- We maintain BUY on Sime Darby, with an unchanged fair value of RM10.58/share – based on a 15% discount to our SOP value of RM12.45/share.

- Sime Darby has for the second time extended the offer period for New Britain Palm Oil Ltd (NBPOL), this time to 20 March 2015 from 20 Jan 2015.

- Simultaneously, the second notice of variation to NBPOL takes into account the further extension in calculating the date by which the offer must become unconditional.

- Sime Darby says the further extension is to accommodate the decision of the European Commission (EU), which is one of the conditions for the completion of the offer. The decision of the EU Commission is only expected by 26 January 2015.

- The company says it is a precautionary measure against the possibility that the EU Commission decision could be delayed by any potential requests for additional information.

- In the event that the EU Commission makes any such requests, Sime Darby and NBPOL may require time to respond to it and this is likely to extend any decision by the EU Commission to beyond 27 January 2015, which based on the previous

timetable was the last date by which the conditions were to be satisfied.

- We continue to believe that the deal is likely to obtain the approval of the EU Commission, as it would largely be counter-intuitive to discourage the growth of sustainable palm oil.

- Our only concern is the steep price that Sime Darby is paying for NBPOL. However, we still see Sime Darby as a prime beneficiary to any upward trend in CPO prices.

- Another catalyst in the pipeline is the proposed listing of its auto division, which could occur early in the second half of CY15. Maintain BUY.

Source: AmeSecurities