PETALING JAYA: The Federal Land Development Authority (Felda), which now has an 81% stake in FGV Holdings Bhd, said the management of the listed planter’s land lease agreement (LLA) estates and its palm oil mills will be integrated with the agency’s other estates.
This is to ensure a more efficient and effective plantation operations for the benefit of both Felda and the listed planter, the agency said in a statement yesterday.
Some 350,000ha of Felda land was leased out to FGV under the LLA to pave way for the listing of FGV on Bursa Malaysia back in 2012.
Apart from Felda, the Pahang state government and Sabah state government with its investment arm, Sawit Kinabalu Group, also have a 5% and 4% stake respectively in FGV.
Felda chairman Datuk Seri Idris Jusoh said he believes that the cooperation between Felda and FGV will create synergies that could bring mutual benefits to the two organisations.
“In order to move forward, it is important for us to hold the ‘we are one’ principle, ” he pointed out.
Felda director-general Datuk Amiruddin Abdul Satar also shared a similar sentiment, saying that the working cooperation between Felda and FGV would add value to the agency, particularly for its downstream activities.
“Given its higher profit-margin prospects, the focus into downstream activities will put Felda on a more sustainable financial position, ” he added.
Meanwhile, in another development, shares in FGV Holdings Bhd soared to their highest in over two years in active trading on Bursa Malaysia yesterday after the unsuccessful bid by Felda to take over the listed planter.
FGV closed 20.77% or 27 sen higher to finish the day at RM1.57, its highest since August 2018.
A total of 58.18 million shares changed hands.
According to analysts, Felda’s unattractive offer price of RM1.30 per share for FGV could be one of the main reasons for the unsuccessful attempt at FGV’s privatisation.
When the offer closed at 5pm on Monday, Felda had only managed to obtain 81% equity, or a 2.955 billion share interest in FGV.
The agency was required to obtain 90% of the FGV shares it did not own from the acceptance of its takeover offer in order to trigger a compulsory share acquisition and to take FGV private.
The original deadline for the closing date for the acceptance of the takeover offer was Feb 2, which was then postponed to Feb 16, and subsequently to March 2.
It was further extended for the third and final time last month to March 15.
MIDF Research in its latest report noted that one of the reasons which contributed to the unsuccessful attempt by Felda was the unattractive offer price of RM1.30 per share for FGV.
“With the current price of crude palm oil (CPO) breaching RM4,000 a tonne, the FGV minority shareholders might be seeking a higher valuation, ” the research unit pointed out.
Felda’s takeover offer valued FGV at RM4.74bil or RM1.30 per share, which is a steep 71.43% discount to its 2012 initial public offering price of RM4.55 per share.
As for FGV, MIDF Research is maintaining the planter’s earnings estimates unchanged at RM323.4mil and RM361.3mil for financial year 2021 (FY21) and FY22 respectively.
“We anticipate that the group’s earnings will remain sanguine boosted by the favourable CPO price with a modest fresh fruit bunch production, ” added the research unit.
MIDF Research meanwhile expects that FGV’s sugar refiner subsidiary MSM Holdings Bhd will further increase its earnings in the coming quarters.
This is due to the anticipated higher average selling price of refined sugar and increase in sales volume.
Despite the United States ban on palm oil imports from FGV over allegations of forced labour, the research unit believes that “the group’s outlook remains resilient as FGV will revisit the appointment of an independent audit firm for an audit of operations within a reasonable period of time.
“FGV will also continue to engage with the US Customs and Border Protection accordingly once an independent auditor has been appointed.”