Better days ahead for FGV?
Roznah Abdul Jabbar | 10 Aug 2018 00:30
Troubled plantation company FGV Holdings Bhd may see better days ahead on expectations of upward movement of crude palm oil (CPO) prices.
Hopes are high for the company to sort out its management issues following the recent change of government and this will likely lead to better corporate governance and improvements in operations.
Investors believe the company needs to address the fundamental issue of yields as it is harvesting far less per hectare than other major plantations.
The world’s largest CPO producer lags behind its smaller competitors in terms of efficiency although FGV is the market leader in terms of production volume.
Other critical issues affecting FGV’s financial performance and profitability include the company’s land lease agreement (LLA) with parent Federal Land Development Authority (Felda) that has been a major drag on earnings.
Accusations of graft and poor company management within FGV caused its share price to slump in the last few years, but the the emergence of a new government, with Tun Dr Mahathir Mohamad returning as prime minister, has raised hopes of a company clean-up.
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