• Sime Darby announced that the discussion in relation to the non-binding indicative proposal for Ramsay Sime Darby Health Care (RSDH) has been terminated.

• We are neutral on this development. The group may explore other avenues to monetise its healthcare business. Previously, Sime Darby had considered spinning off its healthcare unit through an initial public offering, but the plan was shelved due to the pandemic. Given its healthy financial position (net debt: RM1.2bil as of FY22) and the low capex requirement to run its business, Sime Darby is in no hurry to dispose of the asset and can afford to wait for the right deal.

• Recall that earlier in March, Sime Darby and Ramsay Health Care (Ramsay) received a confidential, conditional, non-binding, indicative proposal from IHH Healthcare (IHH) to acquire 100% of RSDH. RSDH is a 50:50 JV between Sime Darby and Ramsay. Under the proposal, the conditional indicative enterprise value (EV) for RSDH is RM5,670mil (or US$1.35bil) on a cash-free, debt-free basis.

• We maintain our BUY call and earnings forecasts on Sime Darby with a fair value of RM2.88.

Source: AmInvest Research - 9 Sept 2022