The conglomerate announced on Tuesday that it was the first in the world to completely sequence, assemble and annotate the oil palm genome.

Sime Darby Plantation Sdn Bhd managing director Datuk Azhar Abdul Hamid had said the new sequence will lead to growing new varieties of oil palms and yields could double to 10 tonnes to 12 tonnes of crude palm oil (CPO) per hectare from Sime’s current five tonnes.

Sime initiated the project in 2003 with Synamatix, a biotechnology firm and 454 Life Sciences — a unit of Swiss drugmaker Roche — to map and analyse genetic markers in tropical oil palm.

Sime, which had invested more than RM40 million into oil palm genomic research, will inject a further RM100 million over the next five years into the project.

Azhar added it would take another five years before Sime would be able to produce ready-to-plant “super palms”. At least 15% of Sime’s estates in Malaysia will be planted over the next decade with new varieties of oil palm seeds — with a view to making oil palms shorter to facilitate harvesting and to be more disease resistant. Sime expected all its plantations to be have the new variety within 30 years.

AmResearch said Sime’s efforts to develop its own oil palm genome would help provide the group with a cutting edge to stay ahead as the largest plantation group in Malaysia. But potential enhancement to Sime’s plantation earnings would be some eight years away.

The research house added that Sime’s current share price of RM6.55, was just ahead of its sum-of-parts fair value of RM6.30 per share.

“We have a hold recommendation on the stock as we see its share price being maintained at current levels due to buoyant CPO prices. Sime is also seen as a good proxy to the Malaysian stock market given its large market capitalisation of RM40 billion,” it noted.

Among plantation companies in Malaysia, Asiatic Development Bhd is the only other plantation company that is working on oil palm genome. Asiatic started its research and development back in 2007-08 and the management expects to reap benefits from its annotated genome in 2013.

Sime closed at RM6.50 yesterday, down five sen.

This article appeared in The Edge Financial Daily, May 14, 2009.