Felda’s IPO can fetch as high as 18 times PE: Analysts
Posted on 30 April 2012 - 05:38am
Last updated on 30 April 2012 - 08:43am
EE ANN NEE and PREMALATHA JAYARAMAN
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PETALING JAYA (April 30, 2012): Felda Global Ventures Holdings Bhd's (FGVH) IPO is likely to be priced at a price/earnings (PE) multiple of as high as 18 times, which will be on par with other bigger plantation players in the country, say analysts.
Plantation stocks like Genting Plantations Bhd, Wilmar International Ltd and Kuala Lumpur Kepong Bhd (KLK) have PEs of more than 16 times while Sime Darby Bhd is traded 13.34 times because it is not a pure plantation counter. Furthermore, Sime is said to have lower yield than its peers.
A plantation analyst with a local brokerage said FGVH's PE could be around 18 times because the listing will boost the other plantation stocks and inject more liquidity into the sector.
"The listing will support the replanting programme and in the long run improve overall fresh fruit bunch (FFB) production. With more liquidity, hopefully there'll be a re-rating for the overall plantation sector and place a higher price/earnings ratio (PE) to plantation companies," he said.
MIDF Research senior vice-president and head Zulkifli Hamzah said: "Until the listing, we do expect market sentiment to be adequately supported by local funds."
He expects FGVH's listing to be imminent, taking place before the general election.
However, Inter-Pacific Research put the value of FGVH at a PE of 13 times when listed because it is a conglomerate and not a pure play stock.
"Sime Darby is a conglomerate company which runs various businesses. The conglomerate trades at a discount compare to pure play stocks such as IOI Corp Bhd, KLK, Wilmar and Genting Plantations," it added.
According to its prospectus published on the Securities Commission's website, FGVH is offering up to 2.19 billion shares, comprising an offer for sale of up to 1.2 billion shares and a public issue of 980 million shares.
Of this, 1.21 billion shares will be for Malaysian and foreign institutions via bookbuilding exercise, 419.54 million for approved bumiputra investors, 200.65 million to employees and Federal Land Development Authority (Felda) settlers, and 72.96 million shares to the public.
For the last financial year ended Dec 31, 2011, it posted a net profit of RM942.18 million compared with RM932 million previously. Revenue was RM7.47 billion against the previous year's RM5.8 billion.
The group currently operates 343,521ha of oil palm plantations in Malaysia that produced 5.2 million metric tonnes of fresh fruit bunches (FFB) last year. According to Frost & Sullivan, FGVH was the third-largest oil palm plantation operator in the world based on planted hectarage (other than plantings of immature oil palms) last year.
Meanwhile, Bernama reported that FGVH CEO Datuk Sabri Ahmad is leading a team to woo international cornerstone investors for the IPO.
Sabri was in London for back-to-back meetings with British fund managers in an effort to generate European interest on the IPO, reported to be the third biggest in Southeast Asia.
"We have gotten some good pledges. Overall, the response from our prospective European investors has been positive," he said.
Apart from London, Sabri and his team will also visit potential investors in Hong Kong and Singapore.
