Felda: The smell of easy money (Part VI)

by Dr R@28

Part 1:    FELDA – The smell of easy money

Part 2:    FELDA – The smell of easy money

Part 3:    FELDA – The smell of easy money

Part 4:    FELDA – The smell of easy money

Part 5: FELDA- The smell of easy money 

• The brains behind the FGV-KPF-FH restructuring are good at selling stories. Their skills are probably as good as the medicine peddlers at the night market. Being private company, FELDA-A has refuses to make public their annual report or the annual report of FGV. The basic fact is that they it owes it to the taxpayers. I have been fortunate for knowing a group of people who wish to be identified as “Friends of Felda”. They have been giving me information and documents that I need to write my post as well as to answer some of the commentators. In the last few days TV3 has also been selling the story of how Felda settlers would benefit by interviewing key pro-BN settlers in light of the upcoming KPF EGM on Jan 5^th, 2012. Unfortunately they never explicitly explained how the settlers would benefit. Their explanation is very grey. The way I see it, they don’t really know or they don’t want people to know that they don’t know.

• FGV has been touted as the global player and has been promoted using the media as a competent group that would propel Felda and the settlers to greater greatness in the next few years. The world is facing economic slow down. Globally everyone talks about it and is taking preventive actions. However our government is says that Malaysia will be fine. The settlers must appreciate the reality. Their revenue is expected to drop as the global CPO price is expected to soften in view of weakening demands in EU, USA and China. If they think FGV can do wonders I suggest they think again and think hard.

• Felda Global Ventures has 101 subsidiaries. Only 90 of the companies are actively doing business. The rest are either dormant or holding companies. Recently they entered the sugar business and float the company (MSM Holdings). They are planning to float another 4 companies within the next 18 months. In the past few years, the bulk of its profits came from Felda Holding.The other 89 subsidiaries are in general contributed losses or some meager profits.

• These are the companies that everyone thinks as high value assets that FGV are injecting into the merger. If we can split the land bank based on equity, the 49% share of FH can be translated into 170,000 hectares.  As at Dec 31^st, 2010 FGV pretax profit is RM366mill and during the same period FH profit is RM760mill. Going by the fact that FGV owns 49% of FH, we can assume that would get RM372.4 mill profit from FH is the entire 100% of the profits are returned to shareholders. In reality that is not the case.

• For the first half of 2011, FGV chalked a turnover of RM1.98bill with a profit of RM167.8 mill. Assuming that their fortune is good, than the profits for 2011 would be about RM336 mill. Again this would mainly come from Felda Holding. Clearly, FGV has very poor track record. The restructuring followed by IPO is merely an exercise to support FGV poor business venture as well as “to feed a few personalities”. The company would be in debt and the financial outlook for the settlers after the IPO and listing looks bleak. Numbers don’t lie. Based on past financial performance, I don’t think KPF should support the scheme. FGV track records are extremely discouraging.