Judge Felda on what it does post-IPO

THERE will be days when Felda Global Ventures Holdings Bhd (FGV) shares will go up, and there will be days when the shares of the plantation company will go down.

This is what happens to all companies listed on the stock exchange. Hence, putting FGV under the lenses on a daily basis to justify its listing based on how the shares performed on a particular day is brinksmanship of the worst kind.

The listing is over and done with, and FGV should be judged now on what it will do, rather than on what it has done.

FGV was last traded at RM5.32, a premium over its initial public offer price of RM4.55 a share. A handsome premium to some, but not so to others, who were expecting a 100 per cent return in a single day.

FGV’s listing evoked a lot of mixed feelings and emotions. To some the glass is half empty, while to others it is half full.
The debate on whether FGV should have been listed in the first place or if the first few days premium was attractive enough, could go on, as some would say until the cows come home.

For new investors to FGV, especially the ones who did not manage to get it at the IPO level, what the company brings to the table now and in the future forin the future is what will determine their investment choice.

FGV does not have to look far to be the darling of the investment community here. It just has to look at Tan Sri Teh Hong Piow, the chairman of Public Bank Bhd. Public Bank has more than 40 years of uninterrupted profit growth.

In a 2007 report, it was stated that a shareholder of 1,000 Public Bank shares in 1967 will be the owner of 129,720 Public Bank shares worth a whopping RM1.16 million.

Together with RM391,000 paid out in gross dividends, the net worth of the 1,000 shares would have been RM1.55 million in 2007, which represented a compounded annual return of 20 per cent for each of the 39 years.

The value is much higher now, as Public Bank has grown in strength since 2007.

As such, Teh is often described as the only person who can match US investor Warren Buffett in generating profit for shareholders.

The challenge for FGV is not how many millionaires it has created from the IPO exercise, but how many millionaires it can create from those investors who will keep the shares for the next 10 or 20 years.

In the end, that will be the barometer in which FGV must be judged, not on the past but on what it can achieve from now on.