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PETALING JAYA: Sime Darby Bhd, which posted a 3.9% rise in its net profit for the second quarter ended Dec 31, 2018 (Q219), expects its FY19 results to be better than FY18 based on the strong results reported in 1H19.
“If you look at the half-year results, they’re already ahead of the game, compared to last year. We have a pretty good chance of being better than last year,” Sime Darby group CEO Datuk Jeffri Salim Davidson (pix) told a press conference after announcing its 1H19 financial results today.
Sime Darby’s net profit for Q219 rose 3.9% to RM317 million from RM305 million a year ago mainly thanks to its motors division with the absence of a loss of RM109 million from the group’s discontinued BMW operations in Vietnam in Q218.
Its revenue was 6.9% higher at RM9.42 million compared with RM8.82 million in the previous year driven by the industrial division.
For the six-month period (1H19), the group’s net profit fell 66.6% to RM542 million from RM1.62 billion a year ago which included profit from its discontinued operations.
For a like-for-like year-on-year comparison, Sime Darby’s continuing operations posted a 69.4% increase in net profit to RM542 million for 1H19, from RM320 million for the same period last financial year, supported by a strong showing in the group’s industrial division.
Its revenue for its continuing operations stood at RM18.27 billion in 1H19, representing a 7.7% increase year-on-year, from RM17.96 billion in 1H18.
The group announced an interim dividend of 2 sen per share for FY19.
Jeffri said Sime Darby’s performance in 1H19 was pretty solid due largely to its industrial division in Australia. Demand for its products and services from the mining and construction sector there have been strong.
“Results (1H19) were strong compared to last year and that strong trend, particularly industrial (division) will continue for the next six months,” he added.
However, it is seeing a slight softening in the group’s motors business, particularly in China and Singapore.
Sime Darby CFO Mustamir Mohamad said there is room for the group to gear up given its current gearing ratio of 21.6% against the optimal level of 60%.
“If we’re targeting to double our profit in the next five years, we have to do some acquisitions. We can’t do it organically,” he said, adding that any acquisitions will be mainly for the industrial division.
He said the group’s focus is in its industrial and motors divisions, where both divisions currently contribute 95% of its profit.
Meanwhile, it is also looking at opportunities to divest its logistics business, but not in a hurry to do so.
KUALA LUMPUR: Corporate earnings delivery will not significantly influence the Malaysian capital market this year as catalysts are expected to come from the external front, according to Affin Hwang Asset Management Bhd (Affin Hwang AM).
Its managing director, Teng Chee Wai, said for 2019, the company expects a single-digit upside in the FBM KLCI at around 8% to 10%, partly buoyed by recovery in global growth as the economic cycle matures.
“2019 is a year that the markets are going to respond more towards macro policies rather than earnings. And I do not see price-earnings expansion to be one big factor this year for the market because there is a very little growth,” he told a press conference after presenting Affin Hwang AM market outlook and company briefing here today.
“With 5% in (consensus) earnings (estimates) growth, I don’t expect this year to be a double-digit year (for the FBM KLCI),” he said, noting downward revisions in earnings are likely if there is slowdown in global economic activities.
Asked whether 2019 is a good year to invest in stocks, Teng warned of risks and uncertainties in the market such as the ongoing trade dispute between the United States and China.
“There is no such thing as the best time to invest … you must be mindful of the risks, and asset allocation is the way forward,” he added.
Nevertheless, Teng said given the positive development in the US-China trade talks, coupled with changes in policy by the Federal Reserve, he is fairly confident that the market will improve at some point in the second half of the year.
On Affin Hwang AM’s outlook, Teng said the fund manager is confident that it will surpass the RM50 billion mark in assets under administration (AUA) this year and reach the RM52 billion level.
He said the firm’s AUA grew 0.84% or RM400 million to RM47.8 billion as at end of 2018 from RM47.4 billion in late 2017.
Earlier at the press conference, Affin Hwang AM’s Islamic entity, Aiiman Asset Management Sdn Bhd, launched its maiden fund called Aiiman Asia Pacific (ex-Japan) Dividend Fund, which marks its foray into the retail market.
Aiiman managing director Akmal Hassan said the fund is suitable for retail investors who want regular income distribution and capital gains, and have a medium- to long-term investment horizon and moderate risk tolerance.
The fund will invest a minimum of 70% of the fund’s net asset value (NAV) in syariah-compliant equities and a maximum of 30% of its NAV in sukuk, syariah-compliant money market instruments and/or deposits.
The base currency of the fund is in ringgit with a minimum investment amount of RM1,000.
KUALA LUMPUR, Feb 21 — Sime Darby Bhd is allocating RM1 billion for capital expenditure (capex) this year. Group chief executive officer Datuk Jeffri Salim Davidson said the capex is mainly for the upgrade and refurbishment of its motor showroom….
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