Zakaria’s resignation seen as a ‘slight positive’ for FGV

PETALING JAYA: The resignation of Datuk Zakaria Arshad as group president and CEO of FGV Holdings Bhd is a “slight positive” as it paves the way for the group to move forward, said CGS-CIMB.

“The news is a slight positive for FGV as it appeared to us that the matter has ended amicably. The resignation of the group president and CEO will pave the way for FGV to move forward to identify and appoint a new CEO to drive the turnaround initiatives that its board has conveyed to the investment community earlier,” it said in its report.

On Tuesday, FGV announced Zakaria’s immediate resignation and the end of the suspension imposed on him. However, the forensic investigation on alleged irregularities in the group’s past investments will continue and is expected to be concluded by year-end.

The Special Board Committee 2 comprising four FGV directors, namely its chairman Datuk Wira Azhar, Datuk Dr Salmiah Ahmad, Dr Mohamed Nazeeb and Datin Hoi Lai Ping, will continue to perform the functions of the group president and CEO.

“Also worth noting is that it took only five days for the suspension to end, significantly shorter than the earlier suspension, which dragged on for slightly over four months,” said CGS-CIMB.

Although it is a slight positive, CGS-CIMB does not expect FGV’s share price to rerate given the short-term uncertainty relating to FGV’s leadership.

“This, coupled with the challenges of low crude palm oil prices and concerns over start-up losses from the group’s new sugar refinery in Johor, will likely limit its share upside in the near term,” it said.

CGS-CIMB maintained its “hold” call and target price of RM1.67 on the stock.

To recap, Zakaria resigned on Wednesday, just a day before he was due to respond to a notice of inquiry following his suspension last week.