File photo shows Zakaria’s last meeting at Menara Felda on September 11. — Bernama photo
KUCHING: Analysts are generally positive on the news that Felda Global Ventures Holdings Bhd’s (FGV) chief executive officer (CEO) Datuk Zakaria Arshad will be resuming his duties following a leave of absence relating to the long outstanding debt of Safitex Trading LLC (Safitex) with Delima Oil Products Sdn Bhd (Delima Oil).
This sentiment was reflected in the group’s shares yesterday as it closed at RM1.76 per share – higher by four sen with 9.54 million shares traded.
The group announced on Bursa Malaysia that after taking into consideration the ongoing FGV transformation program and the CEO’s commitment and assurance to resolve the long outstanding debt of Safitex, the Minister of Finance (Incorporated) would like Zakaria to return as the CEO of FGV.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) believed the news reflected certainty on the direction of the company which is likely to be viewed positively by the market.
“FGV chairman Datuk Wira Azhar Abdul Hamid has also highlighted that his priorities are to improve operational and financial performance of FGV core business and ensure sustainable growth going forward,” MIDF Research said in a statement yesterday.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) was also positive on this update, adding that with the hiatus of both the CEO and chief finacial officer (CFO) of FGV, management decisions were made in the interim by a management committee.
“Although such an arrangement would be sufficient for maintaining day-to-day operations, the longer-term company direction requires further guidance, which may not be possible under a temporary committee.
“While the decision may have no immediate earnings impact, we think the return of the CEO should reduce long-term uncertainty regarding the company direction,” it said.
As such, the research arm expected the market to react positively to the news.
However, while the return of Zakaria reduces an element of uncertainty, Kenanga Research remained neutral over the overall group outlook.
“Although production is expected to improve in the second half of 2017 (2H17), the company’s labour woes are expected to continue over the mid-term, leading to some crop losses,” Kenanga Research forewarned.
“Meanwhile, sugar earnings may remain weak in the third quarter of 2017 (3Q17) with possible improvement towards 4Q17 due to existing higher cost stocks,” it noted.