FGV - A Great Mid to Long Term Investment

FGV had shed off 15% of its value since listing day. It touch the high of 5.55 a few days upon listing and since then, it had been all the way down. Today, it touch an oversold position of 4.52 before bouncing back. At the current price, it offers a great entry for mid to long term investors, with a potential capital gain of 30% or more that comes with a decent dividend payout. With election just around the corner, i believe the counter should claw its way back and past its ipo glory. FGV is the world’s third largest oil palm planter with access to 7% of global CPO supply via 49%-associate.

The latest financials shows the Group's revenue rose sharply to Rm3.5bn as the group switch to recognising sales of CPO. However, the net profit declined by 4.9% QoQ and 33.3% YoY to RM186 million. As of 2Q12, the Group's balance sheet stands strong with a cash pile of RM6.0bn.

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According to a Business Times report recently, the Group is currently planning a joint venture with a local partner to buy an initial 30,000ha of land in Myanmar to plant sugarcane and oil palm. Other potential Asean countries that are also being considered are Malaysia, Indonesia and Cambodia

Below are recent price targets by Research Houses, with the exception of ECM, all of them give FGV a fair value above RM5.0.

29/8/2012            Target Price :   RM 5.39         ALLIANCE
29/8/2012            Target Price :   RM 5.80         BIMB
29/8/2012            Target Price :   RM 4.85         ECM LIBRA
29/8/2012            Target Price :   RM 5.27         MIDF
29/8/2012            Target Price :   RM 5.44         PUBLIC BANK
29/8/2012            Target Price :   RM 5.36         TA
06/9/2012            Target Price :   RM 5.05         HWANGDBS