KUALA LUMPUR: AmInvestment research is mildly positive on Sime Darby Bhd
's plans to attract new business partners via its automotive arm, Sime Darby Motors.
"We are mildly positive on this announcement in the long term as the expansion plans will help the group grow its automotive segment over the next few years.
"Should this be successful, it will boost Sime Darby’s 51%-owned Inokom’s earnings in the future with exports of PHEV vehicles to neighbouring countries," it said.
The research house added that the move will be in line with a global trend of industry players moving away from internal combustion engines towards hybrid and electric vehicles.
AmInvestment maintained its hold call on Sime Darby with an unchanged fair value of RM2.57 a share.
It said its forecasts were maintained until there was more clarity on the plans while it remained concerned over the group's China operations amid the ongoing US-China trade war, which could dampen the motor division.
To recap, recent news reports said Sime Darby plans to expand its manufacturing facility in Kulim by another 50 acres while growing its annual production capacity by 25% from 40,000 to 50,000 units over the next three years, to accomodate new partners.
AmInvestment noted that only 110 acres of the facility have been utilised while the expansion will increase it to 160 acres.
Meanwhile, Sime Darby aims aims to tap into the local e-hailing vehicle servicing segment by collaborating with local e-hailing companies to growth its automotive segment via its unit, Sime Darby rent A Car Sdn Bhd.
"SDRAC’s Malaysian operations currently contributes circa 15% of Sime Darby Motor’s profit," said AmInvestment.
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