FGV public shareholding spread narrows to 13.5%


Group still faces delisting risk factor. FGV’s public spread standing at 13.19% as at Nov 25, has also failed to meet the 25% public spread requirement.

PETALING JAYA: FGV Holdings Bhd still faces the risk of being delisted from Bursa Malaysia given its narrowing public shareholding spread.

According to CGS-CIMB Research, the planter’s public shareholding spread has fallen to 13.19% as at Nov 25 from 13.47% as at Aug 25.

Under the current listing requirements by Bursa Malaysia, a listed issuer must have at least 25% of its shares held by the public.

Furthermore, the plantation group still has not formulated a rectification plan to address the shortfall in its public spread, said the research house in its latest report.

The time extension granted by Bursa Malaysia to comply with the public spread will end on Feb 3, 2022.

To reflect on the delisting risk factor, CGS-CIMB Research has retained a “hold” call on FGV and kept its target price at RM1.43, a 10% premium over the last offer price of RM1.30 by the Federal Land Development Authority (Felda).

“We see FGV’s share price supported by a potential privatisation offer by Felda and an estimated 3% financial year 2021 (FY21) yield.

“The key upside risks are resolution to the public spread and higher milling profits,” added CGS-CIMB Research.

On the group’s third quarter of FY21 (Q3’21) performance, the research house said the results were above expectations given the higher crude palm oil (CPO) prices and higher milling margin despite lower fresh fruit bunch production.

On workers shortage and environmental, social and governance – related issues, FGV had said that its workforce currently stands at 70% of total requirement.

This is down from 75% as at the end of the second quarter of 2021, which has negatively affected its productivity.

The group hopes to cover some of the worker shortfall from the second quarter of FY22.

FGV has recently appointed Elevate as a third party to conduct an independent assessment of FGV’s operations against the 11 International Labour Organisation indicators of forced labour.

FGV signboardFGV signboard

The site assessments will take place in the first half of 2022, after which remediation and verification will be carried out and FGV will submit a petition to the United States Customs Border Protection to revoke its Withhold Release Order on FGV’s palm oil and palm products entering the United States.

Meanwhile, TA Securities in its latest report said FGV reported the highest quarterly profit since listing and beat market expectations.

The planter’s core net profit increased 62.2% year-on-year to RM368.8mil on the back of a 33.2% jump in revenue.

The commendable results were driven by higher CPO price and improved performance of sugar and logistics sectors, said TA Securities.

The research firm also viewed that the possibility of FGV privatisation going through remains high as Felda has indicated that it does not intend to maintain the listing status of FGV.

There is also no indication of Felda’s direction on FGV after the privatisation bid fell through.

FGV’s public spread standing at 13.19% as at Nov 25, has also failed to meet the 25% public spread requirement.

For this, TA Securities has maintained a “sell” call on FGV with a higher target price of RM1.42 from RM1.30 previously.

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