SIME’s subsidiary Sime Darby Property (SDP) signed a MOU with Penang Development  Corp  (PDC)  yesterday  to  develop  the  “Small  Medium Enterprise  High-Teck  Park”  on  a  former  oil  palm  plantation  measuring nearly  2,000  ha  in  Nibong  Tebal  in  mainland  Penang.  SDP  will  develop 376 ha for small and medium industries while PDC will develop 1,626 ha for  heavy,  light  and  moderate  industries,  SMIs  and  mixed  projects.  The project is expected to break ground by end-2017. (Source: Business Times)

Comments: Given the scarcity of land and demand for industries properties in Penang, the project will be beneficial for both SIME and PDC. Impact on SIME’s  bottom-line  will  depend  on  the  ascertained  value  of  the  said  oil palm  plantation  as  well  as  the  GDV  and  duration  of  its  portion  of  the industrial park development. We maintain our HOLD rating on SIME with a TP  of  RM8.28.  The  project  also  highlights  the  development  potential  of many of SIME’s plantation lands in Peninsular Malaysia.

Source: Affin Hwang Capital Research - 1 Jul 2015