FGV Holdings Shares Fall After Bonus Issue Proposal

By Ying Xian Wong

FGV Holdings shares declined early Monday, after it made a bonus issue proposal.
The Malaysian plantation company stock was recently trading at 1.39 ringgit ($0.30), down 4.1%.

FGV Holdings late Friday proposed a bonus issue of up to 364.8 million new Islamic redeemable preference shares, on the basis of one new Islamic redeemable preference share for every 10 existing ordinary shares held in FGV, with an issue price of MYR0.10 per share.
The proposed bonus issue shares will be separately listed on the Main Market of Bursa Securities and likely to be completed in the fourth quarter, the company said in a filing.
As of May 22, FGV’s public shareholding spread was at 13.09%, narrower than the minimum requirement of 25%.
FGV said its parent company, The Federal Land Development Authority, which holds 81.91% stakes, intended to dispose as many shares as may be required to comply with regulator’s public spread requirement after completion of the bonus issue.
FGV said the proposed bonus issue also provides shareholders with “better exposure, via preferential dividends, to the distributable profits of the key companies under FGV which are involved in upstream plantation activities”.
TA Securities analyst Angeline Chin downgraded FGV’s rating to sell from hold due to limited upside, but kept the target price at MYR1.45.
AmInvestment Bank analyst Gan Huey Ling deemed the proposal neutral, noting this isn’t a surprise, as FGV has previously said it might issue Islamic redeemable preference shares to address the problem with its public shareholding spread.
AmInvestment Bank maintained a hold rating with a target price of MYR1.35 on FGV.
Write to Ying Xian Wong at [email protected]