Friday, September 19, 2014

Felda Global IPO revisited (update 1)

21 September 2014: Lots of talk about Felda Global / FGV share price among KL share market observers. It recently fell to a low of RM3.46/share. Notably below even the most pessimistic view (Macquarie - see below) at the time of its IPO in mid 2012. The 52-week share price trading range: 3.460 - 4.700.
 
source: Bloomberg.com, 19 September 2014
 
  
13 July 2012: Credit Suisse issues report on Felda Global, 12 July 2012: "We initiate coverage on Felda Global Ventures (FGV) with an UNDERPERFORM rating and a target price of RM4.90, a potential downside risk of 11%. There are far better choices—younger age profile with more attractive valuations—in the region. We prefer Genting Plantations and Sime Darby in Malaysia, London Sumatra and Salim Ivomas in Indonesia.... Positives: large, leveraged to palm oil prices, fast-tracked to the indices, net cash position, clear dividend policy and a turnaround plan for downstream... Negatives: Old with falling yields, low profitability, minimal organic growth, potentially less transparency, 1QFY12 results have halved... Expensive and fully valued at CY12 and CY13 P/Es of 16.9x and 17.4x respectively..."

Source: Credit Suisse


Khor Reports Comment: This is the second "underperform" rated report on Felda Global by an investment broker that we have seen. Another report, issued by Macquarie Equities Research on 29 June 2012, gives a price target of RM3.85.

Tuesday, September 16, 2014

Jokowi-JK cabinet - with new Agrarian Ministry

Khor Reports comment: More news is emerging on the Jokowi-JK cabinet. We'll collate them here for you. You can also read earlier news on the cabinet planning and Indonesia presidential race here: http://khorreports-palmoil.blogspot.com/2014/06/indonesia-presendial-race.html. Notable for those in plantation and agribusiness are the new Agrarian Ministry (we know in our meeting with industry experts, that Indonesia plantation business interests were keen to have a ministry focused on their concerns - is this it?). Also note the to-be rejigged Agriculture and Food Sovereignty Ministry (currently the Agriculture Ministry, with additional functions currently overseen by the Forestry Ministry and the Maritime Affairs and Fisheries Ministry). There are efforts being made to stream-line the functions of ministries and the elimination of deputy minister roles is proposed. 34 ministries are anticipated, with 18 run by ministers with professional backgrounds.

News links:

Jokowi says Cabinet to  have 34 ministries by Dylan Amirio, The Jakarta Post, Jakarta | National | Mon, September 15 2014, 8:04 PM; "President-elect Joko “Jokowi” Widodo announced on Monday the structure of his future Cabinet, elaborating that there would still be 34 ministries in his government and that 18 ministers would have professional backgrounds. “We are looking for a strong, structured Cabinet that is willing to work efficiently with the government in carrying out programs,” Jokowi said at Transition House in Menteng, Central Jakarta... Jokowi did not announce the names of his ministers, but said that 18 would have professional backgrounds while 16 would come from political parties in his coalition..." http://www.thejakartapost.com/news/2014/09/15/jokowi-says-cabinet-have-34-ministries.html

Jokowi to have new ministries, eliminate deputy ministers by Bagus BT Saragih and Hans Nicholas Jong, The Jakarta Post, Jakarta | Headlines | Mon, September 15 2014, 9:48 AM; "President-elect Joko “Jokowi” Widodo will make moderate adjustments as he crafts his Cabinet, employing only minor changes to accommodate his vision but with close attention to the values of effectiveness and efficiency, which may result in reviewing the positions of some deputy ministers and director generals... Many previously expected that Jokowi would reduce the size of the Cabinet, which consists of 34 ministers under President Susilo Bambang Yudhoyono, on the basis that the move could save a significant amount of the state budget... Jokowi and vice president-elect Jusuf Kalla, however, considered the number ideal given the size of the country’s population. Jokowi has also taken into account the consideration that too many changes could also lead to adjustments that will cost the state budget and take time... Andi Widjajanto, one of the deputy heads of Jokowi-Kalla’s transition team, said the two leaders would have the final say on the Cabinet composition by Sept. 15 at the latest... Jokowi has asked us to reassess the effectiveness of the structures of the ministries by, for example, identifying overlapping tasks and functions done by different director generals at different ministries,” said Andi... The 34 ministries being scrutinized by Jokowi-Kalla include 19 ministries with the exact same names as they possess today and three new ministries.
“As many as 12 ministries are with different names, which is partly due to the merger of some functions overseen by different ministries,” Andi said... For example, issues related to higher education will be taken from the Education and Culture Ministry and given to the Research and Technology Ministry, which will then be become the Research, Technology and Higher Education Ministry... The three new ministries proposed are the Agrarian Ministry, the Population Ministry and the Creative Economy Ministry... Jokowi-Kalla will also likely scrap all deputy minister positions, except at the Foreign Ministry. There are currently 19 deputy ministers in Yudhoyono’s Cabinet. “The duties of almost all deputy ministers can be handled by the director generals.

New ministries:
1. Agrarian Ministry
2. Population Ministry
3. Creative Economy Ministry

Ministries with new names or merged
• Maritime Ministry (currently the Maritime Affairs and Fisheries Ministry)
• Infrastructure Ministry (currently the Public Works Ministry)
• Agriculture and Food Sovereignty Ministry (currently the Agriculture Ministry, with additional functions currently overseen by the Forestry Ministry and the Maritime Affairs and Fisheries Ministry)
• Research, Technology and Higher Education Ministry
http://www.thejakartapost.com/news/2014/09/15/jokowi-have-new-ministries-eliminate-deputy-ministers.html