Nov 7, 2017 - Unchanged Target Price: RM9.25 ... Neutral on the news. ⢠Earnings ... to be high, its share price is su
07 November 2017 | Corporate Update
Maintain NEUTRAL
Sime Darby Berhad
Unchanged Target Price: RM9.25
Illustrative market cap announced INVESTMENT HIGHLIGHTS
RETURN STATS
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Illustrative market cap announced
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Neutral on the news
•
Earnings forecast maintained
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Maintain NEUTRAL with TP of RM9.25
Illustrative market cap announced. Sime Darby Berhad (SIME) has announced the illustrative market cap (ILM) for Sime Darby Plantation, Sime Darby Property and the future SIME post demerger. Sime Darby Plantation's ILM is in the range of RM36.9b to RM41.8b. For Sime Darby Property, the ILM is in the range of RM9.9b to RM11.7b. Lastly, the future SIME ILM is in the range of RM8.0b to RM14.8b. Refer Table 1 for details.
Price (6 Nov 2017)
RM9.08
Target Price
RM9.25
Expected Share Price Return
+1.9%
Expected Dividend Yield
+2.7%
Expected Total Return
+4.6%
STOCK INFO
Neutral on the news. Although Sime Darby Property ILM came in higher than expected, this is neutralized by lower than expected Sime Darby Plantation ILM.
KLCI
1742.29
Bursa / Bloomberg
4197 / SIME MK
Earnings forecast maintained. The details announced does not change the fundamentals of respective companies, hence we maintain our FY18/FY19 core earnings forecast of RM2.42b/RM2.43b respectively.
Board / Sector
Maintain NEUTRAL with TP of RM9.25. Our Target Price is based on Sum-Of-Parts based valuation. While SIME valuation at 25.0x PE appears to be high, its share price is supported by decent dividend yield of 2.7% and the expectation of value creation from the demerger corporate exercise.
Main / Industrial
Syariah Compliant
Yes
Issued shares (mil)
6800.84
Market cap. (RM’m)
61,751.62
Price over NA
1.65
52-wk price Range
RM7.85 - RM9.7
Beta (against KLCI)
1.51
3-mth Avg Daily Vol
5.39m
3-mth Avg Daily Value
RM49.3m
Major Shareholders Skim Amanah Saham Bumiputera
41.60%
EPF Yayasan Pelaburan Bumiputra
11.17%
KWAP
5.20%
5.58%
KINDLY REFER TO THE LAST PAGE OF THIS PUBLICATION FOR IMPORTANT DISCLOSURES
MIDF RESEARCH Tuesday, 07 November 2017 INVESTMENT STATISTICS FYE Jun (RM m) Revenue EBIT PBT Net Income Core Net Income EPS (sen) Core EPS (sen) Net DPS (sen) Net Dvd Yield Core PER NTA/share (RM) P/NTA ROE ROA
FY15A 43,729 3,542 3,003 2,313 2,071 37.68 33.74 25.0 2.8% 26.9 4.29 2.11 7.6% 3.8%
FY16A 43,963 3,067 2,816 2,409 1,877 38.60 29.67 27.0 3.0% 30.6 4.45 2.04 7.4% 3.8%
FY17A 48,045 3,562 2,655 2,438 2,216 36.70 33.40 23.0 2.5% 27.2 5.24 1.73 6.5% 3.6%
FY18F 49,340 3,785 3,366 2,821 2,469 41.48 36.30 24.9 2.7% 25.0 5.41 1.68 7.3% 4.9%
FY19F 50,738 3,829 3,382 2,833 2,481 41.66 36.49 25.0 2.8% 24.9 5.58 1.63 7.2% 4.7%
Source: Company, MIDF Research Forecast
TABLE 1: ILLUSTRATIVE MARKET CAP
Companies
Listing reference / Adjusted share price range
Illustrative market cap range (RM m)
Percentage allocation range
Sime Darby Plantation
5.43 to 6.15
36929 to 41825
60% to 68%
Sime Darby Property
1.45 to 1.72
9861 to 11697
16% to 19%
Sime Darby
1.18 to 2.17
8025 to 14758
Source: Company
TABLE 2: SUM OF PARTS VALUATION Fair Value (RM 'm)
Divisions
Valuation
Note
Plantation
26.8x FY18E earnings
Higher of IOICORP and KLK Target PE
Industrial
24.0x FY18E earnings
In line with Caterpillar Fwd PE
4,049
Motors
10.0x FY18E earnings
In line with average PE for motor companies in China
4,347
Property
13.0x FY18E earnings
In line with other big cap property company valuation
7,707
Energy and Utilities Sum-Of-Parts (RM m) No of shares (m) TP (RM)
10.0x FY18E earnings
In line with average PE for utilities
46,423
390 62916 6,801 9.25
Source: MIDF Research
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MIDF RESEARCH Tuesday, 07 November 2017 DAILY PRICE CHART
Alan Lim, CFA
[email protected] 03-2173 8464 Source: Company
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MIDF RESEARCH Tuesday, 07 November 2017
MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X). (Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad)
DISCLOSURES AND DISCLAIMER This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (23878-X). It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MIDF AMANAH INVESTMENT BANK BERHAD makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MIDF AMANAH INVESTMENT BANK BERHAD. The directors, employees and representatives of MIDF AMANAH INVESTMENT BANK BERHAD may have interest in any of the securities mentioned and may benefit from the information herein. Members of the MIDF Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. This document may not be reproduced, distributed or published in any form or for any purpose.
MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS STOCK RECOMMENDATIONS BUY TRADING BUY NEUTRAL SELL TRADING SELL
Total return is expected to be >10% over the next 12 months. Stock price is expected to rise by >10% within 3-months after a Trading Buy rating has been assigned due to positive newsflow. Total return is expected to be between -10% and +10% over the next 12 months.
Negative total return is expected to be -10% over the next 12 months. Stock price is expected to fall by >10% within 3-months after a Trading Sell rating has been assigned due to negative newsflow.
SECTOR RECOMMENDATIONS POSITIVE
The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL
The sector is to perform in line with the overall market over the next 12 months.
NEGATIVE
The sector is expected to underperform the overall market over the next 12 months.
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