FGV’s denial of restructuring, takeover rumours not to have significant impact on share price

KUCHING: Felda Global Ventures Holdings Bhd’s (FGV) denial of restructuring and takeover rumours is not expected to have significant impact on the group’s share price.

The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) referred to local media stating that FGV has denied talk that it will be announcing a large scale restructuring or be taken over before the General Election on May 9.

MIDF Research also saw that this was in response to International Palm Oil Monitor (IPOM) report on April 30 which suggested such a move.

However, MIDF Research did not foresee significant downside to share price following this news as the company has been registering core net profit in the past two quarters. It noted that this suggested more sustainable earnings trend from the group.

“As we did not factor restructuring or takeover previously, the news is not expected to have significant impact on share price.

“We believe that the key share price driver for the company is its core earnings,” the research arm said.

As such, MIDF Research maintained its financial year 2018 (FY18) core earnings estimate of RM106 milion.

The research arm also maintained its FY19 core earnings estimate of RM117 million.

“The news is not expected to have impact on earnings.”

All in, MIDF Research maintained ‘neutral’ on FGV with a target price of RM1.75 per share.

“The next key event to watch will be the first quarter of FY18 (1QFY18) earnings which will be released before end of May.”