KUALA LUMPUR: CIMB Equities Research is maintaining its target price for Felda Global Ventures target price at RM4.70, which is 3.3% above its last traded price of RM4.55.
It said on Monday, FGV's nine-month core earnings for the period ended Sept 30, 2012, excluding gain on disposal of securities, were disappointing at 77% of its and 67% of consensus full-year numbers, as it expected a lower Q4 profit due to weaker CPO prices.
"The negative surprises came from lower sugar contributions and JV losses. We cut our FY12-14 core net profit forecast by 6%-9% to account for lower JV contributions," it said.
"However, our target price of RM4.70 (based on an unchanged 10% discount to sum-of-parts) remains intact, as we value the group's JV based on historical purchase consideration," it said.
CIMB Research maintained a Neutral outlook on FGV as it sees support in the form of mergers and acquisitions potential.
"So far, it has used only RM420mil of its total gross IPO proceeds of RM4.459bil, mainly to repay loans. The group is scouting for M&A targets and is looking to hive off non-core assets at Felda Holdings," said the research house.
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