Sime Darby (Hold; TP: RM9.82) - Buys into Jimah power plant?

Stock Name: SIME
Company Name: SIME DARBY BHD

Research House: HLG

Price Call: HOLD

Target Price: 9.82

Sime Darby (Hold; TP: RM9.82)

Buys into Jimah power plant?

• According to Star Biz, Sime Darby is considering acquiring the 1,400MWcoal-fired Jimah power plant in Port Dickson for more than RM1.1bn. Sime Darbyis currently carrying out a due diligence on the power plant.
• Premature to assess the impact on earnings given the lack of informationon Jimah's profitability and source of financing.
• While the potential inclusion of Jimah power plant will contributestable earnings and cash flow to Sime Darby, we believe the pricing is criticalin determining whether the deal would be beneficial to Sime Darby.
• SOP-derived TP of RM9.82 remains unchanged. 

Source: HLIB Research 6 March 2012