Disposals raise Sime Darby’s cash position

Sime Darby's chief executive officer Datuk Jeffri Salim Davidson estimated that the sale of its land in Labu, which was earmarked for the Malaysia Vision Valley project, is estimated to have a value of RM2.5bil.

PETALING JAYA: Sime Darby Bhd has earmarked its massive 8,800 acres of plantation land in Labu, Negri Sembilan, and its port asset in China Weifang in Shandong, China, for sale as part of the group’s non-core asset monetisation exercise.

Its chief executive officer Datuk Jeffri Salim Davidson estimated that the sale of its land in Labu, which was earmarked for the Malaysia Vision Valley project, is estimated to have a value of RM2.5bil.

“There is a lot of interest for the land and we are in discussions,” he told reporters after Sime Darby’s online briefing yesterday.

Last year, Sime Darby sold its 30% non-controlling stake in Tesco Malaysia to Thailand’s C.P. Retail Development Company Ltd for RM300mil.

This was followed by the disposal of its last block of shares in E&O Bhd for RM93.5mil last March, 10 years after it bought into the property developer.

The disposals have raised Sime Darby’s cash position to RM2.5bil as of June 30 compared to RM1.65bil a year earlier.

Jeffri said the group is looking for potential mergers and acquisitions to strengthen Sime Darby’s core businesses in the heavy equipment distribution, car dealership and hospital operations.

Part of Weifang Port owned by Sime DarbyPart of Weifang Port owned by Sime Darby

The group is one of the top five largest Caterpillar and BMW dealers globally.

When asked if Sime Darby was going to adjust its vehicle sales targets for this year due to the third movement control order (MCO), Jeffri said the impact was mitigated by its after-sales services and its overseas operations.

“The bulk of our vehicle sales are from China, Hong Kong and Taiwan,” he said.

During the third MCO in Malaysia, car showrooms were closed for two months in June and July.

Jeffri said he remains confident on the prospects of the group’s motor division as demand for motor cars remain robust especially with overseas travel restrictions still in place, and with the extension of the sales and service tax (SST) exemption until the end of this year.

But, he said the group would remain cautious of the Covid-19 pandemic uncertainties.

“It also depends on the Covid-19 situation. We have seen some shutdowns recently in Auckland and Wellington that will impact our sales,” he added.

Sime Darby PlantationsSime Darby Plantations

For the full financial year ended June 30, 2021 (FY21), Sime Darby reported a 73.8% jump in net profit to RM1.4bil on the back of a 20% increase in revenue to RM44.5bil.

The group attributed the stellar performance of its topline and bottomline to the motors division’s “exceptional performance” in most markets, particularly in China.

Its net profit for the fourth quarter ended June 30 was 19% higher at RM211mil from a year ago, on the back of an almost 29% increase in revenue to RM11.3bil.

“This is the result of the successful execution of our Five-Year Value Creation Plan developed just after the de-merger.

“It is also a testament to our very capable management team and our geographical footprint. Of course, the relatively strong demand for our products and services, despite the disruptions caused by the Covid-19 pandemic these two years have contributed to this performance,” he said.

Sime Darby declared a second interim dividend of eight sen per share and a special dividend of one sen per share for Q4FY21. This brings the total dividend payout for FY21 to 15 sen a share, representing a payout of RM1.02bil or more than 70% of net profits.

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