Felda Global Ventures Holdings Bhd
(Oct 15, RM3.03)
Maintain trading “buy” with target price of RM4.22: FGV announced yesterday that all conditions to the offer have been satisfied and the offer has been declared unconditional in all respects. To date, the company has secured an aggregate of 43.9 million shares or 93.9% of the total number of issued shares. The offer will remain open for acceptance until Oct 27.

Asian Plantations Ltd (APL) will eventually be delisted from the Alternative Investment Market in London as FGV has no intention to maintain the listing status.

Enlarge FGV’s oil palm land bank size by 6.5%. The acquisition will increase FGV’s oil palm land from 374,111ha to 398,733ha, and will also improve the planted area to 364,690ha from 348,390ha. The young average age profile of APL’s plantation will help improve FGV’s existing age profile of 16.7 years slightly. Based on APL’s current annual fresh fruit bunch (FFB) production of 32,000 mt, however, it will only slightly enhance FGV’s annual FFB production by 0.6%. We expect APL to be one of the major growth drivers for FGV in the coming years attributed to its young age profile and also more immature land bank turning into maturity.

Expected to be profitable by 2017. The management expects APL to turnaround the earliest by 2017 as more internal FFB production will be coming onstream. The management targets at least 50% of contribution from internal FFB production by 2016. — PublicInvest Research, Oct 15

This article first appeared in The Edge Financial Daily, on October 16, 2014.