RHB Research initiated coverage of Felda Global Ventures Holdings Bhd with a "market perform" rating and target price of RM5, a small premium to the stock's last closing price of RM4.88.

"We initiate coverage on Felda with this recommendation due to its relatively sober earnings growth and our downward projections for crude palm oil (CPO) prices, and similarly unexciting valuations," RHB Research said on Wednesday.

RHB projects a three-year compound annual growth rate (CAGR) of 4.9 percent for Felda. It expects 1.3 percent growth for the current year and 6.4 percent to 7.1 percent for the next two years. It adds that Felda's disposal of non-core and non-performing assets, which are weighing earnings down, may be the catalyst for a rerating.

Felda has been on a downward trend since its debut on the local bourse late July, last closing 10 percent lower than its initial offer price. The company's US$3.1 billion initial public offering was the biggest in Asia this year.

Felda shares were trading 0.21 percent lower at RM4.83. -- REUTERS