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PETALING JAYA: Sime Darby Bhd is expected to register sustainable earnings for the financial year (FY) 2023 and FY24, even though challenges abound.

Several research houses have raised their earnings forecast for FY23 to FY24, after the group released its FY22 results with RM1.2bil in net core profit, while others have kept it neutral.

The group’s disposal of some assets has also led to expectations of special dividends that could provide further upside for dividend per share (DPS) and yields.

TA Research in its note to clients said it has tweaked its Sime Darby’s earnings forecasts higher by 1.9% for FY23 and 2.1% for FY24 respectively.

This is after taking into account the divestment of the logistics division with the disposal of Weifang port operations in China as well as higher earnings contribution from the industrial division.

Hong Leong Investment Bank (HLIB) Research has adjusted Sime Darby’s earnings upward by 15.4% for FY23 and 2.5% for FY24 respectively.

RHB Research has also lifted Sime Darby’s forecasts DPS to 12 sen and 12.5 sen for FY23 to FY24 from 10 sen each previously.

It said, “If Sime Darby distributes half of the Weifang Port disposal proceeds of RM1.623bil as special dividends, that could translate into an additional 12 sen DPS in FY23, bringing total yields to 10.4%.”

Proceeds from the potential healthcare asset disposal is expected to provide further upside to FY23 DPS and yield.

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Meanwhile, CGS-CIMB Research foresees a challenging operating outlook for Sime Darby’s motors and industrial divisions in China due to weaker consumer sentiment and slowdown in construction activities.

Prolonged weakness in the China market could weigh down on the group’s profitability as China accounted for 30% of Sime’s core profit before interest and tax in FY22.

The research house however expects Australia will continue to drive Sime Darby’s FY23 profitability, underpinned by a healthy demand outlook for industrial division, especially parts and services, which command higher margins than equipment.

Sime Darby had highlighted that the recent pullback in coking coal prices provides an opportunity for miners to carry out maintenance services postponed earlier.

The industrial order book remains strong, hovering at RM4.4bil as of end-June 2022.

CGS-CIMB Research has cut the group’s FY23 to FY24 earnings per share by 1% to 3% to reflect a sluggish demand recovery in the China market.

It maintains a ‘hold’’ call on the stock with a target price (TP) of RM2.40 a share.

It expects Sime to maintain attractive FY23 to FY25 dividend yields of 5% to 5.4%, supported by potential one-off gain from Malaysian Vision Valley (MVV) land disposal.

It adds that the group expects to complete the disposal of 760 acres of MVV land in FY23 and register RM250mil net gain from the proposed disposal.

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    黑玫瑰。
    (2023-02-11 00:07:02) 1#

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