28/06/2012 (The Star) - Felda Global Ventures Holdings Bhd's (FGV) listing today will be a closely-watched affair by the world and, going by expectations of fund managers and analsyts, the share price of the world's second largest listing this year is expected to perform well in the short to medium term.

To recap, FGV's listing has put the Malaysian stock market into the limelight as hosting the next biggest initial public offering (IPO) in the world this year after that of Nasdaq's Facebook Inc.

FGV's listing is certainly not a new idea in the capital market as this idea to list Felda Holdings Sdn Bhd was first mooted by the then prime minister and finance minister Tun Dr Mahathir Mohamad in his budget presentation.

However, after taking over the reins of the country, previous Prime Minister Tun Abdullah Ahmad Badawi and the Cabinet had put the plan to list Felda on hold to ensure the interests of Felda settlers were safeguarded.

Felda had been placed under the purview of the Prime Minister's Department from the former Land and Co-operative Development Ministry. Fast forward seven years... Prime Minister Datuk Seri Najib Tun Razak announced the plan to list FGV once again in his budget speech last year, using the same platform as Dr Mahathir did.

FGV had been established in 2007 as part of Felda's commercial arm for overseas investments in the upstream and downstream palm oil business, and other agribusinesses.

Indeed, the journey from when the idea had first been mooted until today, when the listing is finally happening, has not been an easy one as it had taken almost ten years for this to materialise given the vocal opposition to this plan from some quarters.

Just prior to the launch of the prospectus, the National Felda Settlers Children's Association's (Anak) president Mazlan Aliman had said in March 2012 that he would file an injunction against the listing of FGV on top of the earlier opposition to this listing after it had been mooted in 2003 by Dr Mahathir.

Najib had been quoted as saying at the Felda IPO prospectus launch that claims that the Government would manipulate the settlers by listing FGV were “untrue and baseless”.

Other observers who had noted the opposition to this say that the successful listing of FGV shows that the ideals and benefits of capitalism can blend well into the Malaysian society, thus elevating the country's standing among global investors which could also be a catalyst for further foreign inflows into the country and the region.

Citi had said in a note to its clients that since FGV was a significant large capitalised stock which would qualify for fast entry into both the FTSE All World Index and the FTSE Bursa Malaysia KL Composite Index, its prominence would be considered in local and foreign portfolios moving forward.

Meanwhile, analysts are mostly positive on this listing, with Public Investment Bank stating that it likes FGV for its impending aggressive expansion plans, turnaround in the downstream segment, and stronger sales growth with its new business structure.

Public Investment Bank analyst Chong Hoe Leong had an outperform call on the stock in a recent initiation of coverage note and a fair value price of RM5.44, which implies a 22.2% potential upside from its reference price and a 3.6% dividend yield.

Despite some longer-term concerns raised surrounding the IPO, specifically the maturing trees of the company, fund managers and analysts are certain that FGV will do well because the market has had full knowledge of these issues even prior to subscribing to the IPO.

“The issue of the ageing trees, that's a longer term thing and this has been mentioned in their prospectus actually, so the market already knows this and thus is priced in. With this listing, I expect the focus to be on technology and research that is expected to be poured in post listing to enhance the yields of the oil palm trees,” said a local market dealer.

A fund manager expects the performance of FGV to mirror that of other oil palm plantation companies, but more importantly the performance of these stocks will follow crude palm oil (CPO) prices closely.

“I think there is still some upward price movement for CPO for the short to medium term as it is an agriculture-linked commodity,” the fund manager said.

Meanwhile, Etika Insurance and Takaful head of research Chris Eng told StarBiz the listing reference price was already reflective of the higher percentage of older oil palm trees and added that this matter had already been priced into investors' expectations.

“Given the high likelihood of feel-good factors, prior to the general election, FGV is expected to do well. Felda is also viewed to be a proxy to the Government,” Eng said.