Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: AMMB

KUALA LUMPUR: AmResearch reiterates its BUY call on SIME DARBY BHD [] but lowered its earnings expectations.

The research house said on Monday, Nov 29 it had reduced its fair value from RM10.45 a share to RM9.90 a share, pegged to an unchanged 10% discount to its sum-of-parts value of RM10.98 a share.

'Our fair value implies a CY11F PE of 17 times'' - at parity to its three-year average. The group's 1QFY11 net profit of RM655 million (-4% YoY) came in below expectations, accounting for 19% of our earlier FY11F earnings of RM3.4billion and 21% of street estimate's RM3.1 billion,' it said.

AmResearch said this largely stemmed from the lower-than-expected earnings rebound from higher crude palm oil prices. The stock currently trades at an attractive CY11F PE of 15 times, below its three-year average of 17 times.