Sime Darby’s new leadership to pave the way for demerger

Sime Darby Bhd (July 31, RM9.45)

Maintain outperform with an unchanged target price of RM9.72: Last Friday, Sime Darby Bhd announced the new leadership for each of its entities, namely Sime Darby Plantation, Sime Darby Property and Sime Darby Group. The management changes would see Sime Darby’s current group chief executive officer (CEO) Tan Sri Mohd Bakke Salleh become Sime Darby Plantation’s executive deputy chairman and managing director (MD). Sime Darby will see a new president and group chief executive, led by Jeffri Salim Davidson, who is the current deputy group chief financial officer (CFO). Meanwhile, both the plantation and property entities are on course for listing by year end.

Sime Darby’s current chairman Tan Sri Abdul Ghani Othman will assume the same post in Sime Darby Plantation. Datuk Franki Anthony Dass, the current head of Sime Darby Plantation, will be taking on a new role as the company’s chief adviser and value officer.

Permodalan Nasional Bhd group chairman Tan Sri Abdul Wahid Omar has been named chairman of Sime Darby Property. Former Media Prima Bhd group MD Datuk Seri Amrin Awaluddin has been appointed as the property developer’s MD, while Sime Darby’s current group CFO, Datuk Tong Poh Keow, will be redesignated as Sime Darby Property’s executive director and CFO.

Sime Darby deputy chairman Tan Sri Dr Wan Abdul Aziz Wan Abdullah, who is also Malaysia Airports Holdings Bhd’s chairman, has been promoted to become group chairman. Meanwhile, its two wholly-owned subsidiaries, Sime Darby Motors and Sime Darby Industrial, will continue to be led by MD Datuk Lawrence Lee Cheow Hock and Scott William Cameron respectively. Sime Darby Logistics’ MD is Timothy Lee Chi Tim.

The demerger exercise will see the separate listing of the plantation and property entities, while other units, namely industrial, motors, logistics and other non-core businesses remain under Sime Darby Group. 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 Darby’s existing shareholders.

We laud the key changes as it paves the way for the demerger exercise by year end. It is important to have the right leadership to maximise the value of each entity given the sizeable assets that both companies have. — PublicInvest Research, July 31

This article first appeared in The Edge Financial Daily, on Aug 1, 2017.

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