KUALA LUMPUR: Hong Leong Investment Research (HLIB) has maintained its Sell call on Sime Darby with a target price of RM7.65 given the absence of re-rating catalyst in the near-medium term.
In a note on Monday, the research house said its nine months core profit has misses expectations, accounted for only 44.7-51.6% of consensus and HLIB's full-year forecasts.
HLIB added that Sime Darby expects its FY06/15 headline KPI target (RM2.5bil net profit) by 16-20% given the weak CPO prices and FFB production YTD, which dragged earnings at the plantation division significantly lower.
"FY06/15-17 net profit forecasts cut by 4-12.4%, largely to account for lower average CPO price assumption in FY06/15 (to reflect the average price achieved YTD) and lower EBIT margin assumption at the midstream and downstream plantation operations," it said.
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