Felda's offer to take FGV private seen as fair
TA Researc said Felda's offer price of RM1.30 per share was 26% above its target price of RM1.03 per share for FGV.
PETALING JAYA: The Federal Land Development Authority's (Felda) renewed takeover offer of FGV Holdings Bhd 's (FGV) remaining shares that it does not already own at RM1.30 per share has been deemed fair in terms of valuation and the prospects for FGV, analysts say.
Research houses such as BIMB Research, Hong Leong Investment Bank Research (HLIB Research), TA Research and MIDF Research have advised FGV shareholders to accept the offer price.
The latest takeover offer marks the second attempt by Felda to privatise FGV, following a similar offer made in 2020 that also proposed RM1.30 per share.
Felda, together with persons acting in concert (PAC), including the state government of Pahang, now collectively control 86.93% of FGV's issued share capital.
BIMB Research said in a report it believes the likelihood of the shareholding crossing the 90% threshold is high.
'While the offer premium is relatively modest, we believe it is sufficient to attract acceptance given FGV's subdued earnings outlook, prevailing plantation sector volatility and lack of foreseeable near-term re-rating catalysts,' said the research house.
TA Research, meanwhile, said Felda's offer price of RM1.30 per share was 26% above its target price of RM1.03 per share for FGV.
Based on FGV's forecast earnings for this year (FY25), the offer implies an acquisition at 15 times FY25's price-earnings ratio (PER).
Notably, the offer is priced at a steep 71.4% discount to FGV's initial public offering price of RM4.55 per share in 2012.
Since Felda's initial privatisation attempt in December 2020, FGV's share price has been volatile.
It rose to RM1.46 in May 2021 after the first bid failed but steadily declined thereafter to RM1.13 by March 14, 2025, and RM1.01 by April 9, 2025, a 22% drop from the offer price.
'The current attempt would also be the second time investors are presented with an opportunity to realise the value of their investment through a cash offer,' TA Research said.
Given the potential price risk post-general offer, TA Research has advised FGV minority shareholders to accept the offer.
'We also advise investors to switch to other undervalued plantation stocks with more compelling stories and potentially higher earnings growth,' said the research house.
Similarly, HLIB Research also advised existing shareholders of FGV to accept the latest offer, as 'the offer price is higher than our sum-of-part derived target price of RM1.26'.
The research house maintained its 'hold' rating on FGV with a revised target price of RM1.30 from RM1.26 earlier, based on Felda's latest offer.
MIDF Research said in a note to clients that Felda's RM1.30 offer price represents a 12% premium over its fair value of RM1.16.
Currently, the stock is valued at 16.7 times PER based on forecast for FY25 earnings per share of 7.60 sen, 8.6% below the integrated plantation sector average PER of 18.3 times.
According to MIDF Research, the latest development reaffirms Felda's objective to fully privatise FGV and consolidate its ownership and strategic control over the group.
Felda has clearly stated that it does not intend to maintain FGV's listing status upon completion of the offer.
'Should Felda and its PAC reach the 90% ownership threshold, Bursa Malaysia will suspend the trading of FGV shares within five market days, after which the delisting process will be initiated in accordance with Bursa's listing requirements,' it said.
If successful, the privatisation is also expected to streamline Felda's operational oversight, align FGV's strategic direction with broader national interests and potentially unlock long-term value through improved efficiency and coordination across the group.
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