- We maintain HOLD on Sime Darby, with an unchanged SOP fair value of RM9.00/share.

- Sime Darby Property yesterday inked an MoU with the Penang Development Corporation (PDC) to build a RM1.8bil small medium enterprise (SME) high-tech industrial park in south Seberang Perai.

- They will co-develop land parcels in Byram and Changkat in Nibong Tebal over an eight-year period.

- Sime Darby will develop 926.8 acres for SMEs, while the PDC will develop heavy, moderate and light industries, SMIs, and mixed development on 4,017.4 acres.

- Under the master plan, both parties will share the costs for the building of main infrastructure facilities and the environmental and traffic impact assessments.

- Penang’s investment promotion agency investPenang will promote the development and screening of participants for the high-tech industrial park.

- Sime Darby had earlier applied to rezone the parcel of agricultural land in Byram Estate to industrial land.

- The property division has become an even more important contributor to the group amid the downturn in the plantation and industrials divisions.

- For 9MFY15, property accounted for ~7% and ~24% of the group’s revenue and core PBIT, respectively. In previous years, the property division had accounted for 4%-6% of group revenue and 8%-17% of group PBIT.

- We keep our numbers. Maintain HOLD, as most of the focus now is on costcontainment, particularly in the industrials and motor divisions.

Source: AmeSecurities Research - 1 Jul 2015