More listing details unveiled for Sime Darby

KUALA LUMPUR: Sime Darby Bhd (Sime Darby) unveiled more information on the listing processes of its plantations and property divisions on the back of its results for the full financial year 2017 (FY17).

Details of the listings include the restructuring of borrowings, transfer of assets and settlement of intercompany balances, proposed share split in the plantation and property businesses, followed by equal distribution to existing shareholders and listing on the Main Market, and option agreements between the three businesses.

Meanwhile, Kenanga Investment Bank Bhd(Kenanga Research) saw that the group recorded FY17 core net profit of RM2.35 billion including discontinuing plantation and property earnings, which came in line with consensus’ RM2.26 billion at 104 per cent and Kenanga’s RM2.33 billion estimate at 101 per cent.

“Note that our calculations excludes one-off asset impairments, including Plantation’s Liberia operations (RM202 million), Industrial’s Bucyrus (RM257 million) and property’s unsold stocks (RM149 million).

“Fresh fruit bunch production at 9.78 million metric tonnes (MT) was in line at 102 per cent of our forecast.”

A final dividend of 17 sen was declared for full-year dividend of 23 sen – below Kenanga Research’s forecasted 28 sen at 82 per cent and implying a dividend payout ratio of 63 per cent.

This was lower than FY16’s 72 per cent, but in line with the five-year historical average of 62 per cent and 50 per cent dividend policy.

core profit before interest and tax (PBIT) excluding impairment of RM2.2 billion due to higher crude palm oil prices and FFB growth, offsetting lower core PBIT from Industrial on lower Malaysia contribution, and softer Property core PBIT on lower Pagoh contribution.

Motors core PBIT improved 30 per cent to RM653 million on higher local assembly and luxury demand.

On a quarterly basis, core net profit rose 16 per cent on higher Motors core PBIT as noted and stronger Property core PBIT of RM142 million, reversing from core loss of RM17 million, due to higher Battersea deliveries (at RM53 million) and stronger earnings at Elmina West.

However, plantation’s core PBIT fell 17 per cent to RM593 million on lower CPO prices.

“Management noted that they are on track for listing of their plantation and property arms by the end of 2017. With the deconsolidation, we expect Motors and Industrial segments to drive earnings going forward.

“Management is hopeful of stronger Motors performance on new launches and reorganisation in overseas divisions. Industrial prospects are gradually recovering as coal and iron ore prices pick up.

“Meanwhile, plantation’s prospects are bright given its status as the world’s largest certified palm oil producer with integrated supply chain, and Property outlook is longterm sustainable thanks to its substantial strategic land bank and overseas projects in UK and Australia.”