KUALA LUMPUR, June 20 (Bernama) -- MIDF Research is confident that there is plenty of value to be realised for Felda Global Venture Holdings (FGVH) under the company's new business model.

MIDF said FGVH is expected to spend RM2.19 billion from its initial public offering (IPO) proceeds of RM9.96 billion for landbank expansion and RM100 million for improving operating efficiency.

"FGVH would continue to focus on acquiring additional land with primary focus on Southeast Asia and Africa," it said in a research note today.

It said the company, which is also the world's third largest oil palm planter, will undertake an aggressive replanting programme and apply better estate management process.

The company is targeting to increase its fresh fruit bunches (FFB) production by one metric tonne per hectare annually by 2013 and to replant 15,000 hectares per annum until 2015, which is expected to cost the company approximately RM200 million per annum.

Currently, the company's FFB production stands at 19.9 metric tonnes per hectare.

The research house said following a contractual agreement between FGVH and F Palm Industries in March, the company will no longer recognise its revenue from selling FFB but instead from the selling of crude palm oil (CPO).

"This will be reflected in a potential revenue growth of over 68 per cent in FY12," it said.

Nonetheless, MIDF expects a more moderate revenue growth in the subsequent few years given the uncertainties in CPO price levels as well as variation in CPO output.

"It is noteworthy that its replanting program is expected to slow down FFB output growth in the next three to five years," it said.

Therefore, MIDF has set a post-listing target price for FGVH at RM5.30 based on sum-of-parts and expect a 20.5 sen gross dividend in financial year 2013 based on 50 per cent dividend payout.

FGVH is involved in three primary business namely upstream plantation business, downstream business and sugar business.