KUALA LUMPUR (May 30): Hong Leong Investment Bank Research (HLIB Research) has upgraded FGV Holdings Bhd to "Hold" at RM1.16 with a higher target price of RM1.12 (from 80 sen).

The research house also said FGV's 1Q19 core net profit of RM13 million came in above its expectation, accounting for 34.2% of house full-year estimates, mainly on the back of lower-than-expected crude palm oil (CPO) production cost and better-than-expected contribution from logistics support business sector, which altogether more than offset weaker-than-expected palm product prices and performance at sugar division.

In a note today, HLIB Research said FGV's management highlighted that it is on track to lower its CPO production cost in FY19, and divest RM350 million worth of non-core and/or non-performing assets.

"Following the strong set of 1Q19 results, we raise our FY19-20 core net profit forecasts by 16-34% to RM44 million and RM59.8 million, and SOP-derived TP to RM1.12. Upgrade from Sell to Hold," it said.

At 10.42am, FGV was flat at RM1.16 with 2.3 million shares traded.