FGV said in a statement yesterday that the allegations in a video, which was posted on YouTube, had caused much confusion and concern.
KUALA LUMPUR: Affin Hwang Capital Research has raised its target price for Felda Global Ventures Holdings Bhd (FGV) from RM2.09 to RM2.26 and kept its Buy call.
It said on Monday that despite a weaker 2017 revenue of RM16.97bil (-1.5% on-year), FGV reported a better core net profit of RM283.2mil (+250% on-year).
Core earnings were above expectations, mainly due to a better-than-expected profit contribution from the plantation division.
“We have raised our 2018-19 core EPS forecasts by 2%-8% after the good 2017 results. With expected stronger earnings growth, we revise up our 12-month TP to RM2.26 and maintain our Buy call on FGV,” it said.
Affin Hwang Research pointed out FGV’s 2017 revenue slipped 1.5% on-year to RM16.97bil due to lower contribution from plantation but partially offset by higher contribution from the sugar and LO (Logistics & Others) divisions.
Revenue from the plantation division dropped by 4.3% on-year to RM12.9bil while those of the sugar and LO divisions rose 1.7% and 23.3% on-year, respectively, to RM2.7bil and RM1.4bil.
For 2017, FGV’s profit before tax increased by 60% on-year to RM416.6mil, largely due to higher contribution from the plantation and LO divisions which offset the decline in contribution from the sugar division as a result of higher raw sugar costs and the weak ringgit, despite an improvement in the selling price.
The plantation sector showed improvement in profit given the higher crude palm oil (CPO) sales margin on the back of a higher CPO average selling price of RM2,792 a tonne in 2017 vs. RM2,560 in 2016, but this was partially offset by impairment in receivables and provision for litigation loss.
The LO division recorded a higher profit in 2017, mainly attributable to higher throughput and tonnage carried by FGV’s transport operation in tandem with the higher CPO production volume.
“After excluding impairments, provision for litigation loss, forex gains and other one-off items, FGV recorded a core net profit of RM283.2mil in 2017, up by 250% on-year.
“This was above expectations, accounting for 108% of our 2017 forecast. The variance was mainly due to better-than-expected contribution from the plantation division as margins improved.
“Sequentially, FGV’s 4Q17 revenue increased by 3.1% while net profit nearly doubled to RM76.6mil. However, core net profit after excluding the gain on disposal of a long-term investment was rather flat at RM81.2mil (-0.8% on-quarter),” it said.
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