KUALA LUMPUR (March 1): AmResearch is maintaining its Buy rating on Sime Darby, but its fair value of RM10.60 a share has been placed under review with an upside bias pending a management meeting.
It said on Thursday that Sime reported a 2QFY12 net profit of RM1.1 billion, which brings its 1HFY12 earnings to RM2.2 billion or an impressive 42% growth on-year.
“This came in within our, and street, expectations, covering 53% and 55% of full-year estimates, respectively. It declared an interim dividend of 10 sen a share (versus 8 sen a share for 1HFY11),” it said.
AmResearch said the PLANTATION [] division saw its EBIT growing by a massive 38% on-year, driven by a stronger average CPO price of RM2,872 a tonne versus RM2,692 a tonne in 2QFY11.
The research house said the solid FFB production growth of 4.6% was driven by healthy growth (+9.5% on-year) in Malaysia although production in Indonesia slid by 4%.
It added that the oil extraction rate was slightly higher at 21.9% against 21.4% due to new mills in operation and some upgrades.
“We continue to like Sime as the company is the most liquid proxy to the plantation sector, which accounts for 61% of its FY11’s EBIT. Valuations are also attractive, currently trading at CY12F PE of 15 times which is below its three-year average of 17 times,” it said.
It said on Thursday that Sime reported a 2QFY12 net profit of RM1.1 billion, which brings its 1HFY12 earnings to RM2.2 billion or an impressive 42% growth on-year.
“This came in within our, and street, expectations, covering 53% and 55% of full-year estimates, respectively. It declared an interim dividend of 10 sen a share (versus 8 sen a share for 1HFY11),” it said.
AmResearch said the PLANTATION [] division saw its EBIT growing by a massive 38% on-year, driven by a stronger average CPO price of RM2,872 a tonne versus RM2,692 a tonne in 2QFY11.
The research house said the solid FFB production growth of 4.6% was driven by healthy growth (+9.5% on-year) in Malaysia although production in Indonesia slid by 4%.
It added that the oil extraction rate was slightly higher at 21.9% against 21.4% due to new mills in operation and some upgrades.
“We continue to like Sime as the company is the most liquid proxy to the plantation sector, which accounts for 61% of its FY11’s EBIT. Valuations are also attractive, currently trading at CY12F PE of 15 times which is below its three-year average of 17 times,” it said.
