Sime Darby’s 1QFY19 within expectations

KUALA LUMPUR: Sime Darby Bhd (Sime Darby) first quarter of the financial year 2019 (1QFY19) results were within expectations and analysts believe its industrial division will continue its steady growth while recovery is expected for the mining industry in Australia.

According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), Sime’s 1QFY19 core profit after tax, amortisation, and minority initerst (PATAMI) of RM171 million (up 138 per cent year-onyear, down 42 per cent quarter-onquarter) generally came within expectations.

“The industrial division’s product support operations in Australia continue to show growth as a result of the mining business recovery, whilst the China operations are benefiting from strong demand from the construction industry.

“Nevertheless, the motors operations will continue to be impacted by strong competition and cautious consumer sentiment, whereas its port operations will be facing competition from other ports as well as environmental controls implemented by local authorities limiting the operating time of the ports,” said the research team.

It noted that Sime Darby is expected to continue to rationalise its logistics operations (with remaining four ports) which could see value unlocking of RM1.2 billion of its net book value.

“Sime had divested its previously 100 per cent-owned Weifang Sime Darby Water Management for US$68 million or circa RM275 million through competitive bidding,” it added.

Meanwhile, Affin Hwang Investment Bank Bhd (Affin Hwang) noted that 1QFY19 core PBIT from the healthcare segment grew by 25 per cent to RM15 million in tandem with the higher revenue from Malaysia and Indonesia operations.