Friday 29 Mar 2024
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KUALA LUMPUR (Feb 25): Felda Global Ventures Holdings Bhd (FGV) fell as much as 34 sen or 12% after the plantation group reported a sharp decline in fourth quarter and full-year net profits.

FGV (fundamental: 2.1; valuation: 1.8) fell to an intraday low of RM2.60 before paring losses. As at 11.44am, FGV was traded at RM2.66 with some seven million shares having changed hands.

The stock was the second-largest decliner across Bursa Malaysia. For comparison, the KLCI was down 8.23 points or 0.45% at 1,810.45 points.

FGV announced yesterday net profit fell to RM20.21 million in the fourth quarter ended December 31, 2014 (4QFY14) from RM499.92 million a year earlier. Full year net profit dropped to RM306.37 million from RM982.25 million.

Today, analysts downgraded FGV after they said the group's financials came in below expectation. In a note, Affin Hwang Investment Bank Bhd said it had cut its FGV income forecast and downgraded the stock.

These downgrades took into account FGV's lower oil palm production in FY15 and FY16.

“Following management guidance, we now assume a fresh fruit bunch (FFB) production of 5 million metric tonne (MT) in 2015 (+0.7%) instead of a growth of 5%. We have also cut production growth from 5% to 2% in 2016.

"As a result, we cut 2015 to 2016 core net profit forecasts by 9% and 13% respectively,” Affin Hwang said.

Affin Hwang has downgraded FGV shares to “hold” with a lower target price of RM2.90.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. )

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