Sime Darby Berhad (Sime) has signed sale and purchase agreement (SPA) with Sime Darby Property Bhd (SDP) to dispose 760.12 acres land in Malaysia Vision Valley (MVV) for cash consideration of RM280m. The disposal is in line with the Group’s strategy to unlock value of its non-core assets. We are positive on this as it enables the Group to monetise its non core assets, with the proceeds may be partly used to repay short-term borrowings. No changes to our core forecast. We maintain our Outperform call on Sime Darby with SOTP-based unchanged target price of RM2.78.
- Disposal of MVV land. The Group’s indirect wholly-owned subsidiary Kumpulan Sime Darby Berhad (KSDB) has signed SPA with Sime Darby Property (MVV Central) Sdn Bhd, a wholly-owned subsidiary of SDP to dispose 760.12 acres in MVV land for cash consideration of RM280m. The consideration was arrived after considering valuation of RM280m appraised by CH Williams.
- Rationale. The proposed land forms part of MVV 2.0 which has been zoned for mixed development in the Rancangan Tempatan Malaysia Vision Valley 2045. The Group will continue to explore strategic monetisation opportunities in relation to the remaining entire MVV land (approximately 7,934 acres) to ensure value maximization for the shareholders.
- Financial impact. The disposal is expected to record a gain of approximately RM250m, which equates to an EPS accretion of 3.7sen in FYE 30 Jun 2023. The proceeds may be partly used to repay short-term borrowings with a marginal impact to the Group’s gearing (from 0.11x to 0.10x).
Source: PublicInvest Research - 28 Oct 2021