- Sime Darby Motors Wholesale Australia Pty Ltd (SDMW) is buying BMW, MINI and Lamborghini dealerships as well as the related properties in Brisbane, Australia, in which the business activities are carried out, for a total of RM238.4mil (A$80.7mil) cash.

- The acquisitions comprises:- 1) 70% of trustee LMM Holdings Pty Ltd, 2) 70% of the 500,000 units of Brisbane BMW Unit Trust (BBUT), both for a total of A$22.7mil (RM66.5mil); and 3) properties at three locations for A$58.0mil (RM169.9mil).

- As the trustee, LMMH operates BBUT’s two BMW, one MINI and one Lamborghini dealerships in Brisbane. LMMH also has a subsidiary, Brisbane Bodyshop Pty Ltd, which deals in BMW parts, panels and accessories.

- The acquisitions are scheduled to be simultaneously completed by end-February 2014. Sime Darby Motors (SDM) Australia already holds the Peugeot and Citroen distributorships and a Porsche dealership in Sydney, New South Wales. It is operating in a mass market environment that is dominated by imported Japanese makes.

- Sime Darby also supplies light commercial vehicles and lease solutions under the Corefleet brand in Queensland, Western Australia and New South Wales (NSW). It services the mining, O&G and construction sectors, which have seen a slowdown amid the waning mining boom.

- Sime Darby says the Brisbane BMW group is one of the best performing BMW dealerships in Australia. It says 75% of the country’s annual 1.0mil vehicle sales are generated from NSW, Victoria and Queensland, and SDM Australia’s focus will be on Sydney, Melbourne and Brisbane. We believe more acquisitions of BMW dealerships would follow suit.

- The acquisitions are positive insofar as it further cements the group’s relationship with BMW in the region, and rather than solely soldiering on with the two French mid-segment marques in the highly-competitive Australian mass market.

- Sime Darby is one of the largest BMW dealers, with its reach spanning 8 countries in Asia Pacific. The motor’s division is the 3rd biggest profit contributor for FY13.

- While the group is now operating under a challenging global environment for all its divisions, the recent pick-up in CPO prices offers a certain reprieve. We maintain our BUY call, with a fair value of RM11.20/share – a 10% discount to our SOP value of RM12.45/share. 

Source: AmeSecurities