RHB Research has maintained a “Buy” recommendation for Sime Darby Bhd with a target price of RM2.60
It said that reiteration of a “buy” call in anticipation of a potential special dividend from the divestment of SIME’s non-core assets, and on the continued recovery of car sales in China, which has been boosted by the government’s fiscal stimulus.
It said that SIME will receive proceeds totalling c.MYR1,624m. It will reinvest part of the sum in its motor and industrial businesses in China and may distribute some of it through a special dividend – although management did not guide on any potential amount.
It said that assuming the company distributes half of its disposal consideration, that should translate to a special DPS of 12 sen, yielding 5.5%.
Yesterday, Sime Darby announced the sale of its Weifang port assets, marking the full exit of its logistics business. We are positive on the deal as the sale of its non-core ports assets is close to book value. Proceeds will be reinvested into its motor and industrial businesses in China, and potentially be distributed as a special dividend. The company’s discussions to dispose its healthcare unit are still ongoing.
