FGV EARNINGS FORECASTS DOWNGRADED

Slower FFB growth, higher costs, weaker CPO prices to pressure planter, say analysts

ANALYSTS have downgraded FGV Holdings Bhd’s earnings forecasts for financial years 2018 and 2019 after the group posted RM849.25 million net loss in the third quarter ended September 30.

For the nine months, the group posted RM871.15 million net loss, compared with net profit of RM80.48 million previously.

Its nine-month revenue fell to RM10.23 billion from RM12.66 billion previously.

“Despite the sharp retracement in recent share price and new management’s efforts to improve the company’s performance, we believe near-term share price performance will remain lacklustre, and re-rating catalyst could only emerge when crude palm oil price (CPO) sentiment improves and/or earnings performance improves,” said Hong Leong Investment Bank Bhd in a note.

It has maintained a “hold” call on FGV with a target price of RM1.12 from RM1.53 previously.

Kenanga Investment Bank Bhd (Kenanga IB) said moving into the fourth quarter, depressed CPO prices were expected to keep FGV in the red.

Kenanga IB raised its 2018 financial year net loss projection for FGV to RM187 million from RM22 million and trimmed the 2019 financial year net profit projection by 25 per cent to RM60 million, as it cut fresh fruit bunches (FFB) forecasts.

It has maintained a market “outperform” stance on FGV, with a target price of 96.5 sen from RM1.46.

BIMB Securities Sdn Bhd has revised FGV’s forecasts for financial years 2018 and 2019 to a loss of RM991 million and profit of RM18 million, respectively, from RM23 million and RM37 million previously.

It maintained a “hold” call on FGV with lower target price of 90 sen from RM1.60.

TA Securities Holdings Bhd revised FGV’s projected net loss for financial years 2018, 2019 and 2020 to RM261.8 million, RM66.3 million and RM53.9 million, respectively, after factoring in lower FFB production growth, higher production costs, loss from joint ventures and lower margins.

However, it upgraded FGV to “hold” from “sell” with a capital upside of 10.4 per cent. Its target price for FGV was revised downwards to RM1.01 from RM1.47.