Quick take: FGV upgraded at AllianceDBS, shares up nearly 5%

KUALA LUMPUR: FGV Holdings Bhd stock rose 4.76% in early trade Wednesday after AllianceDBS Research upgraded the stock to a “buy”.

The plantation giant, the most active counter on Bursa Malaysia, gained 4.76%, or six sen to RM1.32 with 31.4 million shares traded.

AllianceDBS has upgraded FGV to a “buy” with a DCF-based target price of RM1.75.

“We are positive on FGV’s restructuring plan initiated by Chairman Datuk Wira Azhar Abdul Hamid and the group’s new management team,” it said, adding.

It expected that the resolution of its labour issues, measures to reduce leakages and new planting program to result in a significant improvement in cost efficiency, yields and profitability.

“The group is one of the biggest plantation land owners in the country yet trades at an EV/ha of about US$9,500, a 57% discount to the average EV/ha of US$22,000 under our Malaysian coverage – indicating significant improvement potential.

“The stock trades at 0.9x book or -1 standard deviation since 2015; and is lowest in our Malaysian plantation universe. FGV is our new top pick for the sector,” AllianceDBS said.

“Our net profit forecast for FY19-21F is one of the highest in the market as we have factored in the potential of FGV successfully achieving 90%/92% for FY19-20F of the required labour force for its estates,” it added.

Economic Affairs Minister Datuk Seri Mohamed Azmin Ali will be tabling the White Paper on the Federal Land Development Authority (Felda) today in Parliament.

Source : TheStar