- We are placing our fair value of RM11.20/share for Sime Darby, UNDER REVIEW following the release of its 3FY13 result.

- Sime Darby posted a 9MFY13 net profit of RM2,390mil (-22% YoY) – which met consensus numbers (~70% of FY13 estimate) but was below our forecast (~57%). The 9MFY13 earnings accounted for 75% of the group’s internal target of RM3.2bil. For 3QFY13, it posted a net profit of RM691mil (-21% YoY; -2.4% QoQ).

- The target is likely to be achieved with a net profit of at least RM810mil for the last quarter, considering that it could by then book in a gain of RM340mil for the partial disposal of its healthcare business. The latter has been classified as discontinuing operations following its JV with Australia-listed Ramsay Health Care.

- For the 9MFY13, the motors division was the only one which showed a positive growth in operating profit (+9.5% YoY), with all regions registering improved performances except for Singapore due to weaker sentiment and tightening of hire purchase regulations. Total sales volume rose 17% YoY to 68,092 units, with the strongest growth recorded in Malaysia (+27% YoY).

- At its plantation division, Sime Darby recorded an average CPO price of RM2,338/tonne in 9MFY13, down 19% from 9MFY12’s RM2,881/tonne. The lower selling prices were mitigated by a 9% rise in FFB yield from 15.7 tonnes/ha to 17.2 tonnes/ha as FFB production rose to 8.1mil tonnes from 7.47mil tonnes a year earlier. The OER fell slightly to 21.77% from 21.84%.

- The total oil palm hectarage totaled 524,966ha as at 31 March 2013 (Malaysia: 313,717ha; Indonesia: 206,116ha and Liberia: 5,132ha). Plantation accounted for 46% of operating profit vs. 55% in the previous corresponding nine months.

- For its industrial division, operating profit fell 5% to RM919mil in 9MFY13 from RM966mil a year earlier as lower sales were achieved in the Australasia region due to softer coal prices. That led to lower equipment and product support sales. There was also a slowdown in China’sconstruction sector.

- For the property sector, operating profit fell 11% on the back of a 9% decline in revenue due a lower recognition from two mature townships in the Klang Valley which are at the tail-end of development. Unbilled sales stood at RM1,021mil as at end-March 2013.  

Source: AmeSecurities