The company said in a statement that Elsa marks the launch of the Sime Darby Property Affordable Collection which include high-rise and landed properties priced below RM500,000, located within the Klang Valley
KUALA LUMPUR: CIMB Equities Research is retaining its Reduce outlook on Sime Darby with an unchanged sum of parts based target price of RM2.42 per share. Its last traded price was RM2.80.
It said on Monday Sime is poised to benefit from the uptick in mining activity in Australia and robust demand from One Belt One Road (OBOR) initiatives in China.
The group does not anticipate additional impairment and inventory write-downs related to its decision to exit the Vietnam motor business.
“Sime is exploring the potential sale of its logistics assets in China so it can stay focused on its core expertise and also given its higher capex requirement.
“We believe the current share price, trading at 23 times CY18F price-to-earnings (P/E), already reflects its improving earnings prospects,” it said.
Last Friday, Sime Darby’s management highlighted that group core net profit rose 89% on-year in 1HFY18 after stripping out non-core items such as RM184mil exit cost for the Vietnam motor business, RM215mil gain on property disposal, RM85mil asset writedown for deconsolidation of Yayasan Sime Darby and RM24m net forex gain.
The industrial division posted an impressive 115% surge in core PBIT from RM106mil in 1HFY17 to RM228mil in 1HFY18, driven by higher mining activity in Australia and China.
To recap, the total industrial division order book increased by 64% on-year from RM1.4bil in Dec 2016 to RM2.2bil in Dec 2017. The group expects the recovery in mining activity in Australia to continue to pick up with the uptick in the mining cycle.
The motor division’s core PBIT rose 20% on-year to RM269m in 1HFY18, driven by higher sales volume in North Asia and stronger profitability from Australia and New Zealand due to the cessation of the loss-making Peugeot/Citroen business.
“In addition, the group plans to start producing BMW engines at its 51%-owned Inokom plant starting March 2018, with a production capacity of 10,000 engines/year. The group also expects new model launches, such as the BMW 5 series hybrid and X2, to help to drive sales in 2HFY18.
“The group said during the briefing that it is exploring potentially selling its logistics assets in China but maintains that the process remains in the early stages.
“The group’s logistics assets comprise Weifang Port, three river ports in Jining and two water treatment plants located in the Binhai Economic-Technological Development area. We currently value the logistics division at one time FY6/17 invested capital of RM2.3bil,” it said.
