KUALA LUMPUR (Nov 22): CIMB Group Research has upgraded Sime Darby Bhd to “hold” at RM2.40 with a higher target price of RM2.50 (from RM2.44), and said the group’s 1QFY6/19 core net profit was in line at 21% of house/consensus FY19 estimates.
In a note Nov 21, the research house said Sime Darby’s core net profit rose 57% year-on-year in 1QFY19, driven by stronger earnings from its industrial division on the back of robust mining activity recovery in Australia.
“We roll over our valuation, and upgrade Sime Darby to 'hold' in view of its attractive growth prospects in the industrial segment and recent share price pullback.
“Stronger earnings from the industrial segment and earnings accretive acquisition are potential re-rating catalysts, while weaker-than-expected auto sales and profit margin are potential de-rating catalysts for the stock,” it said.
At 9.19am, Sime Darby gained 0.83% or 2 sen to RM2.42 with 4,900 shares done.