Sime Darby's maritime city could spur further development, says RHB Research

KUALA LUMPUR (April 4): Sime Darby Property Bhd entered into a memorandum of understanding yesterday with MMC Port Holdings Sdn Bhd and India's Adani Ports and Special Economic Zone Ltd to study the feasibility of developing a maritime city on its plot in Carey Island.

RHB Research Institute Sdn Bhd in a note today said it is positive on this development, citing that the port and maritime city could spur further development along southern Selangor's industrial belt.

"Sime Darby Property is well positioned to benefit from this development, given its strategic landbank in the area. This development would also be a strategic fit into the Malaysia Vision Valley Development project to be spearheaded by Sime Darby Property," said RHB Research.

Presently there are no details yet as to the amount of land which would be involved in this maritime city project; however, it is noted that Sime Darby Property has some 26,000 acres of landbank in Carey Island.

"As for the Malaysian Vision Valley project, Sime Darby Property has about 136,000 acres of landbank in Negeri Sembilan which is likely to benefit from this project," added RHB Research.

Meanwhile, Hong Leong Investment Bank (HLIB) in its research note today said given the preliminary stage of the feasibility study, it is of the view that Sime Darby Bhd will emerge as the main beneficiary given its vast landbank in Carey Island at low cost.

As such HLIB Research maintains its "buy" recommendation on Sime Darby with a target price of RM10.06.

This is underpinned by various factors, including its plan to spin off the plantation and property businesses, which would further crystalise Sime Darby's deep intrinsic value; recent completion of private placement, which has strengthened Sime Darby's balance sheet; and anticipation of better quarters ahead on the back of better plantation and property earnings.

RHB Research has also maintained "buy" rating on the stock with a target price of RM10.15, in view that Sime Darby's restructuring and demerger plans would be value enhancing, particularly to its plantations and property spin-offs. — theedgemarkets.com

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