FGV Holdings Bhd. shares fell early Tuesday after it swung to a second-quarter loss as lower crude palm-oil prices and asset impairments weighed on earnings.
Shares of the Malaysian plantation company slid as much as 4.2% and were recently 2.1% lower at 1.39 ringgit, bringing 12-month losses to 7.3%.
FGV late Monday posted a net loss of MYR12.9 million ($2.8 million) in the quarter, versus net profit of MYR374 million in the same period a year earlier. It attributed the result mainly to a decline in prices of crude palm oil, and impairments on its Indonesian plantation assets.
Quarterly revenue slid 40% to MYR4.5 billion.
Analysts have cut target prices on FGV’s stock and flagged headwinds to its outlook in the wake the results.
MIDF Research analysts said in a note Tuesday that they have downgraded FGV to sell from neutral and trimmed the stock’s target to MYR1.06 from MYR1.38, citing an unstable outlook due to low margins at its downstream division amid high production costs. They also remain concerned about ringgit volatility, which could drive up input costs.
Analysts from Affin Hwang Investment Bank cut FGV’s target price to MYR1.35 from MYR1.40, and kept a hold rating on the stock. In a note, they said they have trimmed 2023 to 2025 earnings per share forecasts for the company by 46%, 3.4% and 6.6%, respectively, after six-months earnings came in below expectations.
Other headwinds facing the company are the Ukraine-Russia war and unpredictable weather, Affin Hwang analyst Nadia Aquidah said. Both factors could have a negative impact on global crop supplies and pricing, signaling continued volatility in the palm-oil market.