KUALA LUMPUR: Felda Global Ventures Holdings Bhd’s (FGV) nine month core net profit, which surged to RM112 million, exceeded consensus at 150 per cent and Kenanga Investment Bank Research’s forecast by 226 per cent on strong plantation performance.
In a research report today, Kenanga said for its core businesses, FGV sees positive prospects as the plantation business recruits aggressively to resolve its serious crop loss issue that has limited productivity through the year.
The sugar segment should also see lower raw sugar prices, which should improve earnings contribution from fourth quarter 2017.
Logistics and trading businesses should also perform reasonably well thanks to fresh fruit bunch (FFB) volume recovery.
Kenanga said FGV expects to complete the disposal of its AXA Affin General Insurance Bhd’s stake by end-2017, which comprises a 16 per cent stake on a book value of RM90 million.
Yesterday, FGV reported a net profit of RM38.77 million in the third quarter (Q3) ended September 30, 2017 from a net loss of RM73.61 million recorded in the same quarter a year ago.
Kenanga said it has upgraded FGV’s 2017 and 2018 core net profit forecast by 172 per cent and 86 per cent to RM134 million and RM147 million, respectively on higher margin assumptions due to production recovery.
It expects a decent FFB growth of five per cent for financial year 2017 and 2018, versus sector average of eight per cent.
Kenanga has upgraded its stance on FGV to “outperform” with higher target price of RM2 from RM1.95 previously.