KUALA LUMPUR: Maybank Investment Research expects recent developments to have a positive impact on Sime Darby Bhd
's motor division in the near term although its industrial division could be affected by the cancellation of major infrastructure projects.
The research house maintained its forecasts and target price of RM2.45 with an upgrade from sell to hold.
Maybank Investment said it does not see any significant impact in 4QFY18 from the zero-rated GST as car buyers would likely defer taking deliveries from May to June to enjoy lower prices.
"Pending the reintroduction of SST on 1 Sep 2018, we believe that car sales would see a 3-month spike; our recent channel checks suggests ~3 months waiting list for mainstream models (i.e. B/Csegment models such as Toyota Vios, Honda Civic).
"For SDB, we believe that its Malaysian ops would be boosted in this period, especially for BMW and Hyundai marques."
However, the cancellation of the major infrastructure projects were major hits for the construction sector. Meanwhile, the tapering work pace of existing projects such as the KBMRT2 and KVLRT 3 in two to three years would result in softer demand for Sime Darby's industrial equipment.
"Key growth driver for the division going forward will be the Australasia region where equipment demand returns on higher coal prices. SDB’s Industrial order book has improved 5% QoQ to MYR2.3b end-Mar 2018."
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