• A unit of Felda Global Ventures (FGV) has proposed to sell its 16% stake in AXA Affin for RM224.4mil or RM11.78/share.

• The selling price of RM11.78/share represents a P/BV of 1.5x on AXA Affin's net asset value of RM7.85/share as at end-December 2016.

• FGV's effective interest in the unit, which is selling the 16% stake in AXA Affin is 36.72%.

• About 12.87% of the 16% stake would be sold to Affin Bank for RM180.5mil while the balance 3.13% shareholding would be disposed to AXA for RM43.8mil.

• This is not new as the proposed disposal of the stake in AXA Affin was first reported by the Press last year. The proposed disposal is in line with FGV's statement that it may be disposing some of its non-core assets.
• In the Bursa Announcement, FGV said that the proposed disposal is expected to be completed by 4QFY17. This means that the proposed disposal would be completed by next week.
• We are neutral on this development. FGV would be recording a one-off gain of RM26.85mil on the disposal of the 16% stake in AXA Affin. The proceeds of RM224.4mil would be used for working capital.

• Hence, there would not be any repayment of borrowings or payment of special dividends. Currently, we are forecasting a core net profit of RM36mil for FGV in FY17F. The group's core net profit was RM10mil in 9MFY17.

• Maintain HOLD on FGV with an unchanged fair value of RM1.76/share. Our fair value is based on a P/BV of 1.1x.

Source: AmInvest Research - 22 Dec 2017