Sime Darby’s selling price of land to PNB considered fair
KUALA LUMPUR: Sime Darby Bhd’s (Sime Darby) selling price of land to PNB Development Sdn Bhd (PNB) has been considered fair by analysts.
In a filing on Bursa Malaysia, Sime Darby announced that indirect wholly-owned subsidiary Sime Darby Builders Sdn Bhd (SDBSB) entered into a sale and purchase agreement (SPA) with PNB for the disposal of approximately 297.51 acres of land by SDBSB to PNB for a cash consideration of RM85.5 million.
“We believe that the selling price of the land is fair,” the research firm opined.
AmInvestment Bank estimated that Sime Darby is selling the land in Kuala Langat at RM6.60 per square foot (sq ft). It noted that
We believe that the selling price of the land is fair. Research firm
Sime Darby applied to convert the land to mixed development in 2015.
“Currently, the land is planted with oil palm trees,” the research firm said. “We believe that the loss of plantation earnings from the disposal of the land is minimal.”
As per the filing, Sime Darby revealed that the proceeds derived from the proposed disposal will be utilised to fund strategic development projects by Sime Darby Property Bhd within the next 12 to 24 months and for the payment of expenses in relation to the pro- posed disposal.
Hence, AmInvestment Bank Bhd (AmInvestment Bank) believed that the cash would not be used to pay special dividends. Sime Darby highlighted that the group is expected to record a gain on disposal (after non-controlling interests) of RM62.4 million by the financial year ending June 30, 2018.
“This gain includes the estimated cost of disposal but excludes the impact of any contingent payment under the SPA,” it said.
AmInvesment pointed out that Sime Darby’s key performance indicator (KPI) is to record a net profit of RM2.2 billion, which is inclusive of exceptional gains.
All in, AmInvestment Bank maintained ‘hold’ on Sime Darby.