Latest news with #FGV
Malaysian Reserve
2 days ago
- Business
- Malaysian Reserve
FGV minority shareholders should agree to RM1.30
Investors face tough choice amid weak outlook, fair value bid by RUPINDER SINGH FGV Holdings Bhd is once again in the spotlight with the Federal Land Development Authority's (Felda) renewed attempt to privatise the plantation giant. This time, minority shareholders should seriously consider accepting the RM1.30 per share offer — not only because it reflects fair value under current market and operating conditions, but also because the company's long-term structural issues and volatile earnings profile offer little reason to hold on. Felda, which currently owns 86.93% of FGV shares through direct and indirect holdings, has launched an unconditional voluntary takeover offer to acquire the remaining shares it does not already own. If successful in securing at least 90% of the total share capital, Felda will trigger a compulsory acquisition under the Capital Markets and Services Act 2007 and proceed to delist the company from Bursa Malaysia. The offer, priced at RM1.30 per share, is the same level Felda offered back in 2020 during its first privatisation attempt. While that offer ultimately failed to reach the required threshold, several key dynamics have changed since then — making the current bid more likely to succeed and more compelling to minority shareholders. FGV was once a high-flying IPO story. When it listed on Bursa Malaysia in June 2012, it raised RM10.4 billion, with shares priced at RM4.55 apiece. With a total of 3.65 billion shares issued, the listing valued FGV at a staggering RM16.6 billion, making it the second-largest IPO globally that year after Facebook. The offering was hailed as a major milestone for Malaysia's palm oil industry and Felda's transformation ambitions. More than a decade later, that promise has largely faded. FGV's shares last closed at RM1.28 — more than 70% below its IPO price — reflecting chronic structural inefficiencies, volatile earnings, governance setbacks and missed downstream integration targets. For many long-time investors, the privatisation offer now represents a pragmatic way out of a disappointing investment. Felda's current move echoes its December 2020 attempt, when it triggered a mandatory general offer after acquiring shares from The Retirement Fund Inc (KWAP) and Urusharta Jemaah Sdn Bhd (UJSB). Despite several extensions to the offer period, the bid ultimately failed to reach the 90% acceptance level required for delisting. However, conditions at the moment are more favourable for Felda. Notably, in March 2025, Bursa Malaysia rejected FGV's application for additional time to rectify its low public shareholding, leaving the company in breach of listing requirements and giving Felda a firm rationale to relaunch its takeover effort. Public shareholding now stands below 13%, limiting trading liquidity. This raises the likelihood of offer acceptance, particularly as the remaining minority shareholders face a shrinking market with few institutional buyers. Both Hong Leong Investment Bank (HLIB) and BIMB Securities Sdn Bhd recommend acceptance. HLIB has revised its target price to RM1.30 from RM1.26, in line with Felda's offer. BIMB sees the offer as fair, noting it represents an 8.5% premium over its in-house fair value of RM1.20 and a 10% premium to the one-year volume weighted average price (VWAMP). At RM1.30 per share, the offer translates to a forward price-to-earnings (P/E) ratio of about 13.2 times–15 times for financial year 2025 (FY25)-FY27 and a price-to-book (P/B) multiple of 0.78 times — reasonable when compared to FGV's five-year historical average P/B of 0.9 times. Earnings outlook remains muted. FGV's core net profit is projected to decline from RM453.8 million in FY24 to RM346.2 million in FY25 and RM316.5 million in FY26. EBITDA margins are expected to range between 6.3% and 6.6%, reflecting persistent cost pressures and operational headwinds, particularly in the downstream segment. Dividend yields, while modest, are projected to fall to 1.6% in FY25 and FY26 based on HLIB's estimates. BIMB is slightly more optimistic, expecting yields closer to 4.2% based on higher dividend per share assumptions. Regardless, neither projection makes a strong case for upside from holding out. Felda's intention to gain full control of FGV is part of a broader strategy to consolidate its plantation-related assets and unlock operational synergies. By delisting FGV, Felda gains more flexibility to undertake structural reforms, reduce overlapping functions and implement its Settlers Development Programme (SDP) without the constraints of quarterly reporting and minority shareholder scrutiny. The SDP aims to modernise Felda's agricultural model and improve settler incomes through diversification and sustainability. Full ownership of FGV would allow Felda to better align the company's upstream and downstream assets with these long-term goals. It also provides the opportunity to address governance and cost issues that have long hampered FGV's performance — challenges that are difficult to tackle with fragmented public ownership. For investors considering rejecting the offer, the risks are real. Should Felda succeed in breaching the 90% threshold, dissenting shareholders will likely face a compulsory acquisition. If the threshold isn't met, liquidity will deteriorate further and the stock may trade in a tight band with limited institutional interest. The chance of a meaningful re-rating appears remote, particularly in the absence of strong palm oil price tailwinds or significant internal restructuring both of which are unlikely in the short term. FGV's privatisation may not deliver IPO-level returns, but it represents a realistic and fair exit for investors. The RM1.30 offer reflects current valuations and market sentiment while allowing Felda to execute its vision for agricultural reform and settler empowerment. From a capital markets standpoint, the delisting is now not only inevitable — it is necessary. Minority shareholders would be wise to take the offer and move on, closing a long and often difficult chapter in one of Malaysia's most watched listings. This article first appeared in The Malaysian Reserve weekly print edition
New Straits Times
5 days ago
- Business
- New Straits Times
FGV's Q1 profit misses expectations despite higher FFB output, says HLIB
KUALA LUMPUR: FGV Holdings Bhd's first quarter (Q1) 2025 net profit fell below the analyst's expectation, said Hong Leong Investment Bank Bhd (HLIB). "The company's Q1 2025 net profit of RM23.3 million fell short of expectations, accounting for only 7.2 per cent and 7.7 per cent of consensus and the firm's full-year estimates, respectively," the bank said. Despite facing less-than-favourable weather conditions, HLIB said FGV's fourth month of 2025 (4M25) FFB output growth of 12.7 per cent beat Malaysia's fresh fruit bunch (FFB) output growth of -1.0 per cent during the same period, and management attributed the stark productivity improvement to enhanced estate practices and better labour availability. Given the strong FFB output achieved year to date (YTD), management raised its FY25 FFB output growth guidance to eight to 10 per cent (from five to eight per cent earlier). On its CPO production cost guidance, HLIB said despite improved productivity, FGV's ex-mill CPO production cost increased by 5 per cent to RM3,040 per metric tonne (mt) in Q1 2025, due to higher harvesting, transportation and manuring costs. "FGV anticipates such cost to ease to less than RM2,700 per mt for the full year, mainly on the back of lower fertiliser cost," it said. Overall, HLIB has cut its financial year 2025 (FY25) to FY27 net profit forecasts by 22.1 per cent/16.2 per cent/15.9 per cent, mainly to account for lower FFB milling and oils & fats margin assumptions. "Maintain Hold rating, with an unchanged target price of RM1.30 (i.e., FELDA's latest takeover offer price)," it added.
The Star
6 days ago
- Business
- The Star
FGV's 1Q earnings bolstered by higher FFB yields, price
KUALA LUMPUR: FGV Holdings Bhd 's performance in the first quarter of 2025 (1QFY25) was buoyed by the contribution of its plantations division, which benefited from increases in fresh fruit bunch (FFB) yield and price. "We are encouraged by the improved 1Q FY2025 results, particularly the consistent performance of our plantation division. "A steady growth compared to same quarter last year, reflects the resilience of our operations and the positive impacts of our ongoing agronomic improvements," said group CEO Fakhrunniam Othman in a statement. In 1QFY25, FGV's bottomline turned positive with a net profit of RM36.48mil as compared to a net loss of RM13.49mil in the year-ago quarter. The group posted an earnings per share of one sen as compared to a loss per share of 0.37 sen in the comparative quarter. Revenue during the quarter under review rose to RM5.04bil from RM4.54bil previously. According to FGV, the plantations division posted a strong turnaround during the quarter, with a profit of RM50.67mil compared to a loss of RM62.14mil in the same quarter in 2024. The improvement was driven by a 5% increase in FFB production to 770,000 tonnes (MT), resulting in a higher FFB yield of 3.05MT per hectare. There was also a 24% increase in FFB price, which reached RM974 per MT, although the oil extraction rate declined to 19.94% from 20.59% in the same quarter in 2024. The division's performance was further supported by stronger contributions from the R&D segment, particularly the fertiliser business, which recorded stronger margins and higher sales volume. However, these gains were partially offset by a higher fair value charge on the land lease agreement, which increased to RM115.91mil from RM86.04mil in the same period last year. The group's other divisions did not fare as well during the quarter. The oils and fats division reported a loss of RM11.57mil due a lower margin in the bulk commodities segment and reduced processed palm oil (PPO) delivery volumes. In the logistics and support division, there was a slightly lower net profit of RM32.47mil, driven by lower tonnage handled in the logistics segment, although this was partially offset by higher profit in the IT segment. The sugar division posted a lower profit of RM11.46mil against RM67.17mil in the same quarter last year due to reduced margin, lower sales volume and decreased capacity utilisation, despite a reduction in production costs The consumer products division narrowed its losses to RM6.09mil from RM8.75mil in the corresponding quarter of the previous year, supported by better margins in the consumer products segment and lower losses in the integrated farming and dairy segments. Moving forward, FGV said CPO prices are expected to ease from RM4,700 per MT to about RM4,000 per MT in the coming months as supply improves with favourable weather, seasonally higher cropping cycles, and the absence of festive-related demand. The group said it will continue enhancing yields, extracting greater value from existing assets and expanding its footprint in the domestic consumer market. Over the longer term, FGV is advancing portfolio diversification through high-value fast-moving consumer goods (FMCG) and international market penetration. "Our core priority is to deliver sustainable shareholder value while navigating a complex external environment. Global headwinds including rising trade tensions, the introduction of new tariffs, and slower-than-expected biodiesel demand may weigh on commodity sentiment. "However, FGV's diversified operations, strong plantation fundamentals and commitment to integrated value creation position us well to withstand volatility and unlock long-term growth," said Fakhrunniam.
New Straits Times
6 days ago
- Business
- New Straits Times
FGV posts RM36.5mil Q1 profit on stronger CPO prices
KUALA LUMPUR: FGV Holdings Bhd returned to profitability in the first quarter ended March 31, 2025 (Q1 FY25). The company posted a net profit of RM36.5 million compared to a net loss of RM13.5 million in the same period last year, lifted by higher crude palm oil (CPO) prices. Its revenue rose 10.8 per cent to RM5 billion for the period from RM4.5 billion previously, driven by a higher average crude palm oil (CPO) price. FGV said the average crude palm oil (CPO) price realised for the quarter was RM4,784 per tonne, higher than RM3,907 per tonne last year. In a statement, the company said the plantation division remained the main revenue contributor, supported by a six per cent improvement in fresh fruit bunch (FFB) yield and a 24 per cent increase in FFB price. Despite the current higher CPO price of about RM4,700 per tonne, FGV expects the price to ease to around RM4,000 per tonne in the coming months, as supply improves with favourable weather, seasonally higher cropping cycles and the absence of festive-related demand. Group chief executive officer Fakhrunniam Othman said the steady growth compared to the same quarter last year reflects the resilience of operations and the positive impacts of ongoing agronomic improvements. "While challenges persist across several business segments, we are focused on driving operational efficiency, unlocking value from underperforming assets and further enhancing integration across the group to ensure long-term, sustainable growth across plantation, oils and fats, sugar, logistics and support and the consumer products divisions," he added.
The Star
7 days ago
- Business
- The Star
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.
