About FGV Bhd

Felda Global Ventures Holdings Berhad (FGV) is an investment holding company. The Company's segments include:

l   Their Palm Upstream consist of plantation estates activities, cultivation, harvesting and production of fresh fruit bunches (FFB), and processing of FFB into crude palm oil and palm kernel (PK)

l   Palm Downstream on the other hand are engaged in refining of crude palm oil (CPO), fractionation of refined bleached deodorized palm oil and Palm Olein, crushing of PK, processing and sales of biodiesel products, production of oleochemicals, graphene and nanotubes, and production of consumer bulk and packed products

l   Sugar refining, sales and marketing of refined sugar and molasse

l   Trading, Marketing and Logistics (TML), engaged in trading, bulking and transportation facilities

l   Rubber processing, research and development activities, fertilizers processing and production, sale of planting materials, services, information technology, security and travel.

The notable Board of Directors of FGV is Tan Sri Haji Mohd Isa Dato' Haji Abdul Samad, who is the Chairman, Non-Independent Non-Executive Director of FGV, has a strong political background for being the Chief Minister of Negeri Sembilan for 22 years till 2004.

Based on Financial Year (FY) 2016 full year results, FGV achieved RM 17 billion turnover, which is categorised as a huge corporation based on turnover value. Other aspects of the company’s FY2016 financial results are illustrated in the table below.

FGV’s revenue has been in an uptrend for the past 5 years, only with a slight dip in revenue in FY2015. From RM 12 billion in FY2012 to RM 17 billion which translates to a 40% increase. However, in terms of net earnings, FGV is in a steep downtrend from RM 805 million in FY2012 to RM 31 million in FY2016. This is mainly due to the increasing cost of revenue over the years.

Net profit margin wise, FGV was at 6.3% in FY2012 but decreased to 0.18% in FY2016. Return of Equity wise FGV also experience a downward trend from 13.2% in FY2012 to 0.54% in FY2016

On company’s debt, FGV has a high debt to equity ratio at 0.96 and both current ratio and cash ratio are of average values at 1.17 and 0.30 respectively.

FGV pays a very low dividend yield of 0.50%, which decreased tremendously as compared to 6.9% in FY2012 due to decreasing net earnings.

In conclusion, FGV is a large corporation with a very large turnover value however experiencing challenges in sustaining their profit and profit margin over the years. It was identified that there are 4 key root challenges that thins down the company’s profit margin, which are lower crude palm oil yield, higher raw sugar cost, impairment loss in Palm oil segments and losses on jointly controlled entity. Recovery of the company’s earnings will not be soon as the company has just implemented their new strategic plan called SP20 in year 2016. SP20 aims to achieve greater operating efficiency through 4 key areas, which are strengthening core business, building human capital, stronger governance and strive for sustainable growth.

Next quarterly results announcement is expected to be in the month of May 2018

Latest News on FGV Bhd

According to the Edge Markets, The FGV group aims to increase its fresh fruit bunch FFB production by 13.9% to 4.85 mil tonnes for year 2018. As part of its ongoing transformation and growth initiatives, it will also continue to replant up to 15,000 hectares (ha) this year. FGV’s chief executive officer Datuk Zakaria Arshad stated that FGV will maintain its position as the biggest crude palm oil (CPO) supplier in the world as CPO production is expected to climb 3.7% from 2.99 mil tonnes in FY17 to 3.9 mil tonnes in FY18. This is despite expectations that CPO prices will range between RM2,400 per tonne and RM2,600 per tonne in 2018, down from RM2,792 per tonne last year.

Coming from Macquarie Research, Zakaria also mentioned that FGV has no plans to diversify into other businesses and will stick to its core business. The company will continue to divest up to three non-core assets in year 2018 as part of its strategy to focus on its core business and to stay lean. According to Zakaria, two of these divestments are at final stages and that they are worth “a few hundred million Ringgit” but declined to elaborate further. The company is seen to have great plans for improvement in the near future.

iVolume Spread Analysis Weekly Chart & Comment – Felda Global Ventures Holding Bhd

Based on the 1-year weekly iVSAChart, we notice that FGV is ready to move into Stage 2 (Mark Up) after the distribution from May 2017 to August 2017. Green Minor Diamond Buy Signal appeared on October 2017 and followed by a few major Sign of Strengths (SoS).

A noticeable strength or support from Smart Money are the 2 SoS indicators in February 2018. Smart Money have tried to remove the weak holders at the support level followed by testing the supply in the market as shown in iVSAChart. The “SP” and “NS” SoS indicators indicate that Smart Money has tried to remove the supply and sellers in the markets for FGV.

Once the supply has dried up and absorbed by Smart Money, they will push up the price quickly and re-test around the previous high of RM2.18. For short term trading and riding on the pending GE14 election rally, FGV is seen to be promising opportunity for short term traders.

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