FGV ... Why SellDown !!!

Share price dropped was due to group’s disappointing quarter.

Observers maintained their bleak outlook on the group’s performance, stating that the downstream segment remained a challenge. The weaker fourth-quarter earnings was attributed to lower plantation and downstream contributions.

Its outlook remains bleak due to poor quarterly results and potential removal from the FTSE Bursa Malaysia KL Composite Index due to its lower market capitalisation.

Turnaround is unlikely in the near term and financial year 2015 (FY15) and FY16 forecast earnings were reduced mainly attributing its weak performance to the loss-making downstream segment due to negative refined, bleached and deodorised and margins, while upstream lacked lustre on low production and prices.

Its bleak outlook remains unless FGV can boost net profit via earnings-accretive acquisitions and extract synergy from its previous acquisitions.

Every RM100 per tonne change in crude palm oil prices could affect its earnings by 4%-6% per annum.