- We maintain a BUY on Sime Darby, with a target price of RM11.20/share,
based on an SOP valuation.
- The Wall Street Journal has reported that Sime Darby is in
talks with Australia's biggest private healthcare provider and Sydney-based
Ramsay Health Care Ltd for a potential JV involving several hospitals in
Southeast Asia, with a target for listing in Malaysia.
- A source told the publication that the talks involved Sime
Darby contributing three Malaysian hospitals to an entity that would also
include three Ramsay-owned hospitals in Indonesia.
- The report said the JV could potentially be valued at more
than RM1.55bil, based on the earnings multiples of similar companies.
- Citing a person familiar with the talks, WSJ also said
Sime Darby would receive RM300mil to RM400mil from Ramsay to ensure that the
venture is evenly split.
- Following up on the WSJ report, StarBiz reported that Sime
Darby president and group chief executive Datuk Mohd Bakke Salleh had
previously indicated that it was in discussions with a foreign party for a
possible JV to extend its healthcare segment in Asean.
- It would appear Sime Darby is now ready to push forward its
healthcare division after years of it being in the lull. In fact, the
conglomerate was mulling over the sale of the division several years ago. The
healthcare division’s current contribution to group earnings is insignificant –
representing only 0.73% and 0.44% of its revenue and operating income for FY12.
- Healthcare has been brought to the fore following the dual
listing of government-investment arm Khazanah Nasionalowned IHH Healthcare Bhd,
Asia’s largest hospital operator, on the Malaysian and Singapore stock exchanges
last year.
- The stock price is now hampered by lackluster oil palm prices.
We maintain fair value for now, pending a meeting with management.
Source: AmeSecurities
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