Latest news with #RM1.30
New Straits Times
2 days ago
- Business
- New Straits Times
Felda lifts FGV stake past 82pct, needs 90pct by July 8 for delisting
KUALA LUMPUR: The Federal Land Development Authority (Felda) has raised its stake in FGV Holdings Bhd to more than 82 per cent, in its second attempt to privatise the plantation group ahead of the July 8 deadline. Felda acquired a total of 2.25 million FGV shares between May 27 and June 3, increasing its direct stake to 69.82 per cent or 2.55 billion shares, exchange filings showed. Including holdings by parties acting in concert (PACs), Felda now controls 82.24 per cent of FGV, or just over three billion shares. The transactions follow the state-backed rural development agency's unconditional voluntary takeover offer launched on May 26. The offer, priced at RM1.30 per share, is being made via Maybank Investment Bank Bhd on behalf of Felda to acquire all remaining shares not already owned by Felda and its PACs. The offer is classified as unconditional because Felda already holds more than 50 per cent of FGV's voting shares, giving it control without needing further shareholder approval. However, to delist the company, Felda must raise its stake to 90 per cent by the offer's closing date on July 8. If that threshold is reached, trading in FGV shares will be suspended five market days later, followed by a formal withdrawal from the Main Market. This is Felda's second attempt to privatise FGV. A similar offer made in December 2020 at the same price closed in March 2021 with Felda holding about 81 per cent, below the level needed to trigger a compulsory acquisition. FGV's public shareholding spread has remained below the 25 per cent minimum required by Bursa Malaysia ever since. As of May 13, the public float stood at 13.09 per cent. Kenanga Investment Bank Bhd has been appointed as the independent adviser. Trading in FGV shares has picked up sharply in recent weeks. The stock began the year at RM1.12 and had mostly hovered between RM1.01 and RM1.16 prior to the takeover announcement. On May 2, shares jumped to RM1.19 from RM1.09, with volume surging to 3.97 million shares. It was the counter's busiest session in a year, fuelling talk that the market had already sniffed out Felda's return. The rally intensified in mid-May, with the stock hitting RM1.35 on May 16, its highest level since the early May spike. On May 27, a day after the offer was announced, volume rose to 6.96 million shares. This marked the stock's busiest trading day in more than two years, with the price closing at the offer level of RM1.30. At market close, FGV shares rose one sen, or 0.77 per cent, to RM1.31, with 652,300 shares traded. This gave the company a market value of RM4.74 billion. FGV made its debut on Bursa Malaysia in June 2012, raising RM10.4 billion at RM4.55 a share. The initial public offering, which valued the group at RM16.6 billion, was the world's second-largest that year after Facebook. Analysts have recommended that investors accept Felda's unconditional voluntary takeover offer to privatise FGV, describing the RM1.30 per share cash offer as fair and attractive, with a clear exit opportunity for shareholders. The offer is also seen as a near-term floor for the stock, representing a premium of about 10 per cent over its one-year volume-weighted average price.
Malaysian Reserve
4 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
Yahoo
29-05-2025
- Business
- Yahoo
Estimating The Fair Value Of Kawan Food Berhad (KLSE:KAWAN)
Kawan Food Berhad's estimated fair value is RM1.58 based on 2 Stage Free Cash Flow to Equity Kawan Food Berhad's RM1.30 share price indicates it is trading at similar levels as its fair value estimate Kawan Food Berhad's peers are currently trading at a premium of 148% on average Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Kawan Food Berhad (KLSE:KAWAN) as an investment opportunity by estimating the company's future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Believe it or not, it's not too difficult to follow, as you'll see from our example! We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (MYR, Millions) RM31.3m RM30.2m RM29.7m RM29.7m RM30.0m RM30.6m RM31.3m RM32.2m RM33.2m RM34.2m Growth Rate Estimate Source Est @ -6.93% Est @ -3.76% Est @ -1.54% Est @ 0.01% Est @ 1.10% Est @ 1.86% Est @ 2.40% Est @ 2.77% Est @ 3.03% Est @ 3.21% Present Value (MYR, Millions) Discounted @ 8.4% RM28.9 RM25.7 RM23.3 RM21.5 RM20.1 RM18.9 RM17.8 RM16.9 RM16.1 RM15.3 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = RM204m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 3.6%. We discount the terminal cash flows to today's value at a cost of equity of 8.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = RM34m× (1 + 3.6%) ÷ (8.4%– 3.6%) = RM748m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= RM748m÷ ( 1 + 8.4%)10= RM334m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is RM539m. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of RM1.3, the company appears about fair value at a 18% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Kawan Food Berhad as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.4%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Kawan Food Berhad Strength Debt is not viewed as a risk. Dividend is in the top 25% of dividend payers in the market. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow faster than the Malaysian market. Current share price is below our estimate of fair value. Threat Dividends are not covered by earnings and cashflows. Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Kawan Food Berhad, there are three fundamental items you should further examine: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Kawan Food Berhad , and understanding this should be part of your investment process. Future Earnings: How does KAWAN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the KLSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
The Star
27-05-2025
- 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.
The Star
27-05-2025
- Business
- The Star
MIDF recommends investors to accept Felda's RM1.30 privatisation offer
KUALA LUMPUR: MIDF Amanah Investment Bank Bhd has recommended investors to accept Federal Land Development Authority's (Felda) offer to buy all remaining shares in FGV Holdings Bhd (FGV). In a note today, MIDF said the RM1.30 offer price represents a 12 per cent premium over its fair value estimate of RM1.16. "Notably, Felda and its persons acting in concert (PACs) collectively hold approximately 86.93 per cent of FGV's total issued shares. The offer, priced at RM1.30 per share - similar to the bid made in 2020 - aims to raise their stake to at least 90 per cent, which would allow Felda to delist FGV,' it said. MIDF said the stock is currently valued at 16.7 times price-to-earnings ratio (PER) based on the forecast financial year (FY) 2025 earnings per share of 7.6 sen, which is 8.6 per cent below the integrated plantation sector's average PER of 18.3 times. "If valuation were instead based on FY2024 earnings, the implied PER would be 17.2 times. Although the historical and forward implied PERs are notably below FGV's five-year average of 21.7 times and lag behind sector valuations, we view this as a fair benchmark given the company's mixed outlook,' it said. MIDF said the rationale for the takeover 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 PACs reach the 90 per cent ownership threshold, Bursa Malaysia will suspend trading of FGV shares within five market days, after which the delisting process will be initiated as per Bursa's listing requirements. "If successful, the privatisation is 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,' it added. - Bernama Trading ideas: Public Bank, U Mobile, Kerjaya, Samaiden, Titijaya, PeterLabs, Shin Yang, NexG, Globaltec, Maybank, AMMB, PetGas, Hume Cement
