RHB Research has maintained a “Buy” recommendation for Sime Darby with a target price of RM2.60.
We think that a c.15% correction from its recent peak has priced in SIME’s near-term headwinds in China.
It said that should weakness persist over fears of prolonged lockdowns or of weak 4QFY22 earnings, it believes this is an opportune time to accumulate – ahead of China’s imminent car sales recovery, which would be fuelled by government incentives and pent-up demand.
RHB said that SIME’s EV ambitions have already begun – starting in China, where it has secured after-sales partnerships with new EV original equipment manufacturers (OEM) like NIO, Weltmeister and Li Auto.
It said that accounting for the EV line-up from its existing principals, SIME has many new EV models in its pipeline that span across the mass and premium segments.
“Through its large sales network in South-East Asia (SEA) and China, SIME strives to bring the new EV OEMs into SEA from China, eg it already has an EV footprint in Singapore as BYD’s official dealer, “the stockbroking house said.
