Nov 04 5:52 PM - Sime Darby Bhd is allocating a total of RM3 billion toacquire plantation land, power, automotive, and oil & gas businesses inthe region, as part of its expansion plan, its group chief executive DatukAhmad Zubir Murshid says.

This year, it has already bought a 50% stake in Singapore-listed oil andgas services Jaya Holdings Ltd, and is finalising plans to acquire a 51%stake each in Hyundai-Berjaya Corporation Bhd, Hyumal Motors Sdn Bhd andInokom Corporation Sdn Bhd.

He added that the acquisition trail would be financed by both internalfunds and borrowings. Despite the expansion move, he said its gearing wasat a low 30% currently. Our gearing level can afford to go up to 50%, hesaid.

He said Sime Darby would also dispose of four non-core businesses byend-2005, which would enable the group to realise a RM200 million gain.

Ahmad Zubir expected the group to record a better performance in itsfinancial year (FY) ending June 30, 2007, upon the completion of itsrevamp exercise.

This current financial year and first half of FY2006 will be spent onrestructuring and recapitalising. In FY2007, things will be put in placealready, he told reporters after Sime Darby's AGM in Kuala Lumpur on Nov4.

Ahmad Zubir said the conglomerate's five core businesses includingproperty development would be its key growth driver over the next fewyears.

Plans are afoot to grow its power generation capacity to 2,000MW from thecurrent 800MW but Ahmad Zubir did not give a timeline to achieve thetarget.

He said Sime Darby was still exploring opportunities in the region such asin Indonesia to expand its power generation business. Besides Malaysia, italso has interests in power plants in Singapore and Thailand.

On its plantation business, he said: Palm oil prices are stable and we arelooking at increasing our acreage. We are happy to double our size fromabout 80,000ha currently.

He expected palm oil prices to hover in the region of between RM1,350 andRM1,400 per tonne in the next 12 months. The group has identified three tofour areas in Sumatra and Kalimantan in Indonesia for potentialacquisition.

Ahmad Zubir said its automotive business especially in the motor franchisesegment would allow the group to be a key player in the market.

We have already acquired the necessary model and mix for our automotivebusiness, he added, having landed the exclusive franchise rights for theAlfa Romeo marque in Malaysia recently.

Ahmad Zubir said the group would also go into the development of high-endproperties after having been involved in developing townships.

Commenting on the Bakun Dam project, he said the project should have been30% completed but it had only managed to do 20% of the work. It wasreported that the contractor was facing geographical problems.

On the disposal of non-core business, he said the group had identified atleast four such operations to be sold. He added that the group would alsoreview the plan to sell some of its non-core activities such as in travel,general trading and tyre, which have a combined value of some RM1 billion.

He said the group was also talking to several other parties besides theGenting group on its the impending sale of its packaging business underSime Rengo Packaging (M) Sdn Bhd and Sime Rengo Packaging Singapore Ltd.