FELDA Global Ventures Holdings Bhd's (FGV) net profit is expected to rise by 40 per cent to RM770.4 million in FY14F, underpinned by higher average crude palm oil (CPO) prices and acquisition of assets carried out in FY13F. AmResearch said it has assumed an average CPO price of RM2,500 /tonne for FY14F versus RM2,400 /tonne in FY13F. It has also forecast FGV's fresh fruit bunches production growth at seven per cent for FY14F, driven by an increase in mature areas resulting from the acquisition of Pontian United Plantations Bhd . FGV's production cost (ex-mill) would range between RM1,350 /tonne and RM1,450 /tonne, due to lower fertiliser costs and higher palm oil production. The research house initiated coverage on FGV with a "hold" recommendation and fair value of RM5.05 /share. Its fair value is based on a FY14F PE of 24x, which is slightly below the PE of 25x that it applied to arrive at the fair values of Kuala Lumpur Kepong and IOI Corp.
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