FGV's MoU with Felda, Suhakam lapses after two years

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KUALA LUMPUR (May 9): FGV Holdings Bhd said an agreement relating to business compliance and human rights programmes it signed with two government agencies has lapsed upon its expiry on March 29.

FGV announced this today in an exchange filing, adding that none of the directors nor major shareholders of the company, or persons connected with then, has any direct or indirect interest in the agreement.

It said that the expiration of the memorandum of understanding (MoU) would not have any financial impact on the company and its subsidiaries.

In March 2017, FGV announced it inked an MoU with Felda Land Development Authority (Felda) and the Human Rights Commission of Malaysia (Suhakam) to establish business operation compliance and human rights programmes. FGV is 33.67% owned by Felda.

The MoU, which came with a two-year validity period and an option for extension, was also to explore each organisation's expertise in order to strengthen cooperation in other areas in support of human rights.

Meanwhile, in a note today, AllianceDBS Research reiterated a "buy" call on FGV with a target price of RM1.75, saying that its cost optimisation plans are bearing fruit.

"We are seeing positive signs from the restructuring plan and believe FGV is on track to record core profit for 1Q19 on the back of the group's cost optimisation efforts.

"The group is one of the biggest plantation land owners in the country yet trades at an entreprise value per hectare (EV/ha) of about US$9,524, a 56% discount to the average EV/ha of US$21,505 for our Malaysian coverage - indicating significant improvement potential.

"The stock trades at 1.0x book or -1 standard deviation since 2015; and is lowest in our Malaysian plantation universe. FGV is our top pick for the sector," the research house said.

At 3.24pm, shares in FGV were up one sen or 0.8% at RM1.22, for a market capitalisation of RM4.41 billion.