PETALING JAYA: Stronger sequential performance at Sime Darby Bhd
should be supported by seasonally higher car sales, alongside potential rebates from the company’s China automotive operations.
The financial performance would also be supported by stronger BYD sales ahead of Malaysia’s revised electric vehicle (EV) policy, according to RHB Research.
The research house expects Sime Darby to report core net profit of RM300mil to RM330mil for the fourth quarter of its financial year ending June 30, 2026 (4Q26), representing growth of 15% to 25% quarter-on-quarter.
On a year-on-year basis, this result could range from a 9% decline to a 1% increase.
Sime Darby will announce its financial year 2026 (FY26) results on Aug 27.
RHB Research said sales at its automotive division should benefit from stronger seasonal demand and advance purchases by buyers before the revised EV policy took effect on July 1.
The company may also receive rebates for its China division, while a potential dividend contribution from BMW could provide further earnings upside.
The research house estimates Sime Darby could receive RM100mil to RM120mil in dividends from its BMW business, assuming a 90% payout ratio.
This could provide a 5% to 7% upside to its current FY26 earnings estimate.
It added that the dividend contribution could support an estimated yield of about 7%, assuming Sime Darby adopts a payout ratio of 65%.
Automotive sales volumes have also strengthened across several brands in the wider industry.
Perodua’s sales rose 13% quarter-on-quarter to 84,062 units in the 2Q26, bringing first-half sales to 158,295 units.
Toyota and BYD posted quarter-on-quarter sales increases of 35% and 31% respectively, reaching about 21,000 and 4,000 units.
RHB Research recently raised its 2026 total industry volume forecast to 805,000 units from 780,000 units following stronger-than-expected first-half sales.
It consequently increased its sales assumptions for Sime Darby’s automotive operations.
However, the research house said the industrial division remains the pivotal business and accounted for 42% of the company’s earnings before interest and tax in the first nine months of FY26.
Its management expects the division to record another broadly flat quarter as Australian miners remain cautious due to elevated financing and fuel costs, despite stronger commodity prices.
After-sales activity, which carries higher margins, reportedly improved gradually in July.
RHB Research said Sime Darby’s flat average selling price adjustments in July should also help preserve margins.
The research house maintained its ‘buy’ call and raised its target price to RM2.40 from RM2.27 after increasing FY27 and FY28 earnings forecasts by 4% each.
It said the earnings recovery in FY27 should be driven by improving industrial demand and a turnaround in China’s automotive business, although this could be partly offset by the subdued outlook for Australian miners.
RHB Research added that Sime Darby remains attractive due to its undemanding valuation and expected FY27 dividend yield of about 7%.
