KUALA LUMPUR: Earnings contribution from Sime Darby Bhd
's latest acquisition is not likely to be significant although despite complementing the group's existing business, said PublicInvest Research.
In a research report on Wednesday, the research house said Sime Darby's purchase of Australia-based Heavy Maintenance Group for A$58mil (about RM172mil) is believed to be fair at mid-teen earnings multiple, which is comparable to its current valuation of industrial businesses at 15x PER.
PublicInvest said it is positive on the purchase but maintains its earningss forecast and neutral call on Sime Darby with a target price of RM2.40.
According to the report, HMG is an investment holding company whose subsidiary HMG Hardchrome Pty Ltd is involved in the manufacture, refurbishment and surface finishing of equipment used in heavy industrial sector.
"Sime Darby plans to continue building its leadership in the mining cylinder refurbishment market and drive growth in the oil & gas sector. We understand that HMG will complement Austchrome, its existing business of cylinder refurbishment and chroming in Mackay, Queensland, Australia."
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