KUALA LUMPUR, Aug 3 — Hong Leong Investment Bank Bhd (HLIB) is positive on Sime Darby Bhd’s outlook, underpinned by the continued strong Industrial segment especially in Australia with a RM4.7 billion order book.
The research firm said demand for heavy mining equipment remains robust in the group’s largest Australian market segment, underpinned by the highly profitable metallurgical coal prices at US$220 to US$250 per tonne.
The latest order book at end-March 2023, sustained at a record high of RM3.3 billion level (out of the group’s total of RM4.7 billion).
“The Malaysian market has seen some pickup in orders since the end of December 2022, but the management has cautioned that the market remains moderate, while the China market also remained slow and highly competitive with other major domestic original equipment manufacturers,” it said in a note.
“Moving forward, Sime Darby will continue to leverage the strong momentum of its Industrial segment, driven by mining in Australia.
“We also expect a continued decent dividend yield of 5.5-6.4 per cent for the financial years 2023 to 2025, while the disposal of Ramsay Sime Darby Healthcare Sdn Bhd (RSDH) may provide upside from the special dividend,” it said.
HLIB has maintained a ‘Buy’ call on Sime Darby with an unchanged target price of RM2.70
At 10.05am, Sime Darby’s shares rose two sen to RM2.20 with 64,900 shares traded on Bursa Malaysia. — Bernama