Felda News Flash

BIMB SECURITIES RESEARCH
MARKET INSIGHT
PP16795/03/2013(031743)
Friday, 27 April, 2012
Company News Flash
Felda Global Ventures Holdings

Blue Chip in the making
Offering 60% of enlarged share capital. Felda Global Ventures Holdings (FGVHB) is offering 2.19bn new shares, equivalent to 60% of the enlarged share capital, for its IPO. The breakdown of the offering is as below:
Categories Retail Offering: - Bumiputera - Non-Bumiputera - Eligible FELDA Settlers - Eligible Employees & Stake holders Institutional Offering: - MITI approved Bumiputera investors - Other institutional investors Total % of enlarged share capital Offer for Sale Public Issue # 36,481,500 36,481,500 91,204,000 109,444,000 36,481,500 36,481,500 91,204,000 109,444,000 Total %* 1.0 1.0 2.5 3.0
1,208,890,900 1,208,890,900 33.1
419,537,000 286,852,000 980,000,000 26.9
419,537,000 1,495,742,900 2,188,890,900
11.5 41.0 60.0
Note:* % of enlarged share capital of 3,648,150,000
Land lease agreement. FGVHB have approximately 355,864 hectares of plantation estates in Malaysia under the tenancy agreements with FELDA. The term of lease is for st 99 years from 1 January 2012. FGVHB is required to pay RM248.5m per annum plus a fixed percentage of its operating profit. The annual fixed lease amount is subject to review every 20 years at FELDAs request. Change in business model. The draft does highlight that the pro forma results does not reflect the future business model of FGVHB as previously it does not sell any CPO. FGVHB disclosed that the Group has entered into a contractual agreement with F Palm st Industries for the sale and purchase of FFB and CPO effective 1 March 2012. Financial results. According to the pro forma consolidated financial statements, FGVHB reported RM7.47bn of revenue in FY11, a 28.8% increase as compared to RM5.80bn revenue in FY10. Despite the significant increase in revenue, reported PAT only rose by 9.2% to RM1.01bn from RM0.93bn previously. This is mainly due to higher cost of sales (gross margin fell to 26.9% from 31.8%), higher administrative expenses, and lower contribution from associates. Indicative IPO price of RM3.90RM4.65, based on FY11s earnings and a P/E range of 15x18x. BIMBs preliminary valuation. Considering the change in business model that include the selling of CPO rather than only FFB, by applying a 35% revenue growth (in view of the high CPO prices) for FY12, FGVHBs prospective revenue is estimated at RM10.09bn with net income of around RM1.31bn translating into an EPS of 35.8 sen. By applying a P/E range of 15x 18x, we therefore derived a target price range of RM5.37 RM6.45 rendering its market capitalisation to between RM19.6bn-23.5bn and placing it within the Top 15-20 of FBMKLCI components.
Ng Keat Yung nkyung@bimbsec.com.my 03-26918887 ext 181
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27 April 2012
(RM '000) Revenue - Revenue growth rate Gross Profit - Gross margin Operating profit - Operating margin Share of results fr. Associates Share of results fr. JCE EBIT Net finance costs PBT Tax - Effective tax rate Adj. to discontinued operation PAT Minority interest Net Income No of Shares ('000) EPS (sen) FY09 2,880,343 n/a 866,974 30.10% 113,474 3.94% 349,227 8,818 471,519 -3,157 468,362 -35,494 7.58% -139,297 293,571 -28,726 322,297 3,648,150 8.83 FY10 5,804,601 101.5% 1,842,723 31.75% 957,148 16.49% 391,225 -24,668 1,323,705 -139,314 1,184,391 -255,024 21.53% 929,367 -2,644 932,011 3,648,150 25.55 FY11 7,474,846 28.8% 2,010,394 26.90% 1,199,821 16.05% 329,328 -53,964 1,475,185 -103,156 1,372,029 -357,364 26.05% 1,014,665 72,483 942,182 3,648,150 25.83 FY12F 10,091,042 35.0% 2,714,032 26.90% 1,619,758 16.05% 356,593 1,976,352 -100,000 1,876,352 -469,088 25.00% 1,407,264 100,528 1,306,735 3,648,150 35.82
Industry P/E Ratio

32.0 27.0 22.0 17.0 12.0 7.0 Jun-09 Jun-10 Apr-09 Apr-10 Apr-11 Jun-11
Feb-10
Dec-09
Dec-10
Feb-11
Dec-11
Aug-09
Aug-10
Aug-11
Bursa Plantation Index
KLK
IOI Corp
Source: Bloomberg
3-year P/E Ratio Statistics Average Bursa Plantation Index KLK IOI Corporation 14.5 18.4 18.5 Stdev 3.1 2.8 4.5
Source: Bloomberg
Feb-12
Apr-12
Oct-09
Oct-10
Oct-11
www.bimbsec.com.my
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27 April 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system: STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months. TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain. NEUTRAL Share price may fall within the range of +/- 10% over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15% in the next 3 months. SELL Share price may fall by more than 10% over the next 12 months. NOT RATED Stock is not within regular research coverage. SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.
Published by
BIMB SECURITIES SDN BHD (290163-X) A Participating Organisation of Bursa Malaysia Securities Berhad Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2691 8887, Fax: 03-2691 1262 http://www.bimbsec.com.my
Kenny Yee Head of Research
www.bimbsec.com.my
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BIMB SECURITIES RESEARCH

Friday, 27 April, 2012

Company News Flash

Felda Global Ventures Holdings

1,208,890,900 1,208,890,900 33.1

419,537,000 286,852,000 980,000,000 26.9

419,537,000 1,495,742,900 2,188,890,900

11.5 41.0 60.0

Note:* % of enlarged share capital of 3,648,150,000

Ng Keat Yung nkyung@bimbsec.com.my 03-26918887 ext 181

Industry P/E Ratio

Bursa Plantation Index

Kenny Yee Head of Research

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