FGV’s  9MFY13  results  were  below  our  and  consensus  expectations, due  mainly  to  lower  associate  contributions  and  higher  costs  at  its plantation division. Nonetheless, we believe FY14 will be a better year for  FGV,  especially  upon  the  completion  of  its  acquisition  of  a  51% stake  in  FHB,  which  could  add  an  estimated  5-10%  to  earnings  and allow FGV to improve its operational efficiencies. Maintain BUY.

• Below  expectations.  Felda  Global  (FGV)‟s  9MFY13  core  net  profit came in slightly below both our and consensus expectations, comprising 68-70%  of  the  respective  FY13  forecasts.  Main  variances  include:  i) lower  depreciation,  ii)  higher  plantation  costs  in  3Q13,  due  to  higher manuring and upkeep costs incurred during the quarter,  iii)  lower CPO trading margin  realised, iv) lower CPO prices of MYR2,302/tonne (vs our MYR2,400  projection),  and  v)  lower-than-expected  earnings contributions  from  its  associate,  Felda  Holdings  Berhad  (FHB),  due  to losses at its milling division. FGV recorded an extraordinary item (EI) of MYR26m in 2Q13 relating to an impairment loss recorded by its jointlycontrolled entity.  The group  declared a 6 sen net DPS in 9M13 (vs 5.5 sen in 9M12).
• Forecasts revised.  We revise our FY13 forecast lower  by  11.5%, after incorporating  higher  depreciation,  higher  plantation  costs  and  lower associate  contributions.  However,  we  tweak  our  FY14  forecast  up  by 5.7% to account for lower land lease liability adjustments. Maintain  BUY.  We maintain our BUY  recommendation on FGV, as we expect  FY14  to be  a better year, especially upon the completion of  its acquisition of a  51% stake in FHB, which could add  an estimated 5-10% to  earnings.  The  acquisition  will  also  allow  FGV  to  improve  its operational  efficiencies,  as  it  will  give  FGV  complete  control  over  the entire  plantation  value  chain,  from  plantation  estates  to  mills  and refineries. Following our earnings revision and update of FGV‟s latest net cash balance, we raise our SOP-based FV to MYR4.90 (from MYR4.84).

Financial Exhibits

SWOT Analysis

Company Profile
Felda  Global  Ventures  (FGV)  is  the  commercial  arm  of  FELDA  in  the  upstream  and  downstream  palm  oil  business  and  other agribusinesses. FGV currently produces oil palm and rubber plantation products, soybean and canola products, oleochemica l products and sugar products, and has operations spread out across 10 countries. FGV was listed on the Bursa Malaysia in June 2012.

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Source: RHB