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PETALING JAYA: Sime Darby Bhd
’s earnings are expected to be impacted in the near to mid-term amid challenging market conditions for both its industrial and automotive segments.
With the challenging outlook and macro uncertainties, among others, analysts have cut their forecast on the conglomerate’s earnings for financial year 2025 (FY25) and FY26.
Kenanga Research said it has cut Sime Darby’s FY25 and FY26 net profit forecasts by 31% and 27%, respectively, taking into account the worsening industrial sales and margin, as well as the re-emergence of new rounds of intense discounting affecting automotive margins.
“We are cautious on the company for the worsening discounting competition in China overshadowing its unique position as being the automotive leader in Malaysia (60% market share), and worsening sales and margin in the industrial segment despite being a proxy to the Australian mining sector (for its rare high-quality met coal and other high-demand sustainable-related metals),“ the research house said.
Sime Darby’s nine-month FY25 results also disappointed, with its core net profit plunging 11%, dragged by weaker sales and margins for both industrial and automotive segments, which overshadowed the robust consolidation of UMW Holdings Bhd’s earnings.
Meanwhile, Hong Leong Investment Bank Research expects Sime Darby to continue leveraging its strong industrial segment in FY25, underpinned by its high RM4.8bil order book, as well as full consolidation of UMW.
“We maintain our ‘buy’ recommendation (on the stock) but with a lower target price of RM2.12 (from RM2.36),” the research house said.
