Illustrative Market Cap Announced - midf

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

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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


In line with Caterpillar Fwd PE

4,049

Motors


In line with average PE for motor companies in China

4,347

Property


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)


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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