Stock Name: SIME
Company Name: SIME DARBY BHD
OSK Research Sdn Bhd is raising Sime Darby Bhd's forecast for financial years 2012 and 2013 by 7.2 per cent and 3.2 per cent, respectively, due to stronger industrial segment performance.
The optimistic outlook is based on the acquisition of Bucyrus distribution business by Sime Darby's industrial division in December.
In a research note today, OSK Research also noted that the better-than-expected oil extraction rate at the group's plantation division also contributed to its new forecasts.
The plantation segment raked in earnings before interest and taxes of (EBIT) RM911.1 million for the quarter, bringing its year to date EBIT to RM1.85 billion, it said.
EBIT for the quarter dropped 2.9 per cent, quarter-on-quarter, despite fresh fruit bunch volume falling 5.6 per cent and crude palm oil price by 4.8 per cent, it added.
"This was the second straight quarter that Sime's Indonesian production stumbled, which was not surprising given that parts of Kalimantan had been hit by poor weather since third quarter calendar year 2011.
"We are raising our forecast for the segment by 1.8 per cent for both FY12 and FY13 to factor in a higher oil extraction rate of 21.8 per cent as the company's 21.85 per cent oil extraction rate for the first half came out better than expected," it added.
Given this, the research house is recommending a "buy" call on Sime Darby with a target price of RM9.69. -- Bernama
Company Name: SIME DARBY BHD
| Research House: OSK | Price Call: BUY | Target Price: 9.69 |
OSK Research Sdn Bhd is raising Sime Darby Bhd's forecast for financial years 2012 and 2013 by 7.2 per cent and 3.2 per cent, respectively, due to stronger industrial segment performance.
The optimistic outlook is based on the acquisition of Bucyrus distribution business by Sime Darby's industrial division in December.
In a research note today, OSK Research also noted that the better-than-expected oil extraction rate at the group's plantation division also contributed to its new forecasts.
The plantation segment raked in earnings before interest and taxes of (EBIT) RM911.1 million for the quarter, bringing its year to date EBIT to RM1.85 billion, it said.
EBIT for the quarter dropped 2.9 per cent, quarter-on-quarter, despite fresh fruit bunch volume falling 5.6 per cent and crude palm oil price by 4.8 per cent, it added.
"This was the second straight quarter that Sime's Indonesian production stumbled, which was not surprising given that parts of Kalimantan had been hit by poor weather since third quarter calendar year 2011.
"We are raising our forecast for the segment by 1.8 per cent for both FY12 and FY13 to factor in a higher oil extraction rate of 21.8 per cent as the company's 21.85 per cent oil extraction rate for the first half came out better than expected," it added.
Given this, the research house is recommending a "buy" call on Sime Darby with a target price of RM9.69. -- Bernama
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