KUALA LUMPUR (Jan 17): Hwang DBS Vickers Research is maintaining its Buy call on Sime Darby and raised the target price of RM10.
It said on Tuesday that Sime announced its acquisition of Bucyrus distribution business on Dec 14, 2011, which based on the factsheet, should contribute additional 10%-11% of Sime’s current Industrial pretax.
“Having imputed these in our forecasts, we raised the group’s FY12F-14F earnings by 1-2%. Likewise, our TP of the stock is raised to RM10.00 – offering c.14% return, including 3.7% net dividend yield,” it said.
HDBSVR said Sime Darby intends to expand its PLANTATION [] land bank in both Africa (Cameroon) and Indonesia. It also plans to diversify its crop profile in Liberia to include rubber (20% of planted area).
As for the motor business, it said Sime Darby is expanding coverage in China. Contributions from China and non-China operations within Sime’s motor segment are currently balanced. While it sees a slowdown in China in FY12, this should be compensated by stronger growth outside of China.
“We believe further executions of its strategy – where they have not yet been priced in – should act as catalysts for earnings/share price upside. We reiterate our Buy call on the stock for an undemanding valuation,” it said.
It said on Tuesday that Sime announced its acquisition of Bucyrus distribution business on Dec 14, 2011, which based on the factsheet, should contribute additional 10%-11% of Sime’s current Industrial pretax.
“Having imputed these in our forecasts, we raised the group’s FY12F-14F earnings by 1-2%. Likewise, our TP of the stock is raised to RM10.00 – offering c.14% return, including 3.7% net dividend yield,” it said.
HDBSVR said Sime Darby intends to expand its PLANTATION [] land bank in both Africa (Cameroon) and Indonesia. It also plans to diversify its crop profile in Liberia to include rubber (20% of planted area).
As for the motor business, it said Sime Darby is expanding coverage in China. Contributions from China and non-China operations within Sime’s motor segment are currently balanced. While it sees a slowdown in China in FY12, this should be compensated by stronger growth outside of China.
“We believe further executions of its strategy – where they have not yet been priced in – should act as catalysts for earnings/share price upside. We reiterate our Buy call on the stock for an undemanding valuation,” it said.
