MIDF Research maintains 'Buy' call on Sime Darby Plantation on bullish outlook

02/12/2022 01:53 PM

KUALA LUMPUR, Dec 2 (Bernama) -- MIDF Research has maintained a "Buy" call on Sime Darby Plantation Bhd (SDP) with an unchanged target price of RM5.50, due to its bullish outlook.

The research firm expects a mixed performance in SDP's earnings and headline earnings per share for the financial year 2022 (FY2022) and FY2023, which are estimated at +13 per cent/-11 per cent to RM2.6 billion/RM2.3 billion and 36.9 sen/32.9 sen respectively, following the one-off gain from the disposal of agriculture land in Kapar.

 "The 11 per cent drop in FY2023 earnings was mainly due to the recent adjustment based on new average crude palm oil (CPO) price of RM3,500 per tonne, as well as lowered assumption in production and margin.

"Operationally, based on the back-of-the-envelope calculations, we find that the disposal of Kapar land (Bukit Keratong Estates) would not have a significant impact on its fresh fruit bunch production since the landbank size proportion is only one per cent of Selangor area or 0.1 per cent of oil palm hectarage area in the peninsula," MIDF Research said in a research note today.

Hence, it makes no changes in forward estimates.

In a filing with Bursa Malaysia yesterday, SDP said it is disposing of three parcels of land in Klang, Selangor to Sime Darby Property (Bukit Tunku) Sdn Bhd for RM618 million.

It said the proceeds to be derived from the proposed disposal will be utilised for working capital requirements.

At the lunch break, SDP shares climbed 11 sen to RM4.52, with 1.01 million shares transacted.


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