MARKET DEVELOPMENT
MIER Hopes Eagle High Purchase By Felda Done At Right Price
MIER Hopes Eagle High Purchase By Felda Done At Right Price
27/12/2016 (Bernama) - The Federal Land and Development Authority's (FELDA) venture into oil palm plantations in Indonesia via the acquisition of a stake in PT Eagle High Plantations Tbk (EHP) will bring positive impact on the industry and country.
However, the purchase transaction must be done at the right price, said Malaysian Institute of Economic Research (MIER) executive director, Dr Zakariah Abdul Rashid.
"Acquisition to expand business is good, nevertheless, must be (done) at the right price.
"The price of a company's equity depends on demand and offer in the market, and determined by its fundamentals," he told Bernama.
He said FELDA's corporate move through its subsidiary, FIC Properties Sdn Bhd (FICP), to buy a 37 per cent stake in EHP, which is listed on the Jakarta Stock Exchange, could sparked concerns in the corporate sector if it was not transacted at the right price.
He said this was because of a report on the purchase of an overseas entity by FELDA earlier which was done at a high price, which was subsequently questioned by the corporate community.
He said the fundamentals that would determine the price included several analyses such as financial report, profit and loss report and balance sheet.
Plantation operation information such as maturity of oil palm trees also helped in making the analysis, and to ensure there were no problems in the potential of fresh fruit bunch production and crude palm oil extraction rate, there was a need for plantation experts to comment further, he added.
FELDA in a statement yesterday confirmed that FICP has signed a sales and purchase agreement (SPA) with Rajawali Group to acquire a significant stake in EHP for US$505.4 million (RM2.26 billion) which provides access to more than 320,000 hectares of plantation landbank in Indonesia.
Further details on the acquisition was not disclosed by FELDA as the SPA is subject to approvals of the relevant authorities in Malaysia and Indonesia.
Last year, Felda Global Ventures Holdings Bhd signed a heads of agreement in its proposal to acquire a 37 per cent stake in EHP for US$680 million (RM2.8 billion) in cash and stocks but the agreement had been terminated.
However, the purchase transaction must be done at the right price, said Malaysian Institute of Economic Research (MIER) executive director, Dr Zakariah Abdul Rashid.
"Acquisition to expand business is good, nevertheless, must be (done) at the right price.
"The price of a company's equity depends on demand and offer in the market, and determined by its fundamentals," he told Bernama.
He said FELDA's corporate move through its subsidiary, FIC Properties Sdn Bhd (FICP), to buy a 37 per cent stake in EHP, which is listed on the Jakarta Stock Exchange, could sparked concerns in the corporate sector if it was not transacted at the right price.
He said this was because of a report on the purchase of an overseas entity by FELDA earlier which was done at a high price, which was subsequently questioned by the corporate community.
He said the fundamentals that would determine the price included several analyses such as financial report, profit and loss report and balance sheet.
Plantation operation information such as maturity of oil palm trees also helped in making the analysis, and to ensure there were no problems in the potential of fresh fruit bunch production and crude palm oil extraction rate, there was a need for plantation experts to comment further, he added.
FELDA in a statement yesterday confirmed that FICP has signed a sales and purchase agreement (SPA) with Rajawali Group to acquire a significant stake in EHP for US$505.4 million (RM2.26 billion) which provides access to more than 320,000 hectares of plantation landbank in Indonesia.
Further details on the acquisition was not disclosed by FELDA as the SPA is subject to approvals of the relevant authorities in Malaysia and Indonesia.
Last year, Felda Global Ventures Holdings Bhd signed a heads of agreement in its proposal to acquire a 37 per cent stake in EHP for US$680 million (RM2.8 billion) in cash and stocks but the agreement had been terminated.