Khor Reports notes and comments:
Felda Global's shares closed the day at RM5.30, for a gain of 19% on the RM4.45 per share price for the public (institutions paid RM4.55)#. At this price, its earnings valuation is 15.7x, compared to 17.5x for KL Kepong, 14.4x for Sime Darby and 9.5x for Golden Agri.
On a day when RM2.8 billion worth of securities were traded on Bursa Malaysia, RM1.5 billion was in the plantation sector. Felda Global was enjoying its debut, and it generated a huge value traded of about RM1.4 billion, or half of the Malaysian bourse's activity. It's not yet part of the FBM KLCI index of 30 stocks@, but it is expected to enter in the future. Among the largest Malaysian plantation stocks, Felda Global's RM19.3 billion market capitalization currently puts it behind KL Kepong with RM24.5 billion, but ahead of PPB Group (which has a key stake in Wilmar International) with RM18.8 billion.
Holders of shares from the offer for sale and the public issue will be sitting pretty with gains in excess of RM1.4 billion today, with about 12% trading their holdings on the first day, locking in gains of some RM170 million.
However, a Reuters news article raises questions about how the shares in Felda Global were allocated. It quotes: "This Felda IPO is an embarrassment," said an official with a Malaysian bank-backed fund management firm. "About 23 percent of the book was allocated to 'friends and family', all at the expense of legitimate investors with potential synergies."
The share allocation by Felda Global is summarised in its IPO prospectus in the table below, but there is little information yet on total shares allocated to key executives and details of major shareholders.
#Correction at 11.20am on 29 June 2012, of 2nd paragraph on retail and institutional price, so that the gain is 19% not 16.5% on retail IPO price.
Some news reports:
The Edge Malaysia: "FGV is the third largest planter in the world after Sime Darby and Singapore-listed Golden Agri-Resources Ltd. As a yardstick, Sime is currently trading at an average of roughly 14.4 times estimated earnings for 2012/13, and Golden Agri at 63 Singapore cents is valued at 9.5 times estimated earnings for 2012 and and 8.8 times for 2013." http://www.theedgemalaysia.com/business-news/216198-fgvh-fails-to-sustain-debut-momentum-.html
"The strong debut beat market expectations of a first day pop of 10 percent and brushed aside, for now, a widely flagged 36 percent drop in Felda Global's first-quarter profit to 223.2 million ringgit ($70 million) that unnerved some investors."
"To keep the farmers happy, government-linked funds and the domestic pension fund, which accounted for part of the institutional tranche, made a rush for the stock during the book-building process."
"This Felda IPO is an embarrassment," said an official with a Malaysian bank-backed fund management firm. "About 23 percent of the book was allocated to 'friends and family', all at the expense of legitimate investors with potential synergies."
Reuters news feature, "Malaysia's Felda surges 20 percent in debut of world's No.2 IPO," http://www.reuters.com/article/2012/06/28/us-malaysia-felda-ipo-idUSBRE85R07S20120628