The eastern states of Peninsula Malaysia have been hit by floods, and had affected Felda Global Ventures’ (FGV) operations there. Key highlights from FGV’s  assessment  on  the  impact  of  the  flood  on  its  operations  are  as follows:--  Areas  of  estates  flooded  is  23,730  ha  (Gua  Musang  and  Kuala Lipis  among  areas  badly  affected),  daily  harvest  down  50%  and  milling activity down to 40% of full capacity;

-  Total  areas  impacted  by  the  flood  are  2%  in  Kelantan,  0.22%  in Terengganu, 4% in Pahang and 0.12% in Negeri Sembilan;

-  As of 29 December 2014, the opportunity loss of FFB production to FGV is estimated at 11,000 MT, only 0.2% of forecast annual production; and

-  As of 29 December 2014, flood damages and opportunity loss to FGV due to the flood is estimated at RM21m.

(Source: Felda Global Ventures)

Comment: It has been reported that the flood in certain areas are receding. Barring the flood situation worsening, it is unlikely that 2015 production will be  significantly  affected.  Meanwhile,  CPO  3-Month  futures  closed  1.6% higher yesterday at RM2,286/MT.

We maintain our forecasts and rating for FGV (RM2.17, BUY TP RM3.39).

Source: Affin Hwang Capital Research - 30 Dec 2014