FGV drops after company slipped into red in 2Q

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KUALA LUMPUR (Aug 29): FGV Holdings Bhd shares fell as much as 15 sen or 9% to RM1.50 so far today after the plantation group announced yesterday a net loss of RM23.23 million for the second quarter ended June 30, 2018 (2QFY18) versus a net profit of RM37.26 million a year earlier.

FGV said 1HFY18 net loss stood at RM21.9 million compared to a net profit of RM38.96 million a year ago. At 11:02am today, the stock was traded at RM1.57 with some eight million shares transacted.

CIMB Research wrote in a note today that CIMB had cut its FGV share target price (TP) to RM1.67 from RM2.12. "We slash our FY18-20F EPS to reflect lower palm oil and sugar earnings. Our target price, which is based on a 15% discount to SOP (sum-of-parts), has also been cut to reflect lower valuations for its plantation assets. We maintain our Hold call.

"FGV's 1H18 results were below our and consensus net profit. The group's 1H18's core net loss of RM87 million was below our full-year profit forecast of RM172 million and Bloomberg consensus's RM141 million," CIMB said.

TA Securities Holdings Bhd said in a note today it had revised downward its FGV share TP to RM1.68 from RM1.76. "We see downside risk in future earnings and do not see any re-rating catalysts in the near term that could incentivise a rally. Downgrade to SELL," TA Securities said.