The real reason for FGV’s RM11 billion loss in market capitalization

Over the last five years FGV has lost more than RM10 billion of its market capitalisation and this will increase to RM13 billion by or before the end of this year. What caused this? Well, the market has always been known to vote with its feet so this means FGV is suffering from a crisis of confidence. And this reflects on those helming the organisation

THE CORRIDORS OF POWER

Raja Petra Kamarudin

When Felda Global Ventures Holdings Bhd (FGV) was listed in June 2012 its share price was RM4.55 per share, giving the company a market capitalisation of RM16.6 billion. Today, at RM1.66 per share, RM10.6 billion of FGV’s market capitalisation has been wiped out.

Why has FGV’s market worth suffered so badly? After all, FGV is the world’s largest plantation operator with more than two million acres of oil palms across Malaysia and in other parts of the world. So the company is solid and stands on firm ground.

The problem is not the company. The problem is the person helming that company, Mohd Isa Abdul Samad. Isa does not command confidence and the investors and market players are basically demonstrating this crisis of confidence by voting with their feet. And if this situation prevails, by or before the end of this year FGV’s share price will be below RM1.00 and the market worth of that company will be further eroded to less than RM3 billion — or a loss of more than RM13 billion in market capitalisation.

The market is fully aware of what is or has been going on in Felda in general and FGV in particular. And the market reacts in the normal way it always does: it votes with its feet. That is why most investors or market players do not want to touch FGV with a ten-foot pole. FGV is suffering a crisis of confidence. And that crisis of confidence is because the market views Isa as someone totally unqualified, extremely tainted, and who is ripping off Felda left, right and centre.

Isa is supposed to be the non-executive Chairman of the company but he is interfering in the day-to-day operations and is treating the company like it is a political organisation. He has changed many of the heads of departments and puts his family and cronies in various important positions even if they are not suited to the job. Isa is totally unqualified for the job and his interference is messing up everything. He thinks that running a company is the same as running a state as the Menteri Besar of Negeri Sembilan.

There is rampant and blatant abuse of power and conflict of interest and one very glaring case involves Felda Travel Sdn Bhd. As at yesterday, Isa’s wife, Bibi Sharliza Mohd Sulaiman, owes Felda Travel more than RM200,000, which is an outstanding two-year-old debt. Felda Travel has about RM22 million in debts out of which more than RM6 million are over 120 days. And most of these outstanding debts involve Isa’s family.

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