on FGV’s prospects despite the commendable Q3’21 outcomes, citing their considerations on the delisting of one of many world’s largest CPO producers from Bursa Malaysia.
Several brokerage homes additionally highlighted the planter’s narrowing public shareholding unfold this week.
It has fallen considerably beneath the inventory trade’s 25% public unfold requirement for a listed firm.
As at Nov 25, FGV’s public shareholding unfold had dropped additional to 13.19% in contrast with 13.47% as at Aug 25, thus placing the group nearer to the chance of being delisted.
While Bursa Malaysia has given the time extension till Feb 3 subsequent yr for FGV to satisfy with the requirement, analysts say FGV nonetheless doesn’t appear to have a correct plan to handle the shortfall within the public unfold scenario.
Felda oil palm plantation
“Perhaps FGV will consider seeking for a further time extension or proposing for a lower public shareholding spread from Bursa Malaysia on this matter,” says an analyst with a neighborhood brokerage.
FGV’s controlling shareholder, the Federal Land Development Authority (Felda), has additionally indicated its intention of not retaining the itemizing standing of FGV.
“The odds of delisting FGV are high, given Felda’s stated intention.
“The share price of FGV could be supported by the potential privatisation offer by Felda,” says CGS-CIMB Research.
The analysis home has raised its monetary yr 2021 (FY21)-FY23 earnings per share forecasts to replicate the upper CPO costs and milling margin for FGV.
“However, we keep our hold call on FGV given the risk of delisting,” it says.
To replicate this danger, CGS-CIMB Research has saved FGV’s goal value at RM1.43.
This is a ten% premium during the last provide value of RM1.30 by Felda.
“We see the share price supported by a potential privatisation offer and forecast a 3% FY21 yield,” provides CGS-CIMB Research.
Aminvestment Research is sustaining a “sell” name on FGV with a decrease truthful worth of RM1.20 from RM1.25 beforehand.
“Although FGV’s nine-month FY21 net profit exceeded our forecast and consensus estimates, we believe that it would be difficult for FGV to maintain its profitability in FY22 due to lower palm product prices and higher costs of production,” says the analysis agency.
On the opposite hand, MIDF Research has a “buy” name on FGV with a revised goal value of RM2.20.
“Our target price implies an expected total return of 50.58%,” provides the analysis home.
“Nonetheless, moving ahead, we anticipate that the favourable CPO price will continue to generate a better financial performance for the group.”
MIDF Research additionally anticipates a better common promoting value for refined sugar.
The improve within the gross sales quantity ought to be capable to assist FGV’s listed sugar refiner, MSM Malaysia Holdings Bhd, to attain a better revenue margin within the coming quarters.
Meanwhile, TA Securities says FGV’s administration expects the corporate’s extended labour scarcity difficulty and Covid-19 pandemic disruption scenario to show round ranging from Q2’22.
The group remains to be going through a labour scarcity of roughly 30% of the full necessities.
“We also understand that FGV has appointed ELEVATE as the third party assessor to conduct an independent assessment of FGV’s operations against the 11 International Labour Organisation Indicators of Forced Labour.
“Preparatory work for the independent audit began in November and the site assessments are expected to occur in the first half of 2022, after which remediation and verification will be carried out,” it provides.
TA Securities notes that FGV plans to submit a petition for the Withhold Release Order revocation to the United States Customs and Border Protection (CBP) as soon as the remediation has been accomplished and verified.
The analysis agency has maintained a “sell” name on FGV however with a better goal value of RM1.42.
It says, “There is no indication of Felda’s direction on FGV after the privatisation bid fell through.
“However, we view that the possibility of privatisation going through remains high, as Felda has indicated that it does not intend to maintain the listing status of FGV.”
On Thursday, FGV’s share value on Bursa Malaysia closed at RM1.46, giving it a market capitalisation of RM5.33bil.
