CIMB Research:
KUALA LUMPUR: CIMB Equities Research is slightly positive on the leadership line-up for its three pure plays which will see the listing of its plantation and property divisions separately which will unlock values for the group.
“We maintain our Add call and sum-of-parts based target price of RM10.10. Key risks are lower fresh fruit bunches and output and crude palm oil (CPO) prices,” it said on Monday.
Last Friday, Sime Darby revealed the new chairman and senior leadership for each of the group’s three pure plays, namely Sime Darby Plantation
, Sime Darby Property and the leaner and more focused Sime Darby.
Sime Darby Plantation and Sime Darby Property are on course for listing at the end of the year via a demerger exercise. Under the exercise, Sime Darby will undertake to distribute its entire shareholding in Sime Darby Plantation and Sime Darby Property to entitled shareholders via dividend in specie.
At Sime Darby Plantation, Tan Sri Abdul Ghani Othman (incumbent chairman of Sime Darby Group) will become chairman, Tan Sri Mohd Bakke Salleh (incumbent president and group CEO of Sime Darby) will be the executive deputy chairman and managing director, Datuk Franki Anthony Dass (incumbent MD of Sime Darby Plantations) will be the chief advisor and value officer and Renaka Ramachandran will take on the role of CFO.
“We are not surprised by the leadership line-up at Sime Darby Plantations, which we estimate could make up around two-thirds of Sime’s current market cap post demerger. We expect Bakke and Franki to continue with efforts to improve FFB yields and cut operating costs at the estates to create value,” it said.
At Sime Darby Property, Tan Sri Abdul Wahid Omar (current chairman of Permodalan Nasional Bhd) will be the chairman, Datuk Seri Amrin Awaluddin (former MD of Media Prima) will be the MD and Datuk Tong Poh Keow (currently Sime Darby’s group CFO) will be the executive director and CFO.
“We are positive on the appointment of Wahid, who successfully transformed Telekom into a regional telecommunications group and turned around UEM Group, as chairman of Sime Darby Property. We believe his appointment will help boost investor confidence in Sime Darby Property, which has been struggling to deliver profit from its property development business (excluding land sale gains),” it said.
Amrin is a new face in the Sime group. Prior to joining the media industry, he had stints with major property developers Renong and MRCB. He will be supported by Tong, who is a highly respected CFO, to unlock value in Sime Darby Property.
Sime Darby named Tan Sri Dr Wan Abdul Aziz Wan Abdullah (current deputy chairman of Sime Darby) as chairman and Jeffri Salim Davidson (current deputy group CFO of Sime Darby) as president and group chief executive.
The MD for Sime Darby Motors is Datuk Lawrence Lee Cheow Hock, the MD of Sime Darby Industrial is Scott William Cameron and the managing director of Sime Darby Logistics is Timothy Lee Chi Tim.
“There were no major surprises in the leadership line-up in Sime Darby, which reflects the global nature of the business as 80% of revenues are generated from outside of Malaysia. The only surprise here is that the CFO has yet to be named,” said CIMB Research.
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