This article first appeared in The Edge Financial Daily on May 7, 2018

Felda Global Ventures Holdings Bhd
(May 4, RM1.64)
Maintain neutral with a target price (TP) of RM1.75: According to a report in The Edge Financial Daily, Felda Global Ventures Holdings Bhd (FGV) has denied talk that it will be announcing a large-scale restructuring or be taken over before the 14th general election on Wednesday, May 9. This is in response to an International Palm Oil Monitor report on April 30 which suggested such a move.

As we did not factor in a restructuring or takeover previously, the news is not expected to have a significant impact on FGV’s share price. We believe that the key share price driver for the company is its core earnings.

We maintain our financial year 2018 (FY18) core earnings estimate of RM106 million. We also maintain our FY19 core earnings estimate of RM117 million. The news is not expected to have impact on earnings.  

Our TP is based on 1.1 times price-to-book valuation (mean valuation). We do not foresee a significant downside to the share price as the company has been registering core net profit in the past two quarters, suggesting a more sustainable earnings trend. The next key event to watch will be the first quarter of FY18 earnings which will be released before the end of May. — MIDF Research, May 4