FGV shares at 4-month high
Zakaria’s return seen as a boost for planter’s turnaround plan
PETALING JAYA: Shares in Felda Global Ventures Holdings Bhd (FGV) climbed to a four-month high on optimism that Datuk Zakaria Arshad’s ( pic) return at the helm will put the planter’s turnaround plan back on track.
The stock was up four sen, or 2.3% higher yesterday at RM1.76, near the price level in early June when Zakaria and three other top officials were told to take an indefinite leave of absence by his directors led by former chairman Tan Sri Mohd Isa Abdul Samad.
FGV said on Monday that Zakaria will resume his duties on Oct 16.
The three other officers, including group chief financial officer Ahmad Tifli Mohd Talha, are already back at work.
MIDF Research in a report yesterday said Zakaria’s return reflects certainty on the direction of the company and likely to be viewed positively by the market.
“FGV chairman Datuk Wira Azhar Abdul Hamid has also highlighted that his priorities are to improve operational and financial performance of FGV’s core business and ensure sustainable growth going forward.”
CIMB Research said the return of Zakaria will allow FGV to continue with its 2020 Strategic Plan to revive its performance.
“This is in line with its chairman’s commitment to turn the group around. However, the chairman has also mentioned that there is a need for a new management structure to strengthen the organisation and the board’s composition could be enhanced with the appointments of experts in related subject matters.”
Kenanga Research, meanwhile, said that while the return of Zakaria reduces an element of uncertainty, the research house is neutral on the overall group’s outlook.
“Although production is expected to improve in the second half of 2017, the company’s labour woes are expected to continue over the mid-term, leading to some crop losses. Meanwhile, sugar earnings may remain weak in the third quarter of 2017, with possible improvement towards the fourth quarter of 2017 due to existing higher cost stocks.”
MIDF Research also said it was neutral on the company’s outlook.
“Earnings estimate are maintained for both 2017 and 2018. Our Target Price is based on one-time price-to-book value. Despite the positive news, we believe that the long-term re-rating catalyst for FGV is the sustainable core earnings.”
CIMB Research has upgraded the stock and increased its higher target price to RM1.80 following the company’s management change.
“In line with this, we raise the stock from “reduce” to “hold” as we expect FGV’s share price to be supported by its plans to improve yields and by the sale of its non-core businesses.”
FGV shares ended four sen higher at RM1.76 yesterday.
In a filing with Bursa Malaysia on Monday, FGV said Zakaria would resume his duties on Oct 16 after a four-month leave of absence.
On June 6, Zakaria was suspended along with FGV’s group chief financial officer Ahmad Tifli Mohd Talha and two senior officers, namely, Delima Oil Products Sdn Bhd senior general manager Kamarzaman Abd Karim and FGV Trading Sdn Bhd CEO Ahmad Salman Omar.
The action to force the four senior executives to go on leave was taken by the FGV management headed by former chairman Tan Sri Mohd Isa Abdul Samad.
Three of the four executives of FGV who were told to go on leave by the board in June have resumed their duties.
They were told to go on leave pending an investigation on purported wrongdoings in the dealings of a subsidiary of the group, Delima Oil Products, and long-term business partner Afghan-based Safitex Trading LLC.
FGV also set up a domestic inquiry panel to assist investigations.