Holistic View of FGV with Fundamental Analysis & iVolume Spread Analysis (iVSAChart) - 12 Dec

Joe Cool

Publish date: Fri, 11 Dec 2015, 12:43 AM

Is FGV Berhad worth investing given the current low share price?

Felda Global Ventures Holdings Berhad (FGV), based in Malaysia, is a globally- integrated, diversified agri-commodities company with operations in ten countries across four continents. FGV principally involved in plantations, downstream and sugar businesses.

Incorporated in Malaysia as a private limited company in 2007, Felda Global Ventures Holdings Sdn Bhd (FGV) initially operated as the commercial arm of Federal Land Development Authority (FELDA). On 28 June 2012, the company was listed on the main market of Bursa Malaysia Securities Berhad as Felda Global Ventures Holdings Berhad.

Today, Felda Global Ventures Holdings Berhad ranks among the top 25 companies on Bursa Malaysia with a market capitalisation of RM16.6 billion. Felda Global Ventures Holdings Berhad employs close to 19,000 people in some 44 subsidiaries in over ten countries.

Being one of the top agriculture powerhouse in the world, the share price of FGV have dropped tremendously in year 2015, from RM3.60 to today’s RM1.65. By analysing the company’s financial performance, we shall evaluate whether is the current share price a good deal, or it is an indication of the company’s bad financial health.

Company	FGV Bhd (FY 2014)
Revenue (RM’000)	16,434,331
Net Earnings (RM’000)	306,369
Net Profit Margin (%)	1.864
Total Debt to Equity Ratio	0.727
Current Ratio	1.650
Cash Ratio	0.838
Dividend Yield (%)	2.58
PE Ratio	21.79

Revenue for FGV have increased substantially to RM 16.4 billion in FY 2014 as compared to RM 12.5 billion in FY 2013. This RM 4 billion increase is mainly due to sales of three new product category which are Refined Bleached Deodorised (RBD) products, Fertilisers and crude palm kernel oil (CPKO). This is a great milestone for the company as these new product streams have shown success in sales and could continuously generate new income for the company in following financial years.

However, in terms of net profit, the group have suffered a sharp decrease from RM

1.14 billion in FY2013 to RM 0.62 billion in FY2014. This decrease is mainly due to a sudden 4 fold increase in administrative expenses (RM 193 million in FY2013 to RM 859 million in FY2014) which the reason behind this increase was not explained clearly in the financial report. This also resulted in the decrease in the group’s net profit margin to 1.864% whereby previous years were hovering around 7% to 8%.

Debt to equity ratio of the company of 0.727 is not favourable for long term investors as more than half of the company is funded by borrowings and the decrease in the company’s long term liability is at a very slow rate for the past 3 years.

Current ratio at 1.65 and cash ratio at 0.838 is still consider healthy, however dividend payout of the company had decreased in FY2014 to 10 cents per share from 16 cents per share in the previous financial year.

In conclusion, although the current share price is only one third of it’s highest share price record (RM 1.65 vs RM 5.50) which may seem attractive to buy, investors should be caution as this share price drop is mainly due to the company’s poor performance in sustaining their net earnings. Although revenue of the company have been increasing at a very healthy rate throughout the years, but failure to control the total yearly expenses and lack clarity in explaining factors contributed to these expense increase will deter value investors. (Today’s share price: RM 1.58)

iVolume Spread Analysis (iVSA) & comments based on iVSAChart software toolkit - FGV

iVSAChart Comment:

On IFCAMSC weekly chart, chart background is still bearish (red colour) and trending below 50w MA & 10w MA. This is looking bearish after breaking below RM1.75. Any breach of this support line may indicate downtrend. However, there is a support @ RM1.55.

It is likely that FGV will hold at this support level RM1.55. A right price to buy is at RM1.55-RM1.60

FGV (5222)

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Discussions

1 person likes this. Showing 3 of 3 comments

Bruce88

Are u sure can buy at 1.55 ?

2015-12-11 08:27

Andy Lau

It did go up to 1.79 thereafter in end Dec

2016-02-02 13:41

FGV_

IOI DPS 8 sen vs FGV 6 sen but FGV only 1/3 IOI price.

2016-02-20 21:11

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