PETALING JAYA: Analysts are upbeat on Sime Darby Bhd
’s motor and industrial divisions as key drivers of the conglomerate’s earnings growth in the near-to-medium term.
CGS International (CGSI) Research expects the deferment of open market value (OMV) excise tax revision for complete knock-down vehicles to July 2026 (from Jan 2026) to drive another round of demand for cars in the first half of 2026.
“The deferment benefits Sime Darby, in our view, as its brands like Toyota, Perodua and BMW are mainly assembled locally.
“Additionally, we see resilient UMW Toyota Motor Sdn Bhd contribution amid the competitive auto outlook, as we expect the strong sales momentum to continue from the deferment of the OMV revision.
“We believe the market is underestimating the resiliency of Perusahaan Otomobil Kedua Sdn Bhd’s (Perodua) market share at about 44%, despite the growing market share of electric vehicles (EVs),” the research house said.
It is also positive on the industrial segment over the long term, supported by infrastructure projects and continued demand for commodities in Australia, potentially greater mining activity due to elevated copper prices, and growing data centre investments in Malaysia, which are expected to lift contributions from the division.
CGSI Research reiterated its “add” call on the conglomerate, with a Gordon Growth Model-derived target price of RM2.38, citing the OMV deferment, Perodua’s resilient market share, and improving prospects for the industrial division as key earnings drivers.
It noted that re-rating catalysts include higher-than-expected auto sales, while downside risks relate to a weaker-than-expected recovery in the industrial segment and weaker auto sales.
Meanwhile, CIMB Securities Research has raised its financial year 2026 (FY26) to FY28 earnings per share projections by 5.2% to 6.3%, as it expects higher contributions from UMW Toyota and Perodua, alongside narrowing losses in the motors division due to improved cost discipline and potential resumption of BMW Malaysia dividends.
Moreover, the research house does not expect muted EV uptake to weigh materially on Perodua’s overall performance, given the resilient outlook for its existing model portfolio and encouraging early response to new launches such as the Perodua Trazz.
Overall, it said the UMW Toyota division is expected to sustain a low-teens return-on-equity and continue providing earnings stability at the group level.
Following the earnings upgrade, the research house is reiterating its “buy” call on the stock, with a higher sum-of-parts-based target price of RM2.47.
Sime Darby maintained stable underlying performance in the first quarter ended Sept 30, 2025 (1Q26), with contributions from the UMW Toyota division driven higher by steady demand in the automotive business.
The group announced a net profit of RM355mil in 1Q26, which was lower than RM800mil in the same quarter of 2024, due to a one-off gain from the disposal of Malaysia Vision Valley land in the earlier period.
Core earnings slipped from RM359mil in 1Q25 to RM335mil in 1Q26.
Quarterly revenue, meanwhile, edged down to RM18.03bil from RM18.26bil in 1Q25.
Sime Darby ended yesterday’s trading up 5.45% to RM2.32.
