Good quarter for Sime Darby
KUALA LUMPUR: It was another good quarter for Sime Darby Bhd (Sime Darby) as it reported another good set of results, rounding up its core net profit for the first half of 2019 (6MFY19) to RM543 million which came in above analysts and consensus’ expectations.
Affin Hwang Investment Bank Bhd (AffinHwang Capital) saw that Sime Darby’s core profits before interest and tax (PBIT) grew 15.4 per cent year on year (y-o-y), led by industrials and healthcare.
The industrials segment continued to perform well in the period as core PBIT rose 52.6 per cent to RM348 million on higher deliveries of equipment to the mining and construction sector in Australia.
“Management believes that the recent news on the China ban on coal imports from Australia is still at its preliminary stage. The Australian trade minister has acknowledged the unconfirmed and unsourced reports,” said AffinHwang Capital in a note yesterday.
“In the medium term, earnings will likely be supported by its orderbook of RM2.5 billion as at the end of December 2018. Elsewhere, the healthcare division continued to grow: core PBIT increased 20 per cent to RM30 million, attributable to higher profit from Malaysia and Indonesia operations.”
Meanwhile, Sime Darby’s motors’ 6MFY19 core PBIT shrank by 16.4 per cent year on year (y-oy) to RM225 million due to lower margins in China as a result of competitive discounting and lower sales and margins in Singapore.
“We believe the softening in the motors segment is temporary and the rich product pipeline will likely spur excitement moving into 3QFY19.
“The logistics division’s 6MFY19 core PBIT declined by 39.5 per cent to RM43 million on lower throughput, adversely affected by severe weather conditions.”
Operationally, results were broadly in line with AffinHwang Capital’s expectations as the 6MFY19 core PBIT accounts for 47 per cent of its FY19E forecast.
However, core net profit was above expectations, attributed to the low tax rate of 10 per cent on deferred tax credit recognised due to the change in Real Property Gains Tax (RPGT) rates for the Malaysian Vision Valley land.