MARKET DEVELOPMENT
RHB Research Maintains \'Buy\' Call On Sime Darby
RHB Research Maintains \'Buy\' Call On Sime Darby
03/05/2013 (Bernama) - RHB Research has retained its "buy" call on Sime Darby Bhd with a target price of RM10.60, despite the gloomy outlook for the group's plantation business.
The prevailing crude palm oil (CPO) prices will have a negative impact on Sime Darby's earnings, given that the segment made up 50-55 per cent of its earnings. However, this would be partially offset by its other businesses.
"For the first half of its financial year ending June 30, 2013, the motor division, comprising 12-15 per cent of the group's earnings, posted a six per cent year-on-year decline in earnings before interest and taxes.
"However, this is expected to turn around to a positive 5-10 per cent growth for the whole 2013 financial year," RHB Research said in a note Friday.
The research house said sales volumes in China, for the division, have also improved in the last few months.
The anticipated slowdown in its plantation division will also be cushioned by stable earnings from its industrial division, comprising 20-25 per cent, as well as its property division, which makes up 6-8 per cent.
"At this juncture, we maintain our earnings forecast for the group. But, should CPO prices average at RM2,400 per tonne during the group's financial year ending June 30, 2013, the earnings estimates will be revised down by 12.3 per cent," RHB Research added.
The prevailing crude palm oil (CPO) prices will have a negative impact on Sime Darby's earnings, given that the segment made up 50-55 per cent of its earnings. However, this would be partially offset by its other businesses.
"For the first half of its financial year ending June 30, 2013, the motor division, comprising 12-15 per cent of the group's earnings, posted a six per cent year-on-year decline in earnings before interest and taxes.
"However, this is expected to turn around to a positive 5-10 per cent growth for the whole 2013 financial year," RHB Research said in a note Friday.
The research house said sales volumes in China, for the division, have also improved in the last few months.
The anticipated slowdown in its plantation division will also be cushioned by stable earnings from its industrial division, comprising 20-25 per cent, as well as its property division, which makes up 6-8 per cent.
"At this juncture, we maintain our earnings forecast for the group. But, should CPO prices average at RM2,400 per tonne during the group's financial year ending June 30, 2013, the earnings estimates will be revised down by 12.3 per cent," RHB Research added.