FGV in spotlight after upgrade amid limited downside (Update)

KUALA LUMPUR: Felda Global Ventures (FGV) was in the spotlight on Tuesday after it was upgraded by CIMB Equities Research, which viewed the downside for the plantation company as limited.

At 5pm, the FBM KLCI was up 6.73 points or 0.37% to 1,803.17, aided by FGV's 1.27 point gaint. Turnover was 2.05 billion shares valued at RM2.18bil. There were 447 gainers, 366 losers and 314 counters unchanged.

The ringgit rebounded against the US dollar to 3.5972 from the previous close of 3.6200.

CIMB Research said in its report early Tuesday that there was limited downside for FGV from current levels, with the market already valuing its plantation estates at below the replacement cost of new planting. 

“It's move to sell non-core assets will help improve sentiment.  However, the stock is unlikely to rerate significantly as 4Q’s earnings are likely to remain weak and could come in below consensus,” it said. It lowered the target price from RM2.93 to RM2.33.

However, CIMB Research cautioned FGV may lose its position in the 30-stock FBM KLCI due to its lower market capitalisation. FGV closed  20 sen higher at RM2.40 in active trade.

Crude palm oil for third month delivery rose RM7 to RM2,179 per tonne. PPB Group added 18 sen to RM15.14, IOI Corp three sen to RM4.77 but KL Kepong shed four sen to RM22.82. Sime Darby edged up one sen to RM9.53.

US light crude oil added eight cents to US$45.23 but Brent shed four sen to RM48.12. 

Petronas Dagangan rose 42 sen to RM17.62, Petronas Chemicals 20 sen to RM5.55 and pushed the KLCI up 2.79 points but Petronas Gas shed two sen to RM22.34. SKPetro added one sen to RM2.28.

Among the banks, CIMB gained eight sen to RM5.54, Public Bank added six sen to RM18.12 while Hong Leong Bank rose 10 sen to RM14.40. AmBank and RHBCap edged up one sen to RM6.60 and RM7.81 but Maybank was flat at RM8.92.

Insurer Allianz fell the most, down 24 sen to RM11.56 while Hong Leong Capital gave up 22 sen to RM12.48.

Reuters reported European shares were little changed on Tuesday as disappointing updates by companies like Siemens and Ericsson raised concern about the coming earnings season and weakened demand for stocks after an eight-day rally.

Among key Asian markets, Hong Kong shares snapped a five-day winning streak on Tuesday, dragged down by losses in mainland China markets. The Hang Seng index fell 0.4% to 24,807.28, while the China Enterprises Index lost 1.6% to 12,030.38.
Stocks in mainland China fell, dragged down by financial and property shares after the benchmark index opened the day at its highest level since August 2009.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.9%, or 33.05 points, to 3,574.93. The Shanghai Composite Index which tracks all the stocks trading on the Shanghai Stock Exchange, also lost 0.9%, closing down 28.82 points, at 3,352.96.

Among the other key regional markets,

Japan’s Nikkei 225 jumped 1.72% to 17,768.30;

Taiwan’s Taiex rose 0.46% to 9,521.59;

South Korea’s Kospi rose 0.86% to 1,952.40 and 

Singapore’s Straits Times Index edged up 0.4% to 3,412.20.

Spot gold fell 70 cents to US$1,280.70.

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