MARKET DEVELOPMENT
Kenanga Maintains \'Market Perform\' On FGV, Target Price RM4.60
Kenanga Maintains \'Market Perform\' On FGV, Target Price RM4.60
02/07/2013 (Bernama) - Kenanga Research has maintained its 'market perform' call on Felda Global Ventures (FGV) with a target price of RM4.60.
This is based on an unchanged 18.7 times forward Price-Earnings Ratio (PER) on earnings per share of 24.5 sen for the forecast calendar year 2014.
Kenanga Research said in a statement today the current low crude palm oil (CPO) prices should keep FGV's share price upside limited.
"However, its downside also appears to be limited as the share price is close to its IPO price of RM4.55.
"We maintain our financial year 2013 ended (FY13E) to financial year 2014 ended (FY14E) core earnings of RM723 million to RM895 million," the research house said, adding key assumptions are FY13E-FY14E CPO prices of RM2500-RM2700 per tonne.
FGV announced that it had terminated its joint venture (JV) with Bunge Ventures Canada LP (Bunge), originally set up for the soybean and canola business in Canada with FGV collecting tolling fees from Bunge based on the latter's usage of FGV's downstream facilities.
Post the JV termination, FGV will now be involved in the commercial operation of the business (including the crushing and processing of soybean and canola into refined products) and will accordingly assume the market risk of the soybean and canola purchasing and hedging.
The JV will terminate on Aug 31, 2013 with the intent of dissolving the JV entity by Nov 30, 2013.
This is based on an unchanged 18.7 times forward Price-Earnings Ratio (PER) on earnings per share of 24.5 sen for the forecast calendar year 2014.
Kenanga Research said in a statement today the current low crude palm oil (CPO) prices should keep FGV's share price upside limited.
"However, its downside also appears to be limited as the share price is close to its IPO price of RM4.55.
"We maintain our financial year 2013 ended (FY13E) to financial year 2014 ended (FY14E) core earnings of RM723 million to RM895 million," the research house said, adding key assumptions are FY13E-FY14E CPO prices of RM2500-RM2700 per tonne.
FGV announced that it had terminated its joint venture (JV) with Bunge Ventures Canada LP (Bunge), originally set up for the soybean and canola business in Canada with FGV collecting tolling fees from Bunge based on the latter's usage of FGV's downstream facilities.
Post the JV termination, FGV will now be involved in the commercial operation of the business (including the crushing and processing of soybean and canola into refined products) and will accordingly assume the market risk of the soybean and canola purchasing and hedging.
The JV will terminate on Aug 31, 2013 with the intent of dissolving the JV entity by Nov 30, 2013.