KUALA LUMPUR, Aug 26 — Sime Darby Bhd’s bullish prospects have prompted research houses to raise their target prices for the counter.
In a research note today, CGS-CIMB reiterated its 'add' call on Sime Darby’s shares, with a higher sum of parts (SOP)-based target price (TP) of RM2.95.
It has also raised its forecast for the company’s financial year 2021 - 2023 (FY2021-FY2023) earnings per share by nine per cent to 13 per cent.
The research house said Sime Darby is expecting the resilient demand for motor vehicles to continue amidst the ongoing luxury spending trend in Australia and China, and the launch of exciting new electric vehicles such as the BMW iX, i4 and iX3 LCI.
"Meanwhile, the global semiconductor shortage had a minimal impact on Sime Darby, instead, it helped the company to optimise its working capital.
"Essentially, this mitigates the need for discounting for its fleet of vehicles, which helps to sustain its motor division margin," it said in a note today.
Meanwhile, RHB Investment Bank Bhd is keeping its 'buy' recommendation on the counter, with a 20 per cent upside in the SOP-based TP of RM2.70.
It said Sime Darby’s FY2021 core earnings and dividends surpassed the investment bank’s expectations.
"We expect some normalisation in China’s motor sales volumes and growth in the industrial segment on the back of an optimistic FY2022 outlook for the construction industry," it added.
In a filing with Bursa Malaysia, Sime Darby reported that its net profit surged by 74 per cent to RM1.43 billion in FY2021 ended June 30, 2021, from RM820 million in the previous year.
Revenue surged 20 per cent to RM44.48 billion from RM36.93 billion previously.
The group attributed the robust results mainly to its motors division’s exceptional performance in most markets, particularly in China.
At 12.10am, Sime Darby' shares soared 14 sen or 6.2 per cent to RM2.40 with 7.85 million shares traded. — Bernama