Maybank IB has given Sime Darby Property an overall ESG score of 63 based on its proprietary ESG scoring methodology, making its ESG scoring above average.
The bank said SDPR has relatively better disclosures compared to its peers but some of its quantitative parameters have been showing a decline in scoring due to higher construction activities. SDPR aims to achieve Net Zero emissions across its projects. The house maintains its earnings forests, MYR0.86 TP (on unchanged 0.6x FY24E PBV) and HOLD rating.
Low scoring in quantitative parameters
SDPR’s overall ESG score of 63 is above average, which is close to its sector peer, namely Sunway at 74 (above average). The score was dragged by the rising trend in water and waste intensity under the “E” segment. Additionally, lost time injury frequency (LFIT) rate jumped in FY22. There was a recordable fatality of a contractor worker in FY22.
Aiming for Net Zero emissions
Positively, Maybank said SDPR has relatively better disclosures as compared to the other developers under the its coverage. It has also clearly stated its medium-term ESG targets in FY22. SDPR has begun developing its Net Zero pathway with a strategic partner to chart its carbon footprint reduction, focusing on its operational carbon Scope 1 and Scope 2 before establishing a baseline for Scope 3 in 2023.
The house is maintaining earnings forecasts. SDPR is focusing on expanding its investment property portfolio for future income sustainability. In end-2023, SDPR’s unbilled sales stood at MYR3.6b (0.8x of FY24E revenue). Maybank IB said it likes SDPR for its large exposure in the landed and industrial property segments as well as its healthy balance sheet with 0.22x net gearing as at 4Q23. SDPR currently trades at 0.6x FY24E P/B.
