FGV RESULTS BEAT FORECAST

Kenanga rates planter ‘outperform’ with higher target price of RM2, up from RM1.95 previously

FELDA Global Ventures Holdings Bhd’s (FGV) nine-month core net profit, which surged to RM112 million, exceeded consensus by 150 per cent and Kenanga Investment Bank’s research forecast by 226 per cent on strong plantation performance.

In a report yesterday, Kenanga said for its core businesses, FGV sees positive prospects as the plantation business recruits ag- gressively to resolve its serious crop loss issue that has limited productivity through the year.

The sugar segment should also see lower raw sugar prices, which should improve earnings contribution from the fourth quarter of this year.

Logistics and trading businesses should also perform reasonably well thanks to fresh fruit bunch (FFB) volume recovery.

Kenanga said FGV expects to complete the disposal of its AXA Affin General Insurance Bhd’s stake by the end of this year, which comprises a 16 per cent stake on a book value of RM90 million.

Yesterday, FGV reported a net profit of RM38.77 million in the third quarter ended September 30 this year from a net loss of RM73.61 million recorded in the same quarter a year ago.

Kenanga said it has upgraded the global agricultural company’s 2017 and 2018 core net profit forecasts by 172 per cent and 86 per cent to RM134 million and RM147 million, respectively, on higher margin assumptions due to production recovery.

It expects a decent FFB growth of five per cent for financial year 2017 and 2018, versus the sector’s average of eight per cent.

Kenanga has also upgraded its recommendation on FGV to “outperform” with a higher target price of RM2 from RM1.95 previously.