* Sime Darby has profited as prices of palm oil have more than doubled since January 2006

02/12/2007 (Daily Times), Kuala Lumpur - Shares of plantation-to-energy group Sime Darby surged nearly 25 percent on Friday after relisting in Malaysia, making it the world’s largest listed palm-oil firm as investors ride a sustained commodities boom.

Sime, which also became Malaysia’s most valuable stock following its recent merger with palm oil groups Golden Hope Plantations and Kumpulan Guthrie, also has businesses in property development, heavy equipment, autos and energy. The stock ended at 11 ringgit, up nearly a quarter from its indicative price of 8.90 ringgit, after earlier hitting a high of 12.10 ringgit. Analysts had expected a rise of 6-7 percent.

That values Sime at around 66 billion ringgit ($19.65 billion), surpassing Singapore’s Wilmar International as the globe’s largest listed palm-oil firm by value and Malaysia’s previous biggest firm, Malayan Banking Bhd. “Today is a crucial day,” Sime Darby Chairman Musa Hitam told reporters at the stock exchange building in Kuala Lumpur. “Happily for us the market has indicated their confidence in us. Now it’s time to deliver.”

Sime has profited as prices of palm oil, used in products ranging from instant noodles and lipstick to biofuel, have more than doubled since January 2006.

Prices of edible oil have recently pulled back from record highs amid worries about slower consumer demand, falling crude oil prices and selloffs in global financial markets, but analysts predict the market will resume its uptrend soon.

Sime’s revenue and profit are expected to grow at least 10 percent in fiscal 2008, Musa said on Wednesday, an estimate its chief executive Ahmad Zubir Murshid reckons is conservative.

Biofuels: News on Friday that Finland’s Neste Oil plans to build the world’s largest biodiesel plant in Singapore by 2010 should help keep crude palm oil prices firm, some analysts said. “It’s going to boost (CPO) prices further as we are already facing supply constraints and not even able the meet demand,” said M. R. Chandran, an independent consultant and former head of the Malaysian Palm Oil Council. Analysts are concerned with Sime’s plans to take 60 percent stakes in Malaysia’s mammoth Bakun hydroelectric dam and constructing undersea cables to route power to the Malaysian peninsula, because it could place the debt-free firm under financial strain.

Up to 80 percent of the cost of would be debt-financed, Sime Chief Ahmad Zubir Murshid has said, with the cables not due to be completed until at least 2013. -Reuters-