- We maintain our BUY on Sime Darby, with a fair value of RM11.20/share (Under Review).

- Sime Darby posted an FY13 core net profit of RM3,327mil (-19% YoY) – in-line with the consensus estimate of RM3.26bil and beating the company’s internal target of RM3.2bil.

- It declared a single-tier final dividend of 27 sen/share, bringing the total to 34 sen/share (vs. FY12’s 35 sen/share) for a net payout of 55% (vs. FY12’s 51%).

- The company has proposed a dividend reinvestment plan (DRP) that allows shareholders to elect to reinvest their cash dividend for new shares. The DRP shares will be issued at a 5% discount to the 5-day VWAP prior to pricefixing date, after adjusting for the dividend.

- Revenue growth was seen in all segments except for plantation (-17%), which was affected by a lower CPO average price of RM2,317/tonne vs. RM2,925/tonne in FY12.

- FFB production rose 4% to 10.1mil tonnes from 9.76mil tonnes, as yield improved to 21.52 tonnes/ha from 20.54 tonnes/ha previously. CPO production rose 1% to 2.47mil tonnes from 2.44mil tonnes, while OER was maintained at 21.8%. Plantation operating result (before excluding eliminations/EIs) fell 38.5% YoY to ~RM2bil.

- The property segment’s operating profit rose 21% on the back of 43 launches with a total GDV of RM1.5bil. Gross sales totalled RM1.9bil for FY13, while unbilled sales stood at RM1.3bil as at end-June 2013.

- For its industrial division, operating profit fell 3% YoY to RM1.28bil in FY13. The segment was affected by lower equipment sales to the mining sector in Australasia and by the slowdown in the construction sector and delayed commencement of infrastructure projects in China.

- In the motors division, operating profit (RM699mil) growth was relatively flat at 0.8% as stronger performances by BMW in HK & Macau and higher profit generated from strong sales of all the marques in Malaysia (+20% sales volume growth) were offset by lower sales in Singapore.

- In the energy and utilities division, operating profit fell 29% as activities in China were affected by harsh weather and the slowdown in that country’s economy, which led to lower demand for commodities.

- For the healthcare division, Sime Darby had in July completed the restructuring of its healthcare unit with the official set up of Ramsay Sime Darby Health Care Sdn Bhd. Following that, it has recognised a gain of RM340mil.

Source: AmeSecurities