KUALA LUMPUR, April 10 — AllianceDBS Research today upgraded FGV Holdings Bhd’s stock to a “buy,” with a new revised discounted cash flow-derived target price of RM1.75 from RM1.40 per share.
While the company expecting fresh fruit bunch yields to grow at 12 per cent and 10 per cent for the financial year 2019 and 2020 , AllianceDBS Research said its assumptions are more conservative at 10 per cent, six per cent and five per cent for FY19, FY20 and FY21, respectively. This is primarily due to lower oil extraction rate assumption forecast of 20.5 per cent, 20.6 per cent and 21 per cent for FY19, FY20 and FY21 compared to management’s estimate of 20.78 per cent and 21.18 per cent for FY19 and FY20.
“We expect the resolution of its labour issues, measures to reduce leakages and new planting programme to result in a significant improvement in cost efficiency, yields and profitability,” it said.