Sime Darby closes higher but plantations, property slump on trading debut

KUALA LUMPUR: It was a disappointing day for investors on Thursday following the weaker-than- expected performance of Sime Plantations and Sime Property on their trading debut on the Main market of Bursa Malaysia on Thursday.

Despite the stronger performance by Sime Darby, its gains were not enough to offset the losses sustained by investors who were also holding the plantations and property shares following the demerger.

Sime rose 50 sen to RM2.35 with 124.72 million shares done but Sime Plantations fell 58 sen to RM5.01 with 38.18 million units traded. Sime Propery lost 30 sen to RM1.20 with 69 million shares done.

Based on the pre-suspension price of RM8.94 on Nov 24, an investor would have made a loss of 38 sen as the  prices of the three shares combined would be RM8.56.

Sime Plantations' fall erased a hefty 6.71 points from the KLCI while Sime Property erased 3.47 points.

The FBM KLCI closed down 2.52 points or 0.15% to 1,717.86. Turnover was 2.47 billion shares valued at RM6.03bil – the highest in recent months – due to the listing of Sime Plantations and Sime Property as pure plays.

“Looking at the price to earnings ratio, Sime Darby Plantations was pricey which is why we saw some price adjustments.

 Compared to its other plantation peers, it is not the cheapest,”  Danny Wong, chief executive of Kuala Lumpur-based Areca Capital – was qoted saying by Reuters.

Wong, who manages about RM700mil in funds, explained:

“Since it is concentrated on plantations, it will be very sensitive to crude palm oil prices, which are not high at this moment.”
 
Benchmark crude palm oil prices are trading at four-month lows after India, the world’s largest vegetable oil importer, raised import taxes to the highest in more than a decade.

Wong said a weak property market outlook contributed to the decline in Sime Darby Property’s shares.

“It needs to launch more projects to sustain growth, but looking at the soft market, growth will be flat to negative,” he said.