Wednesday, August 17

Positive on RSPO certification for FGV’s mills

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KUCHING: Analysts are positive on Felda Global Ventures Holdings Bhd (FGV) receiving its Roundtable Sustainable Palm Oil (RSPO) Principles and Criteria (P&C) certification for eight mill complexes at the end of 2017.

Yesterday, the stock rose by four sen to close at RM1.90 with 20.37 million shares transacted.

The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) believed the eight mill complexes are expected to produce over 200,000 MT of Certified Sustainable Palm Oil (CSPO) and 60,000 MT of Certified Sustainable Palm Kernel Oil (CSPK).

Recall that FGV voluntarily withdrew from the RSPO certification in May 2016.

“Looking ahead, the company plans to secure RSPO certification for another eight more by end March-2018,” it said in a note yesterday. “By the end of 2021, FGV plans to certify its 70 palm oil mills complexes to RSPO and The Malaysian Sustainable Palm Oil (MSPO) standard.

“We are positive on the news as higher volume of CSPO should lead to higher market access in Europe for FGV,” it added.

However, MIDF Research said earnings impact for FGV is minimal as the premium of RSPO oil is small against normal palm oil, it said.

“Hence, we maintain our FY18 core earnings estimate of RM70 million. FY17 core earnings is also maintained at RM54 million.”

The research firm maintained neutral with a target price of RM1.96 per cent.