Investment Highlights

• 9MFY17 core earnings within expectation

• A 5.0 sen dividend is announced

• Plantation division performed well

• Earnings estimate maintained

• Maintain NEUTRAL with higher TP of RM1.96

9MFY17 core earnings within expectation. Felda Global Ventures Holdings Berhad (FGV) registered improved Core Net Profit (CNP) of RM46.5m which is the best quarterly CNP in the past 3 years based on our estimate. This has caused its cumulative 9MFY17 CNP to turned positive with RM10.0m CNP as compared to 1HFY17 Core Net Loss of RM35.5m. We deem the result to be within expectation as we expect the profitable quarter to continue into 4QFY17 with CNP estimated at RM44m to make up our full year FY17 CNP of RM54m. A 5.0 sen dividend (Ex-Date: 7-Dec) is announced and this is a positive surprise.

Plantation division performed well. Plantation division performed well with PBT of RM255m (against 9MFY16's Loss Before Tax of RM30m). The improved performance is caused by better CPO price (+15% yoy to RM2820 per tonne) and improved FFB production (+3% yoy to 3.07m tonnes). However, Sugar division suffered Loss Before Tax of RM26m (against 9MFY16's PBT of RM132m).

Earnings estimate maintained. We maintain our FY17 CNP forecast of RM54m. For FY18, we expect FGV to register CNP of RM70m.

Maintain NEUTRAL with higher TP of RM1.96. We have increased our Price to Book target to 1.23x (from 1.0x) as we expect more sustainable profitability for FGV in the future. The 1.23x Price To Book reflects +0.5 Standard Deviation in view of the positive reasons stated above.

Source: MIDF Research - 24 Nov 2017