Journey to Wealth
Sime Darby - Solid numbers all around BUY
We maintain our BUY rating on Sime Darby, but with our fairvalue of RM10.60/share placed under review with an upside bias pending a managementmeeting.
Sime reported a 2QFY12 net profit of RM1.1bil, which bringsits 1HFY12 earnings to RM2.2bil or an impressive +42% growth YoY. This came inwithin our, and street, expectations, covering 53% and 55% of full-yearestimates, respectively. It declared an interim dividend of 10sen/share (versus8 sen/share for 1HFY11).
Key highlights from the 1HFY12 earnings announcement:-
Plantation division saw its EBIT growing by a massive 38% YoY,driven by a stronger average CPO price of RM2,872/tonne versus RM2,692/tonne in2QFY11. Solid FFB production growth of 4.6% was driven by healthy growth (+9.5%YoY) in Malaysia although production in Indonesia slid by 4%. OER was slightlyhigher at 21.9% against 21.4% due to new mills in operation and some upgrades.
However, its downstream division reported losses of RM37milwhich were mostly due to the weak performance at its Holland operations 'affected by a competitive market, and high operating costs due to inefficientmills.
Industrial showed solid growth in EBIT (+38% YoY) to RM628mil,underpinned by strong mining & logging activities in the Australia region.We expect this division to continue to perform given the expected continuedrobust mining activities. That aside, a one-off acquisition cost relating tothe purchase of Bucyrus was recognised during the quarter which amounts toRM62mil.
Motor division EBIT growth of 11% was capped by a weakercontribution from China/HK as result of forex losses of RM37mil. Discountingthe losses, growth would have been a healthy 31% YoY. On the flipside, the new BMW3-series and Hyundai Elantra & Veloster will be launched by 1HCY12 inMalaysia and these models would be one of the key drivers for the motor unit.We have assumed a 10% revenue growth for FY12F or a volume of circa 79,000cars.
The tighter credit on hire purchase would have a negligible impacton Sime's motor division, given its portfolio mix are dominated by higher-endmakes.
We continue to like Sime as the company is the most liquid proxyto the plantation sector, which accounts for 61% of its FY11's EBIT. Valuationsare also attractive, currently trading at CY12F PE of 15x which is below its3-year average of 17x.
Source: AmeSecurities
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Latest Videos
MQ Trading Signals
Time
Signal
Duration
Type
2024-11-25 11:40:00
ADX
5 Mins
SELL
2024-11-25 11:20:00
EMA 5
5 Mins
SELL
2024-11-25 11:15:00
EMA 5
5 Mins
BUY
2024-11-25 10:55:00
EMA 5
5 Mins
SELL
2024-11-25 10:55:00
MACD/RSI
5 Mins
SELL
Apps
Top Articles
1
2
3
save malaysia!
Visa-free travel to China extended for Malaysians to 30 days
4
Good Articles to Share
5
Good Articles to Share
Four convicted in Spain over homophobic murder that sparked nationwode protests
6
Good Articles to Share
7
Good Articles to Share
What’s behind the slew of restaurant bankruptcies in 2024? Experts unpack the problems
8
Good Articles to Share
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
