Macquarie Securities started coverage of palm oil company Felda Global Ventures Holdings with an "underperform" rating and a target price of RM3.85 based on the firm's unfavourable tree age and rising downstream competition.

Macquarie said in a note to clients that while local funds supported the stock's debut on Thursday, research showed there could be a 27 percent downside to the share price.

Felda surged 20 percent in its trading debut as investors cheered on he world's second largest IPO this year with share prices going as high as RM5.46.

Macquarie said Felda Global's current fresh fruit bunch (FBB) yield is 15 percent lower than listed competitors with more than half of its estates at over 20 years old.

Increased competition from Indonesia and a reversal of abnormally high margins in 2011 may also weigh on profitability.

Shares in Felda Global fell 0.4 percent to RM5.28 on Friday, underperforming the broader market that inched higher. -- Reuters