KUALA LUMPUR (July 31): Analysts have given the thumbs up to conglomerate Sime Darby Bhd's management changes announced last Friday, as they opined the changes would pave the way for the group's demerger exercise. 

PublicInvest Research has maintained its outperform call on Sime Darby Bhd with an unchanged target price (TP) of RM9.72, following the changes made to the group and its subsidiaries last Friday.

Last Friday, Sime Darby announced boardroom changes at Sime Darby Bhd, Sime Darby Plantation Bhd and Sime Darby Property Bhd, in which its chairman Tan Sri Abdul Ghani Othman will assume the same post in Sime Darby Plantation Bhd, while its group chief executive officer (CEO) and president Tan Sri Mohd Bakke Salleh will become the plantation company's executive deputy chairman and managing director (MD).

Datuk Franki Anthony Dass, the current head of Sime Darby Plantation, will be taking on a new role as the company's chief advisor and value officer, while Renaka Ramachandran will be its chief financial officer (CFO).

The research house added Permodalan Nasional Bhd group chairman Tan Sri Abdul Wahid Omar was named chairman of Sime Darby Property Bhd, while former Media Prima Bhd group MD Datuk Seri Amrin Awaluddin had been appointed as the property developer's MD, and Sime Darby's current group CFO Datuk Tong Poh Keow will be redesignated as Sime Darby Property's executive director and CFO.

In a company note by PublicInvest Research today, Chong Hoe Leong said the research house approved of the management changes, as it paves the way for the group’s planned demerger exercise by year-end, in which it plans to list both its property and plantation arm.

“The demerger exercise will see the separate listing of plantation and property units, while other units, namely, industrial, motors, logistics and other non-core businesses, remain under Sime Darby Group,” PublicInvest said.

“The demerger exercise intends to create the pure plays for each core business and to unlock the valuation of its entities. It will not involve any public offering of new shares and there will be no cash proceeds raised, as well as no dilution to existing stakes held by Sime’s existing shareholders,” PublicInvest said.

Meanwhile, CIMB Research has maintained its Add rating on Sime Darby with an unchanged TP of RM10.10, adding it is “slightly positive” on the news of management changes.

“Key risks are lower fresh fruit bunch (FFB) output and crude palm oil (CPO) prices,” it added.

At 10.46am, Sime Darby’s shares were unchanged at RM9.50, for a market capitalisation of RM64.5 billion. — theedgemarkets.com

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