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Saturday, September 4, 2010

KLCI Stock - SIME / 4197 - 2010 Quarter 4

Market Cap : 6009463831*8.28 = 49,758,360,520.68 (Very Large)
NTA per share : (20450100-108900)/6009500 = 3.38
P/BV : 8.28/3.38 = 2.4497
Forecast P/E now : Not applicable
ROE : 3.44% (Low)
DY : 0.1/8.28*100 = 1.21% (Low)
Fixed Asset Turnover(4 year) : (0.8688+0.8751+0.9318+0.85)/4 = 0.8814 (Moderate)
Liquidity Ratio : 18797900/11688900 = 1.6082 (Moderate)
Receivables Collection Period : (5864100+6285600)/2/(32951600/365) = 67 days (Acceptable)
My Target Price : 8.8 (Technical point of view only)
My Decision : BUY if not break 7.5 support
My Comment : Revenue increased, expect lesser or same impairment loss from E&U, good cash flow, above moderate debt and increasing, navps decreasing, CPO price increasing, other than E&U division all growth, price broke first resistance
Technical Support Price : 7.5
Risk Rating : MODERATE
My Target Price : 8.09 (27 Aug 10)

My notes based on 2010 quarter 4 report (number in '000):-

- The Group registered a 43% lower pre-tax profit than that of the previous year’s. The lower profit was attributable principally to the losses incurred in Energy & Utilities and a 12% decline in contribution from Industrial whilst all other divisions reported higher earnings

- Plantation posted an increase of 23% in profit mainly due to the higher average crude palm oil price realised of RM2,311 per tonne as compared to RM2,177 per tonne for the previous year, higher fresh fruit bunches (FFB) production from Indonesia and better performance from downstream operations. FFB production for the Group decreased marginally by 0.2% to 9.84 million tonnes. The FFB production in Malaysia fell by 5% to 6.56 million tonnes while in Indonesia, the FFB production was up by 10% to 3.28 million tonnes due to the increase in matured hectarage and improvement in FFB yield by 8% from 16.6 MT per mature hectare to 18.0 MT per mature hectare. Downstream operations had turnaround and recorded profits primarily due to the lower feedstock costs and higher selling prices. The results of Plantation also included a provision for impairment of biodiesel and other assets of RM152.4 million

- Property registered a higher profit of 7% as compared to previous year attributable mainly to the higher residential and commercial sales in the Group’s townships and gain from the disposal of a subsidiary of RM40.3 million

- Industrial recorded a reduction in profit of 12% as compared to previous year mainly due to the lower demand for heavy equipment in Singapore and Australia, offset to some extent by the higher equipment sales in China and gain on disposal of a property of RM19.0 million in Malaysia

- Motors achieved a 116% jump in profit as compared to previous year mainly driven by the robust sales growth in all regions. Operations in Australia and New Zealand, both registered a turnaround and reported positive results in the current year

- Energy & Utilities registered a total loss for the year of RM1,751.7 million inclusive of provision for foreseeable losses of RM969.0 million and impairment of RM412.4 million. In respect of the four projects, namely the Qatar Petroleum (QP) project, the Maersk Oil Qatar (MOQ) project, the Bakun hydroelectric dam (Bakun) project and a project on the construction of marine vessels for use in the MOQ project, the total loss for the year amounted to RM1,645.6 million. The Group is still actively negotiating with the clients on the claims and therefore the estimated losses on these four projects may eventually vary

- The results from Healthcare & Others increased by 242% largely as compared to previous year due to the better performance from all operating sectors in addition to a reversal of impairment on an associate of RM17.0 million which partially offset by an impairment of investment of RM61.2 million

- The lower corporate expenses in the previous year were mainly due to the recognition of income on the first time consolidation of Yayasan Sime Darby. Excluding the contribution to Yayasan Sime Darby, the corporate expenses stood at RM150.8 million for the current financial year and RM136.7 million for the previous financial year

- Contribution from Plantation was lower by 6% mainly due to an impairment of assets totalling RM146.0 million which was partially offset by the increase in fresh fruit bunches (FFB) production by 10% on account of the 12% increase in FFB yield. CPO price realised was also marginally higher at RM2,440 per tonne as compared against RM2,425 per tonne in the preceding quarter

- Earnings from Property declined by 40% primarily due to the inclusion of the gain of RM78.0 million arising from the sale of land in the preceding quarter

- Contribution from Industrial rose by 39% mainly due to the significantly higher sales in equipment and product services in Australia as compared to the preceding quarter

- Motors achieved a higher profit of 81% for the current quarter mainly driven by the better results from Singapore and China

- Included in the loss for the quarter are provision for foreseeable losses of RM454.9 million and impairment of RM257.0 million. In respect of the four projects undertaken by Energy & Utilities, namely QP, MOQ, Bakun and marine vessels, the Group announced a loss of RM963.8 million in the third quarter. In the current quarter, a further loss of RM337.2 million was recorded largely due to delays in completion, bringing the total loss for the year to RM1,645.6 million

- Healthcare & Others reported a loss of RM46.4 million for the current quarter compared to a profit of RM50.0 million in the preceding quarter mainly due to the impairment on an investment of RM61.2 million in the current quarter and the reversal of an impairment on an associate of RM17.0 million in the preceding quarter

- No estimate next 4Q eps after 2010 Q4 result announced
- No estimate next 4Q eps after 2010 Q3 result announced
- Estimate next 4Q eps after 2010 Q2 result announced = 0.37, estimate highest/lowest PE = 22.22/2 (DPS 0.22)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.34, estimate highest/lowest PE = 26.44/23.76(DPS 0.2)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.37, estimate highest/lowest PE = 24.43/21.59 (DPS 0.2)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.34, estimate highest/lowest PE = 24.35/18.91 (DPS 0.27)

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