KUALA LUMPUR: RHB Investment Research is more positive on Felda Global Ventures Bhd's fundamentals with earnings set to turn around more solidly from FY18 onwards.
It upgraded its recommeantion to Buy with a higher target price of RM2.30.
The research firm said FGV's rejuvenation of its age profile has started bearing fruit, and costs should start moderating while the impact of cost saving initiative come through.
The recovery of waste via the sale of palm kernal shells and sludge can add 10% to 12% to its earning.
It added that the Roundtable on Sustainable Palm Oil has certified eight of its mills, which would enable the company to benefit from certified sustainable palm oil and palm kernal oil premiums.
Lastly, the research firm said there should be more asset disposals ahead for the company, and it has become more open to M&As for its upstream landbank.
"We lift our earnings by 6-9% for FY17F-19F, to take into account the impact of the sale of PK shells and other waste products, as well as to impute slightly higher losses at its downstream division."
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