Hot Stock FGV shares down after CIMB cuts TP

by **Cals** Wed 27 Jan 2016, 05:42

Hot Stock

[size=28]FGV shares down after CIMB cuts TP

By Danial Idraki / theedgemarkets.com | January 26, 2016 : 3:22 PM MYT

KUALA LUMPUR (Jan 26): Felda Global Ventures Holdings Bhd (FGV)'s shares fell two sen or 1.3% amid broader market losses and after CIMB Investment Bank Bhd cut its target price (TP) for the plantation stock.

At 2:34pm, FGV shares were traded at RM1.48 for a market capitalisation of RM5.4 billion. The stock saw some two million shares done.

At 2.52pm, the FBM KLCI fell 2.41 points to 1,622.80.

In a note to clients today, CIMB said it cut its FGV TP to RM1.49 from RM1.73 while maintaining its "reduce" call for the stock.

CIMB said it raised its FGV discount to sum-of-parts (SOP) valuation from 30% to 40% over concerns about the company's plan to acquire a stake in Indonesia's PT Eagle High Plantations Tbk (EHP).

"We are keeping our earnings forecasts, but lower our target price as we raise the discount to our SOP valuation from 30% to 40%.

"The persistent news flow on its plans to acquire EHP at a premium over its market price may dampen sentiment on share prices of the company," CIMB said.

CIMB's note followed a report on FGV by The Edge Malaysia business and investment weekly (The Edge Weekly) in its latest Jan 25–31 issue.

The Edge Weekly, quoting sources, reported that FGV and its major shareholder Federal Land Development Authority (Felda) were close to securing a 30% discount to the initial price tag of US$680 million (RM2.92 billion) for a 37% stake in EHP.

It was reported that negotiations were geared towards Felda acquiring most of the 37% stake while FGV purchases a minority stake.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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