MARKET DEVELOPMENT
CIMB Research Ups Felda Global’s Target Price to RM4.49
CIMB Research Ups Felda Global’s Target Price to RM4.49
30/05/2013 (The Star) - CIMB Equities Research described Felda Global Ventures' (FGV) 1Q13 as largely in line with its estimate, at 22% of its full-year forecast, but they were at 17% of consensus.
The research house said on Thursday 1Q core earnings were dragged down by lower crude palm oil (CPO) prices, weaker sugar earnings and higher fair value changes in land lease liability.
“We maintain our FY13-15 core EPS forecasts but raise our sum-of-parts (SOP) value to reflect the recent upgrade of our target market P/E from 13.5 times to 15.6 timesin our valuation of the plantation division.
“As a result, we have raisedour SOP-based target price to RM4.49. We remain Neutral as we see share price support from M&A potential,” it said.
To recap, CIMB Research said FGV posted a 35% on-year decline in 1Q13 core net profit due to lower plantation and sugar contributions as well as higher fair value changes from land lease agreement (LLA) liability of RM102.3mil.
Plantation earnings were weaker as lower CPO prices more than offset the 8% increase in output while sugar earnings were diluted by weaker domestic sales volumes.
However, the downstream division reported higher earnings due to better refining margins. The group also booked a gain of RM26.5mil from the sale of Tradewinds in 1Q but this was partially offset by RM13.7mil impairment loss for its investment in Felda Iffco.
The research house said on Thursday 1Q core earnings were dragged down by lower crude palm oil (CPO) prices, weaker sugar earnings and higher fair value changes in land lease liability.
“We maintain our FY13-15 core EPS forecasts but raise our sum-of-parts (SOP) value to reflect the recent upgrade of our target market P/E from 13.5 times to 15.6 timesin our valuation of the plantation division.
“As a result, we have raisedour SOP-based target price to RM4.49. We remain Neutral as we see share price support from M&A potential,” it said.
To recap, CIMB Research said FGV posted a 35% on-year decline in 1Q13 core net profit due to lower plantation and sugar contributions as well as higher fair value changes from land lease agreement (LLA) liability of RM102.3mil.
Plantation earnings were weaker as lower CPO prices more than offset the 8% increase in output while sugar earnings were diluted by weaker domestic sales volumes.
However, the downstream division reported higher earnings due to better refining margins. The group also booked a gain of RM26.5mil from the sale of Tradewinds in 1Q but this was partially offset by RM13.7mil impairment loss for its investment in Felda Iffco.