Syed Mokhtar’s interest is opportunity to rejuvenate FGV?

KUALA LUMPUR: FGV Holdings Bhd can be rejuvenated with the potential entry of Perspective Lane (M) Sdn Bhd as a major shareholder, sources said.

Perspective Lane, a company owned by businessman Tan Sri Syed Mokhtar Albukhary’s Restu Jernih Sdn Bhd has made an offer to inject its plantation assets into FGV in return for a sizeable stake.

“It is an opportune time for FGV to turn around its business and return its focus on the core business of palm oil plantation,” a source told the New Straits Times.

The source said since FGV’s listing in 2012, the company had mostly been incurring losses despite endless efforts to diversify into new business to generate profit.

“This deal has given the opportunity for FGV to bounce back after it has failed to generate profit for shareholders for most years since it was listed eight years ago.

“It needs to focus back on its core business of palm oil plantation,” the source said.

The businesses that FGV has diversified into include logistics, information and communication technology under FGV Prodata Systems Sdn Bhd, hospitality under Felda Travel Sdn Bhd and sugar business under listed MSM Malaysia Holdings Bhd.

Since MSM’s listing on Bursa Malaysia in 2011, its share price has continuously been under pressure.

On the day of its listing on July 1, 2011, MSM share price was RM4.98. Today, its share price was traded at 49.5 sen, up 5.32 per cent or 0.25 sen.

For the six months ended June 30, 2020, MSM’s net loss shrank to RM56.26 million from a net loss of RM74.39 million, while revenue dropped marginally to RM959.58 million from RM959.84 million.

Besides that, FGV had in February this year diversified into dairy farming business and fresh milk processing.

This is through its acquisition of a 60 per cent stake in the enlarged share capital of RedAgri Farm Sdn Bhd for RM10 million.

RedAgri owns the Bright Cow brand of dairy products.

FGV was traded at RM5.32 when it was listed on June 29, 2012.

On Friday, following the announcement of Syed Mokhtar’s interest, FGV’s share price rose as much as eight sen or 7.48 per cent to RM1.15.

The stock ended 0.4 sen higher, or 3.74 per cent, at RM1.11.

The source said the important question now was not solely on the proposed acquisition, instead what can be done to realise the company’s true potentials.

Higher crude palm oil (CPO) price had made the potential FGV sale more palatable, the source added.

“In the end, the board must place priority towards protecting the interest of FGV’s shareholders, the smallholders as well as the public,” the source added.

CPO’s three-month futures price has climbed to RM2,826 a tonne today from a low of RM1,962 per tonne in May.

On October 14, the CPO futures contract for October 2020 and November 2020 gained RM7 each to RM3,067 per tonne and RM3,054 per tonne, respectively.

The December 2020 futures contract rose RM9 to RM3,003 per tonne, while January 2021 added RM8 to RM2,952 per tonne.

For the six month ended June 30, 2020, FGV’s net loss widened to RM121.8 million from RM55.57 million.

Group revenue dropped 7.3 per cent to RM6.08 billion from RM6.56 billion recorded in the same period a year ago, due to higher losses registered in plantation business.

In an exchange filing yesterday, FGV said Perspective Lane intended to participate in the company via an injection of plantation assets in exchange for shares.

If accepted, Perspective Lane will become the single largest shareholder of FGV.

A business daily, quoting sources, reported that Syed Mokhtar was eyeing a 20 per cent stake in FGV.

Perspective Lane owns Tradewinds group of companies, including Tradewinds Plantation Bhd and Central Sugars Refinery Sdn Bhd, the same businesses FGV is involved in.

Source: NST