[ad_1]
KUALA LUMPUR: FGV Holdings Bhd shares
It fell to a low of RM1.23 on Wednesday as investors were disappointed with Felda’s takeover offer price of RM1.30 per share, although analysts described it as fair.
At 11:12 a.m., it dropped two sen to RM1.25. 11.19 million shares were made at prices ranging between RM1.23 and RM1.28.
The FBM KLCI rose 17.75 points or 1.09% to 1,649.45. The turnover was 5.32 billion shares valued at RM2.61bil. There were 485 winners, 581 losers, and 437 unchanged counters.
Kenanga Investment Bank Research said that despite the overwhelming gap between the offer price and the listing price of the FGV IPO of RM4.55 – price-earnings ratio (PER) of 17.6 times; three times price-to-book value (PBV) – You think the offer is fair.
The offer price implies FY21E PBV of 1.1 times (64% off the IPO valuation), which better reflects FGV’s current outlook, given that FGV is a pale shadow of what it was before, it said in a note. research.
“Return on equity (ROE) and return on assets (ROA) of FGV have deteriorated to c.5% and c.1% for FY20E (from an average of 15% and 6% in FY11-12), respectively, and it was even loss – doing for the last two years, ”he said.
As the company has been less efficient in using its assets, it is right for investors to place a lower value on FGV’s assets, Kenanga Research said.
“FGV’s financial position was also stronger back then, with a net cash / share position (excluding the land lease) of 89 sen (versus a net leverage of c.0.8 times today )”, said.
Kenanga Research said that from a PER perspective, the offer price implies a fiscal 21E PER of 18.5 times (5% premium to the IPO PER), possibly due to the current environment of high CPO prices. .
“We consider the offer price of RM 1.30 per share to be fair. FY21E PBV of 1.1 times reflects its three-year median valuation, which is also in line with its peer average.
“This is also due to the downward bias in CPO prices. The sharp drop in the CPO futures curve implies a drop of more than RM800 per ton by the end of 2021, which justifies the average valuations. Our previous TP is RM1.25 based on FY21E PBV one-time, market performance rated, ”he said.
On Tuesday, Felda had signed conditional share purchase agreements (CSPA) with KWAP and Urusharta Jamaah to acquire 13.88% of FGV’s shares at RM1.30 each.
He then proposed a mandatory takeover offer (MO) for all remaining FGV shares also at RM1.30.
After the completion of the CSPAs, Felda will jointly control 52.29% of FGV, activating the MO.
Completion of the CSPAs is conditional upon: (i) Felda receiving and accepting an offer / commitment letter to finance the proposed acquisition and the proposed mandatory acquisition offer, and (ii) confirmation from Felda’s financier / organizer that Such funding is available for utilization / reduction.
Once the CSPAs become unconditional, Felda will deliver the MO notice to the FGV board of directors.
[ad_2]
