KUALA LUMPUR (March 27): Shares of SIME DARBY BHD [] rose a high of RM9.79 on Tuesday before giving up the gains in the afternoon session in the absence of follow-through buying.
At 3.03pm, Sime Darby was unchanged at RM9.73.
The FBM KLCI was up 4.22 points to 1,587.20. Turnover was 1.29 billion shares valued at RM883.91 million. There were 334 gainers, 344 losers and 353 stocks unchanged.
UOB Kay Hian Malaysia Research said on Tuesday it was maintaining a BUY and target price of RM12.05 based on the sum-of-the-parts method, which implies a blended 15 times 2013F price-to-earnings.
“We continue to like Sime for its defensive PLANTATION [] business, decent dividend yield of 3.6% and good earnings growth visibility,” it said.
The research house said with plantation companies expanding their operations, plantation land is getting scarce, especially those that are suitable for oil palm plantation. This has resulted in land prices increasing by 30%-40% over the past four years.
“Sime is the largest plantation company in Malaysia by landbank. It has a sizeable plantation landbank in Malaysia and Indonesia of 976,000ha, of which about 463,000ha is in Malaysia and 286,000ha in Indonesia. Also, rising urbanisation has resulted in significantly higher valuations for plantation land near to urban centres, especially in Peninsular Malaysia,” it said.
UOB Kay Hian Research said besides having the largest plantation landbank, with about 5,410ha of land for property development (versus UEM Land’s 2,800ha and S P Setia’s 1,800ha), Sime owns the largest property landbank in Malaysia.
“Sime’s large landbank concentrated in Selangor is best for mass-property development. The government’s emphasis on mass-market property and financing scheme for first-home buyers could further boost the need to unlock land for property development. To ride on the rising property land prices, Sime has about six township developments in the pipeline for future development,” it said.
At 3.03pm, Sime Darby was unchanged at RM9.73.
The FBM KLCI was up 4.22 points to 1,587.20. Turnover was 1.29 billion shares valued at RM883.91 million. There were 334 gainers, 344 losers and 353 stocks unchanged.
UOB Kay Hian Malaysia Research said on Tuesday it was maintaining a BUY and target price of RM12.05 based on the sum-of-the-parts method, which implies a blended 15 times 2013F price-to-earnings.
“We continue to like Sime for its defensive PLANTATION [] business, decent dividend yield of 3.6% and good earnings growth visibility,” it said.
The research house said with plantation companies expanding their operations, plantation land is getting scarce, especially those that are suitable for oil palm plantation. This has resulted in land prices increasing by 30%-40% over the past four years.
“Sime is the largest plantation company in Malaysia by landbank. It has a sizeable plantation landbank in Malaysia and Indonesia of 976,000ha, of which about 463,000ha is in Malaysia and 286,000ha in Indonesia. Also, rising urbanisation has resulted in significantly higher valuations for plantation land near to urban centres, especially in Peninsular Malaysia,” it said.
UOB Kay Hian Research said besides having the largest plantation landbank, with about 5,410ha of land for property development (versus UEM Land’s 2,800ha and S P Setia’s 1,800ha), Sime owns the largest property landbank in Malaysia.
“Sime’s large landbank concentrated in Selangor is best for mass-property development. The government’s emphasis on mass-market property and financing scheme for first-home buyers could further boost the need to unlock land for property development. To ride on the rising property land prices, Sime has about six township developments in the pipeline for future development,” it said.
