INVESTMENT HIGHLIGHTS

• Datuk Zakaria to resume his duties

• Positive on the news

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM1.59

Datuk Zakaria to resume his duties. Felda Global Ventures Holdings Berhad (FGV) has announced that Datuk Zakaria Arshad shall resume his duties as Group President / CEO (GP/CEO) on 16 October 2017. Recall that on 6-June 2017, Datuk Zakaria has been given leave of absence pending investigations of certain transactions under Delima Oil Products Sdn Bhd, a subsidiary of FGV. In the Bursa announcement, it was mentioned that “After taking into consideration the ongoing FGV transformation programme and the GP/CEO’s commitment and assurance to resolve the long outstanding debt of Safitex Trading LLC (with FGV’s subsidiary Delima Oil Products Sdn Bhd), The Minister of Finance (Inc) would like Datuk Zakaria to return as the GP/CEO of FGV”.

Positive on the news. We believe that the news reflects certainty on the direction of the Company which is likely to be viewed positively by the market. FGV Chairman Datuk Wira Azhar Abdul Hamid has also highlighted that his priorities are to improve operational and financial performance of FGV core business and ensure sustainable growth going forward.

Maintain NEUTRAL with TP of RM1.59. Earnings estimate are maintained for both FY17 and FY18. Our Target Price is based on 1.0x Price to Book value. Despite the positive news, we believe that long term rerating catalyst for FGV is the sustainable core earnings.

Source: MIDF Research - 10 Oct 2017