Sime Darby wants to list plantation, property arms by early 2018

KUALA LUMPUR: Sime Darby Bhd, which saw its second-quarter net profit more than double, is targeting to list its plantation and property units on Bursa Malaysia at the end of this year or early next year.
“The target we set is aggressive, we’re confident that we can achieve it,” president and group CEO Tan Sri Mohd Bakke Salleh told reporters at Sime Darby’s results briefing here yesterday.
Last month, Sime Darby announced the spinoff of its plantation and property businesses, which will eventually see three different listed enties. The trading and logistics segments will remain under Sime Darby Bhd.
Bakke said yesterday the demerger may be implemented together or at different times depending on the readiness of the businesses and compliance with regulatory requirements.
The proposed listings will entail internal restructuring, including the restructuring of the group’s borrowings, transferring of certain assets including land within the group and capitalisation of intercompany loans.
As at end-December 2016, Sime Darby’s total borrowings stood at RM15.2 billion, of which half came from the plantation and property segments, with RM3.81 billion of cash.
Bakke said the listings will not entail any public offering of shares as it contradicts the deconsolidation exercise. “If we do IPO (initial public offering), then it will be back to the conglomerate structure, where Sime Darby Bhd will be the shareholder of Sime Darby Plantation and Sime Darby Property,” he explained.
Bakke stressed that the main objective of the demerger is not to raise funds, but to create three distinct pure-play companies.
Upon listing, the shareholding structure of the three entities will remain the same as the current structure of Sime Darby Bhd, in which Amanah Saham Bumiputera, Permodalan Nasional Bhd and the Employees Provident Fund own 40.6%, 5.6% and 10.2% respectively.
Sime Darby’s net profit more than doubled to RM644 million for the second quarter (Q2) ended Dec 31, 2016 against RM285,000 in the previous corresponding period, driven by increased crude palm oil (CPO) prices and better fresh fruit bunch production.
Revenue expanded 4.3% to RM12.34 billion from RM11.83 billion.
Sime Darby has proposed to declare an interim dividend of 6 sen per share for the quarter under review.
In a filing with the stock exchange, the conglomerate said its plantation division’s profit before interest and tax increased almost fourfold to RM568 million in Q2 FY17 from RM159 million in Q2 FY16, with average CPO price realised of RM2,835 a tonne against RM2,066 in the same period a year ago.
At the briefing, Bakke said he expects CPO prices to hover between RM2,900 and RM3,000 a tonne in the next two months.
For the first half of the year, Sime Darby’s net profit jumped 78.5% to RM1.09 billion from RM609 million on the back of a 2% rise in revenue to RM22.44 billion from RM22 billion.
Against the challenging operating environment, the group expects its performance for the financial year ending June 30, 2017 to be satisfactory.
Meanwhile, Bakke declined to comment on a possible merger between Sime Darby Property and Eco World Development Group Bhd, calling it pure speculation.