FELDA FAILS IN FGV PURSUIT
Analysts cite unattractive RM1.30 offer and high CPO price for failed takeover bid
FGV Holdings Bhd’s shares surged as much as 28 per cent to hit a one-year high yesterday after Federal Land Development Authority’s (Felda) attempt to privatise the company fell through.
Investors may also have snapped up FGV shares on the back of the strong crude palm oil (CPO) price.
FGV shares rose by 37 sen, or 28 per cent, to RM1.67 at noon before settling 27 sen, or 21 per cent, higher at RM1.57 yesterday.
The share price had been trading in a tight price range of between RM1.30 and RM1.33 since Felda’s RM1.30 offer was tabled more than three months ago.
Analysts said one of the key factors for the failed bid was the unattractive offer price.
They are also bullish about FGV’s outlook this year, buoyed by the record CPO price and stronger performance of its sugar operations.
Felda had late on Monday announced that it had only obtained 80.99 per cent of the total issued shares (excluding Treasury shares) in FGV despite several time extensions.
This was short of the minimum 90 per cent requirement to privatise and delist FGV.
“With the CPO price at having breached RM4,000 a tonne and at an all-time high, minority shareholders may have been seeking a higher valuation,” it said in a report yesterday.
The CPO price had hit a record RM4,247.50 per tonne on Monday.
Felda chairman Datuk Seri Idris Jusoh said in a statement yesterday the cooperation between Felda and FGV would have formed a synergy that benefited both parties.
Felda director-general Datuk Amiruddin Abdul Satar said it would have provided added value, especially with its bigger focus on downstream activities.
“Downstream activities will provide higher profit margins and be able to strengthen Felda’s financial position.
“The acquisition of FGV is an important step in Felda’s rehabilitation plan,” he added.
MIDF Research expects FGV’s earnings to remain sanguine this year, boosted by the favourable
CPO price and a modest fresh fruit bunch production.
On top of that, the anticipated higher average selling price of refined sugar and increase in sales volume should help FGV’s subsidiary, MSM Malaysia Holdings Bhd, to further increase its earnings in the coming quarters.
Meanwhile, MIDF Research said despite the allegations of forced labour use by a non-governmental organisation, FGV’s outlook remained resilient.
“FGV will revisit the appointment
of an independent audit firm within a reasonable period of time and also continue to engage with the United States Customs and Border Protection.
“All factors considered, we are maintaining our ‘neutral’ recommendation on FGV with unchanged target price of RM1.31,” the research firm added.
MIDF Research has left FGV’s earnings estimates for financial years 2021 and 2022 unchanged at RM323.4 million and RM361.3 million, respectively.